Global Data Center Outsourcing Market Size Analysis By Service Type (Managed Hosting, Disaster Recovery and Backup Services, Storage and Data Management, Network Management, Security Services, Infrastructure Management, Others), By Enterprise Size (Large Enterprises, Small and Medium Enterprises (SMEs)), By Industry Vertical (BFSI (Banking, Financial Services, and Insurance), IT & Telecom, Healthcare, Retail, Government, Manufacturing, Energy and Utilities, Others), Region and Companies – Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2025-2034

Report Overview

The Global Data Center Outsourcing Market size is expected to be worth around USD 311.3 Billion by 2034, from USD 187.5 Billion in 2024, growing at a CAGR of 5.2% during the forecast period from 2024 to 2033. In 2024, North America held a dominant market position, capturing more than a 36% share, holding USD 67.6 Billion revenue.

The data center outsourcing market has experienced robust growth, driven by the increasing demand for scalable and flexible IT infrastructure solutions. As businesses continue to generate vast amounts of data, the need for effective data management has accelerated, pushing companies toward outsourcing solutions to optimize operational efficiency.

The market is further bolstered by the growing adoption of cloud technologies, the need for disaster recovery services, and the rising trend of digital transformation in businesses globally. Several factors are propelling the growth of the Data Center Outsourcing Market. Cost efficiency remains a primary driver as businesses look for ways to reduce capital expenditures related to infrastructure setup and maintenance.

For instance, in August 2023, Google introduced BigQuery Studio, a new data analysis and visualization tool designed to make working with large datasets easier for professionals. By offering a user-friendly interface, it empowers data teams to quickly explore, analyze, and extract insights from massive volumes of data. This streamlined approach enhances productivity and supports faster, data-driven decision-making.

According to passive secrets, 74% of companies report relying on external support for their internal audits, citing significant skill gaps within their teams. This trend highlights a broader shift, with 92% of large companies (G2000) outsourcing their IT services to address complex technological needs. Interestingly, 93% of those companies that chose to outsource indicated satisfaction with the results, underscoring the effectiveness of external partnerships in driving success.

The U.S. IT Outsourcing market is set to reach an impressive $197.20 billion by 2024, indicating robust demand for outsourced IT solutions. Among small businesses, the outsourcing focus is clear, with 27% seeking external providers for marketing, followed by 22% for IT services, and 21% for design services. Meanwhile, China continues to dominate as the global leader in both manufacturing and IT outsourcing, showcasing its strategic advantage in these sectors.

Key Takeaways

• In 2024, the Managed Hosting segment dominated the Global Data Center Outsourcing Market, capturing over 25% of the total market share.
• Large Enterprises also held a leading position, with the segment accounting for more than 68% of the market in 2024.
• The BFSI (Banking, Financial Services, and Insurance) sector was another major contributor, securing over 22% of the global data center outsourcing market.
• The US Data Center Outsourcing Market was valued at USD 62.6 Billion in 2024, growing at a steady CAGR of 3.1%.
• In 2023, North America led the global market, holding a dominant share of over 36%.
• According to the Department of Energy.gov, data centers account for roughly 2% of total U.S. electricity usage, suggesting outsourcing could help reduce energy consumption.
• As per Census.gov, employment in U.S. data centers grew by more than 60% from 2016 to 2023, rising from 306,000 to 501,000 workers.

U.S. Market Growth Analysis

The US Data Center Outsourcing Market was valued at USD 62.6 Billion in 2024, with a robust CAGR of 3.1%. The U.S. has a presence of many leading technology companies and start-ups that tend to drive the innovation in data center technologies and services. This technological leadership attracts businesses that are looking for cutting edge solutions.

U.S. Data Center Outsourcing Market is expected to grow robustly due to several key factors that make the U.S. a leading environment for data center operations. Firstly, there’s an increasing reliance on cloud computing, which demands extensive data processing capabilities. Companies like Amazon Web Services are expanding their AI capabilities, which further drives the need for powerful data centers capable of handling sophisticated computations and large-scale data storage​

In 2024, North America held a dominant market position in the Data Center Outsourcing Market, capturing more than a 36% share with USD 67.6 billion in revenue. This leadership is primarily due to the region’s advanced technological infrastructure and the significant presence of major cloud service providers like Amazon Web Services, Microsoft Azure, and Google Cloud.

These companies drive demand for data center services by continuously expanding their operations and investing in cutting-edge data center technologies. North America’s market dominance is also supported by its robust regulatory environment, which ensures data security and privacy. This regulatory framework attracts enterprises that prioritize compliance and data protection, making the region a preferred location for data-sensitive industries such as finance and healthcare.

Furthermore, the U.S. leads in the adoption of hybrid cloud environments, which require sophisticated data center solutions to manage the complexity of integrating public and private cloud infrastructures. The region also benefits from a highly developed internet backbone, which facilitates efficient data transmission across multiple data centers and ensures high levels of connectivity and reliability for data center operations.

Analysts’ Viewpoint

The demand for data center outsourcing is expected to remain strong due to the expanding reliance on digital technologies across industries. Enterprises are increasingly utilizing managed services for scalability, data security, and improved operational efficiency. Furthermore, sectors such as healthcare, retail, and finance, which require secure and compliant data management, are anticipated to drive further demand for outsourced data center solutions.

The global need for effective data storage and processing continues to surge as data volumes increase exponentially across industries. Investment opportunities in the data center outsourcing sector remain promising, particularly in emerging markets where infrastructure development is underway. Investors can consider opportunities in data center facilities, cloud service providers, and managed IT services companies.

Furthermore, investment in green and energy-efficient data center solutions is gaining traction, driven by both environmental concerns and cost-saving opportunities. The rise of edge computing is also presenting new investment avenues in distributed data centers that aim to reduce latency and provide faster data processing closer to end users.

Technological advancements are central to the growth and evolution of the data center outsourcing market. Innovations such as 5G, edge computing, and artificial intelligence (AI) are reshaping data center operations. With the increasing shift toward automation, AI-driven management tools are helping optimize data storage and processing, reducing operational costs.

Service Type Analysis

In 2024, the Managed Hosting segment exhibited a dominant position in the data center outsourcing market, securing more than a 25% share. This leadership stems from its critical role in enabling businesses to offload IT operations, ensuring not only high availability and scalability but also robust security and compliance with prevailing standards.

Managed hosting providers manage the entire server environment, including setup, maintenance, and ongoing management, which significantly reduces the operational burden on businesses and enhances their operational efficiencies. The driving force behind the prominence of Managed Hosting is the increasing reliance of businesses on cloud services and digital transformation strategies.

As organizations continue to migrate their critical operations to the cloud, the demand for managed hosting services that can offer seamless, secure, and compliant operations has surged. This is particularly relevant in sectors such as BFSI, healthcare, and retail, where data security and regulatory compliance are paramount​.

Additionally, the managed hosting market’s growth is bolstered by technological advancements and a growing recognition of the importance of cybersecurity. Providers in this space are continually enhancing their service offerings with advanced security measures like state-of-the-art firewalls and intrusion detection systems, which are essential for protecting sensitive data against increasing cyber threats​.

Enterprise Size Analysis

In 2024, the Large Enterprises segment commanded a significant lead in the data center outsourcing market, accounting for over 68% of the market share. This dominance is largely attributed to their extensive IT infrastructure demands and the strategic adoption of advanced technological solutions to maintain robust and efficient data center operations.

Large enterprises typically manage vast amounts of data and require high levels of reliability and security, making them more likely to invest in outsourced data center solutions that offer scalability, enhanced security, and comprehensive management services.

The growth of this segment is driven by several factors, including the integration of artificial intelligence (AI) and hybrid cloud environments which significantly enhance operational efficiencies through automation and smart analytics. AI aids in predictive maintenance and intelligent workload management, crucial for optimizing resources and ensuring seamless performance.

Moreover, the adoption of hybrid cloud strategies by large enterprises supports the need for data centers that facilitate smooth integration and data mobility, making outsourcing an attractive option​. Furthermore, large enterprises are often better positioned financially to leverage the full spectrum of data center outsourcing services, from cloud hosting to managed hosting and colocation services.

This financial flexibility allows them to invest in high-quality, bespoke services that meet their specific requirements, driving the demand for data center outsourcing. The inclination towards operational efficiency and cost reduction, along with the ability to deploy hyperscale data centers, also contributes significantly to the dominance of large enterprises in this market​

Industry Vertical Analysis

In 2024, the BFSI (Banking, Financial Services, and Insurance) segment held a dominant market position within the data center outsourcing market, capturing more than a 22% share. This leadership can be attributed primarily to the sector’s accelerated digital transformation, which has significantly increased the reliance on data centers for enhanced security, compliance, and operational efficiency.

Financial institutions are increasingly adopting cloud services and requiring robust IT infrastructure to support the vast amounts of data generated by online transactions and digital interactions. The growing need to manage risk and comply with stringent regulatory requirements further drives BFSI entities towards outsourcing data center operations.

Moreover, the significant investments in building hyperscale data centers and the global push towards enhancing digital capabilities have made it feasible for BFSI organizations to leverage third-party data center services that offer scalability and state-of-the-art technologies. These services enable BFSI companies to focus more on their core financial operations while entrusting the management of their IT infrastructure to specialized providers, thereby optimizing costs and resource allocation​.

Key Market Segments

By Service Type

• Managed Hosting
• Disaster Recovery and Backup Services
• Storage and Data Management
• Network Management
• Security Services
• Infrastructure Management
• Others

By Enterprise Size

• Large Enterprises
• Small and Medium Enterprises (SMEs)

By Industry Vertical

• BFSI (Banking, Financial Services, and Insurance)
• IT & Telecom
• Healthcare
• Retail
• Government
• Manufacturing
• Energy and Utilities
• Others

Drivers

Scalability and Technological Advancements

The primary driver for data center outsourcing is the need for scalability and flexibility in IT infrastructure. As businesses expand, the ability to scale IT resources efficiently becomes crucial. Outsourcing offers a solution that allows organizations to adapt their infrastructure based on real-time demands without significant capital investments.

Additionally, access to the latest technology through outsourcing providers ensures that businesses can leverage cutting-edge solutions for enhanced performance and security, without the constant need for updates and staff training. This combination of scalability and technological advancement makes data center outsourcing an attractive option for growing businesses​.

Restraint

Data Security and Privacy Concerns

One of the major restraints facing the data center outsourcing market is the concern over data security and privacy. As organizations outsource their IT infrastructure, they must entrust sensitive and critical data to third-party providers. This raises fears about data breaches and unauthorized access.

Compliance with various data protection regulations, such as GDPR and CCPA, adds additional layers of complexity and potential liability. These security concerns can deter companies from adopting outsourcing solutions, especially in industries where data confidentiality is paramount​

Opportunities

Growth in Colocation and Cloud Services

The market for data center outsourcing is experiencing significant opportunities, particularly in the areas of colocation and cloud services. These services offer businesses cost-effective, scalable, and flexible infrastructure solutions that support dynamic workloads and digital transformation strategies.

The shift towards cloud-based solutions and the adoption of colocation facilities provide reliable infrastructure and enhanced connectivity options, making them ideal for companies looking to optimize their IT operations and accommodate growth without the overheads associated with traditional data centers​

Challenges

Loss of Control and Vendor Lock-In

A significant challenge in the realm of data center outsourcing is the potential loss of control over IT operations. Outsourcing critical IT functions can lead to reduced oversight and decision-making flexibility, which may result in misalignments with a company’s strategic objectives.

Additionally, vendor lock-in poses a major challenge, as it can restrict a company’s ability to switch providers or reintegrate services in-house, potentially leading to increased costs and reduced operational flexibility over time. These factors can make businesses hesitant to commit to outsourcing, despite the potential benefits​.

Growth Factors

The data center outsourcing market is experiencing robust growth driven by several key factors. One significant driver is the increasing demand for scalable and secure data solutions that allow businesses to efficiently manage large volumes of data. As companies generate vast amounts of data, there is a critical need for data management strategies that ensure security, scalability, and retrievability without compromising data integrity​.

Additionally, the modernization of IT infrastructure and the shift towards cloud-based solutions further propel market growth. Organizations are transitioning from traditional on-premises data centers to outsourced data center services that offer advanced technologies such as cloud computing and virtual storage.

Latest Trends

Several emerging trends are shaping the future of data center outsourcing. The adoption of AI and Machine Learning technologies is particularly noteworthy, as these tools enhance efficiency, automate routine tasks, and improve predictive maintenance within outsourced data centers. Such technological integration helps data centers to remain competitive and responsive to the dynamic needs of businesses in a digital ecosystem​.

Another key trend is the growing popularity of colocation services, where businesses can house their IT infrastructure in third-party data centers while maintaining control over their hardware and software. This trend is driven by the need for cost-effective, scalable, and flexible data center solutions that can support high-performance computing and advanced data needs​.

Business Benefits

Outsourcing data center operations offers several business benefits. Primarily, it allows companies to focus on core competencies rather than the complexities of managing IT infrastructure. By leveraging outsourced services, businesses can improve their operational agility, reduce downtime, and enhance data security, all while controlling costs.

Outsourced data centers provide high availability, compliance with regulatory standards, and access to the latest technology without significant upfront investments​. Moreover, data center outsourcing helps businesses scale their IT resources quickly and efficiently in response to changing market demands or business growth, without the need for extensive capital investment in physical infrastructure​.

Key Players Analysis

One of the leading player in the market, Tata Consultancy Services (TCS) is a global leader in IT services, consulting, and business solutions. TCS has a strong presence in the data center outsourcing market, offering a range of services to help enterprises manage their IT infrastructure.

Another firm, Infosys Ltd. is a global leader in digital services and consulting, with a strong focus on data center outsourcing. Infosys provides comprehensive solutions to help businesses manage their IT infrastructure efficiently.

Top Key Players in the Market

• IBM Corporation
• Hewlett Packard Enterprise (HPE)
• Accenture
• Fujitsu Ltd.
• Capgemini
• Tata Consultancy Services (TCS)
• Infosys Ltd.
• Cognizant
• NTT Data Corporation
• HCL Technologies
• Wipro Limited
• Atos SE
• DXC Technology
• Tech Mahindra
• Oracle Corporation
• Microsoft Corporation
• Amazon Web Services (AWS)
• Google Cloud
• Dell Technologies
• Alibaba Cloud
• Other Key Players

Recent Developments

• In November 2024, Infrastructure and connectivity provider BSO is launching a new data center platform. With the backing of the Ardian debt fund, the company is expanding two Tier III-quality campuses in France.
• In October 2024, Modine, a diversified global leader in thermal management technology and solutions, announced the opening of a new 23,200m (250,000ft) facility in Calgary, Canada. The facility will manufacture Airedale by Modin precision cooling equipment to meet the increased demand from data center customers, particularly in the hyperscale market.
• In July 2024, Cushman & Wakefield (NYSE: CWK), a leading global real estate services firm, announced the launch of its GCC Advisory, a first-of-its-kind service to empower global multinationals in developing their captive-offshore Shared Services, R&D, and Centers of Excellence (COE) capabilities.

Report Scope