Data Center Colocation and Managed Hosting Services Market to Grow by USD 236.9 Billion (2024-2028), Driven by Rising Demand for Colocation Facilities, with AI Impacting Market Trends – Technavio

NEW YORK, Nov. 20, 2024 /PRNewswire/ — Report on how AI is redefining market landscape – The global data center colocation and managed hosting services market  size is estimated to grow by USD 236.9 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of  16.82%  during the forecast period. Rising demand for data center colocation facilities is driving market growth, with a trend towards growing investments in hyper-scale data centers by colocation providers. However, increasing demand for cloud-based services  poses a challenge.Key market players include BT Group Plc, Chunghwa Telecom Co. Ltd., Cogent Communications Holdings Inc., CoreSite Realty Corp., Cyfuture, CyrusOne LLC, Cyxtera Technologies Inc., Digital Realty Trust Inc., Equinix Inc., Fidelity National Information Services Inc., Flexential Corp., Internap Holding LLC, KDDI Corp., Lumen Technologies Inc., Navisite LLC, NTT DATA Corp., phoenix NAP LLC, Rackspace Technology Inc., Sabey Corp., and Verizon Communications Inc..

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Key Market Trends Fueling Growth

In today’s digital age, businesses are increasingly relying on data center colocation and managed hosting services to manage their IT infrastructure. Trends such as cloud computing, cybersecurity, data management, remote work solutions, artificial intelligence, automation, IoT devices, and hybrid work models are driving the growth of this market. IT & telecom, manufacturing, retail & consumer goods, healthcare & life sciences, energy & utilities, media & entertainment, and various verticals are investing in these services for operational efficiency and overhead cost savings. Cybersecurity is a top priority, with IT executives focusing on data security, endpoint security, network monitoring, and business continuity. Pricing pressures and differentiation are key challenges, as companies seek to provide superior customer experiences and competitive edge in the market ecosystem. Deployment models like DCaaS (Data Center as a Service) are gaining popularity, as are hybrid models that combine on-premises infrastructure and cloud solutions. Cyber threats, data leakage, and attack surfaces are major concerns, with cyber hardening and malware protection essential. HIPAA compliance is crucial for healthcare and pharmaceuticals, while availability and service-level agreements are critical for all industries. Rackspace Technology and Google Cloud are major players, offering a range of services from physical infrastructure to digital services and online customer experiences. The retail industry, in particular, is embracing e-commerce, mobile shopping apps, and transaction history analysis, with giants like eBay and Amazon leading the way. The market is expanding rapidly, with the metaverse concept and social media adding new dimensions to the digital services landscape. 

The data center colocation and managed hosting services market are experiencing significant growth due to increasing investments in hyper-scale data centers. With the advent of the smart revolution, the creation of vast amounts of data necessitates efficient processing. Hyper-scale data centers are becoming a priority to manage this data influx. Equinix Inc., among other providers, has announced the construction of such data centers in May 2022. These facilities will cater to the escalating information processing demands of a connected world. 

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Market Challenges

In today’s digital age, businesses face numerous challenges in managing their IT infrastructure. Cloud computing has disrupted traditional data center models, leading to cybersecurity concerns. Data management, remote work solutions, and the increasing use of IoT devices require new approaches. Hybrid work models and distributed teams demand endpoint security and network monitoring. Pricing pressures force differentiation through superior customer experiences and client relationships. IT security professionals grapple with cyber threats, data leakage, and attack surfaces from malware. Operational efficiency and regulatory compliance, such as HIPAA, add to the complexity. Data center colocation and managed hosting services offer physical infrastructure solutions, overhead cost savings, and a competitive edge. Rackspace Technology and Google Cloud are key players, while on-premises infrastructure and social media platforms like eBay and Amazon continue to shape the market ecosystem. Verticals like retail, healthcare, energy, media, and manufacturing all have unique needs. IT executives must navigate these challenges to maintain business continuity and ensure availability through service-level agreements (SLAs). DCaaS and IT & telecom companies are essential partners in this digital transformation journey.The global shift towards cloud computing is driving the growth of data center colocation and managed hosting services market. Organizations, regardless of size, are seeking to minimize capital expenditures (CAPEX) by adopting cloud solutions. SMEs and start-ups benefit from the scalability of hardware and resources provided by cloud service providers. Large enterprises also leverage cloud-based services to scale workloads on-demand, eliminating the need for expensive data center setup and maintenance. Cloud solutions offer quicker implementation compared to traditional on-premises software, making them an attractive choice for businesses.

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Segment Overview 

This data center colocation and managed hosting services market report extensively covers market segmentation by

End-user 1.1 BFSI1.2 Healthcare1.3 E-commerce1.4 Telecommunication1.5 OthersType 2.1 Wholesale2.2 RetailGeography 3.1 North America3.2 Europe3.3 APAC3.4 Middle East and Africa3.5 South America

1.1 BFSI-  The banking and financial services sector (BFSI) is experiencing significant growth in m-commerce and e-commerce activities in North America, Europe, and developing economies like India and China in APAC. Financial data, including customer financials, account information, cardholder data, and transaction and personal information, is highly regulated by regulatory bodies such as the EU’s General Data Protection Regulation (GDPR). BFSI companies, including Goldman Sachs, JPMorgan Chase and Co., and Morgan Stanley, require optimal uptime, security, connectivity, and data integrity for sharing information across networks. Traditional data center ownership poses high operating costs for global BFSI companies, leading them to outsource colocation space from vendors or lease servers from managed hosting service providers. This shift towards outsourcing is expected to drive the growth of the BFSI segment of the data center colocation and managed hosting services market during the forecast period.

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Research Analysis

The Data Center Colocation and Managed Hosting Services market is experiencing significant growth due to the increasing demand for cybersecurity, data management, and remote work solutions. With the rise of artificial intelligence, automation, IoT devices, and hybrid work models, businesses require secure and efficient data center solutions to manage their digital transformation. IT security professionals are prioritizing data security, endpoint security, and network monitoring to protect sensitive information. Differentiating customer experiences and building strong client relationships are crucial for gaining a competitive edge. Deployment models, operational efficiency, and regulatory compliance, such as HIPAA in healthcare and pharmaceuticals, are also key considerations. Enterprises are turning to colocation and managed hosting services to meet their unique needs, drive innovation, and stay ahead of the competition.

Market Research Overview

In the digital age, businesses increasingly rely on Data Center Colocation and Managed Hosting Services to manage their IT infrastructure. These services offer operational efficiency, overhead cost savings, and access to advanced technologies such as Cloud computing, Artificial Intelligence, and Internet of Things (IoT) devices. With the shift to remote work solutions and hybrid work models, data security and cybersecurity have become paramount. IT security professionals are tasked with safeguarding against cyber threats, data leakage, malware, and attack surfaces. The market ecosystem includes IT & telecom, manufacturing, retail & consumer goods, healthcare & life sciences, energy & utilities, media & entertainment, and various verticals. Industry expansion brings new opportunities but also pricing pressures, requiring differentiation through superior customer experiences and client relationships. Deployment models range from on-premises infrastructure to DCaaS, with IT executives leveraging these services to gain a competitive edge. In the Metaverse concept, data centers play a crucial role in supporting digital services, online customer experiences, e-commerce, and online retail. Companies like Rackspace Technology and Google Cloud are leading the charge, offering managed hosting services tailored to various industries, from healthcare and pharmaceuticals to enterprises. The retail industry, in particular, benefits from data management, enabling transaction history analysis, cashierless checkout, and personalized marketing through social media and mobile shopping apps. However, the increasing use of these services also presents challenges. Ensuring HIPAA compliance in healthcare and pharmaceuticals, addressing cybersecurity concerns, and maintaining availability and business continuity through service-level agreements are critical. As the market evolves, providers must stay ahead of the curve, offering advanced security features like cyber hardening and endpoint security, as well as network monitoring and automation to meet the demands of distributed teams.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

End-userBFSIHealthcareE-commerceTelecommunicationOthersTypeWholesaleRetailGeographyNorth AmericaEuropeAPACMiddle East And AfricaSouth America

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio’s report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio’s comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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Email: media@technavio.com
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SOURCE Technavio