The Data Center Services Market size is expected to grow from USD 98.52 billion in 2023 to USD 243.12 billion by 2028, at a CAGR of 19.80% during the forecast period (2023-2028).
- Business leaders are facing an influx of data; thus, they are under pressure to manage all business-critical data, along with the constant need to outpace their competitors.
- The emerging cloud technology in data centers is one of the key factors driving the demand for data center systems and technology, thereby fueling market growth. Cloud technology is more flexible because it can be accessed with different devices and easily recover lost data. At the same time, cloud computing offers high speed, which helps other businesses to grow.
- The increase in demand for online retail or e-commerce has acted as a catalyst for the data center industry. Customers want more personalized data, and for this data center, services are beneficial. They help in storing and analyzing the data.
- The data center workloads are also increasing due to increased demand for improving application performance, storage requirements, mobile data use due to increased apps, and growing internet usage. As a result, more and more organizations are shifting to cloud data storage throughout the world, thus bolstering the demand for data center services.
- On the flip side, concerns relating to data privacy are a major concern nowadays, limiting this market's growth. As the data is not being hosted locally, there are high chances of data leakage. As a result, data center service providers have a challenge in terms of data security and availability, with backups, disaster recovery, and business continuity planning (BCP) services available with a single click.
- Owing to the COVID-19 outbreak, data centers saw an increase in demand for Internet bandwidth as users either worked from home (WFH) or turned to video streaming for entertainment. Managed hosting and cloud computing expanded, and demand for colocation rose.
- Since all major organizations began working from home (WFH), data centers, cloud services, and online backups are vital, and that is where data centers step in to help bridge the gap. Even during the pandemic, most data center owners expanded their capacity to accommodate increasing demand.
Data Center Service Market Trends
Cloud and Hosting is Expected to Capture a Major Share in the Data Center Services Market
- There are currently billions of Internet-connected devices, and the number is growing. Many generate large amounts of data, which must be recorded, processed, stored, assessed, and retrieved. With the development of IoT and Industry 4.0, manufacturers rely on big data and data analytics to increase their operations' productivity, cost-effectiveness, security, and efficiency.
- With fresh data being generated quickly over time, the intelligence from data becomes even harder to capture promptly. New digital landscapes, such as smart cities and intelligent buildings, offer more readily available data.
- Moreover, the public cloud is increasing because of lower costs and low maintenance. The data can be accessed at any time and on any device. This is helping small- and medium-sized businesses grow tightly, controlling their costs by paying for the infrastructure based on their needs.
- In October 2022, Intel Corp and Alphabet Inc's Google Cloud announced a co-designed chip that can improve the security and efficiency of data centers. The E2000 chip, code-named Mount Evans takes over the work of packaging data for networking from the expensive central processing units(CPU) that do the main computing. It also offers better security between different customers that may be sharing CPUs in the cloud.
- For instance, in June 2022, Oracle Cloud Infrastructure (OCI) announced the expansion of its distributed cloud services with specialized regions and previewing the Compute Cloud@Customer. OCI Dedicated Regions provides the entire public cloud to more customers and client data centers with a new, smaller infrastructure footprint and lower pricing. On average, the new OCI Dedicated Region consumes 60-75% less data center space and electricity, with a typical customer paying roughly USD 1 million annually.
- Owing to the abovementioned factors, the data center services market is expected to grow during the forecast period.
North America holds the substantial share in the market
- North America is home to many technological innovators. The region has a high demand for technologies like cloud computing and IoT. These technologies need robust data center facilities to handle the increasing complexities. This, in turn, is anticipated to increase the demand for data center services in the region.
- Also, the United States is one of the largest-growing economies in the world, and it is likely to boost the growth of public cloud-based data centers. The IT industry dominates the United States market as the largest private sector employer in the country, where data centers are widely used, thereby propelling the market growth.
- Moreover, the country has also witnessed a rise in its hyper-scale platforms, so providing data center services for the United States' hyper-scale platforms has become necessary.
- Also, colocation data centers are becoming increasingly popular in the region as businesses realize the majority of benefits of leasing from a colocation building their own data center infrastructure. The complexities in the infrastructure facilities, owing to the integration of technologies like networks and connectivity devices, are increasing rapidly.
- Large network operators such as Microsoft, Facebook, and Amazon Web Services (AWS) are large US investors, accounting for more than 50% of total investment in the last year. NTT Global Data Centers, Equinix, Digital Realty, QTS Realty Trust, Switch, Vantage Data Centers, and CyrusOne were among the colocation operators that invested in the United States in the last year.
Data Center Service Industry Overview
The global data center service market is fragmented, and the competitive rivalry is high. The key players in this market are Fujitsu Ltd, Reliance Group, Capgemini, HCL Technologies Limited, etc. Sustainable competitive advantage can be attained through innovation in this market, owing to the growing need for differentiated products for various applications.
Ventures worldwide progressively hope to arrange information, store data, and benefit from cloud specialists. This move and interest in storing media and other information represent gigantic development in the market for cloud benefits. Moreover, the steady increase in the number of new data center establishments throughout the globe would also boost demand for data center services that allow maximum throughput from facilities.
In October 2022, the Euronext Proximity Service was launched by Euronext Technology Solutions. Euronext Proximity Service is a high-end hosting and cloud capability in the Aruba IT3 data center.
In August 2022, Microsoft announced the establishment of a new data center area in Qatar. The data center area will be crucial in offering Qatar's companies, consumers, and partners access to robust, high availability, and reliable cloud services, driving digital transformation and promoting more cloud adoption.
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