NEW YORK, July 18, 2024 /PRNewswire/ — The global data center colocation and managed hosting services market size is estimated to grow by USD 163.36 billion from 2023-2027, according to Technavio. The market is estimated to grow at a CAGR of  13.87%  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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Market Driver

The data center colocation and managed hosting services market is 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 deluge. Notable providers like Equinix Inc. And NTT DATA Corp. Have recently announced their plans to construct such data centers in India, investing USD9 million and opening a new facility in Mumbai, respectively. These developments will cater to the escalating information processing needs of the smart revolution and the connected world, generating new opportunities for market participants. Overall, the construction of hyper-scale data centers is expected to drive the growth of the data center colocation and managed hosting services market throughout the forecast period. 

In today’s digital age, IT executives are increasingly turning to Data Center Colocation and Managed Hosting Services to support their businesses. With the rise of DCaaS (Data Center as a Service) providers like Rackspace Technology and Google Cloud, on-premises infrastructure is no longer the only option. The retail industry, in particular, is embracing this trend, leveraging cloud computing for digital services and enhancing online customer experiences through e-commerce, mobile shopping apps, and transaction history analysis. Social media and IoT devices generate vast amounts of data, requiring robust data management solutions. Cybersecurity is a top concern, with IT security professionals focusing on data security, endpoint security, network monitoring, and pricing pressures. As businesses adopt hybrid work models, automation and artificial intelligence become essential tools for managing distributed teams and ensuring network reliability. EBay, Amazon, and other online retailers are leading the way, integrating cashier-less systems, sensors, and cloud services to streamline operations and enhance customer experiences. 

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Market Challenges

• The adoption of cloud computing is driving the market for Data Center Colocation and Managed Hosting Services, as organizations seek to reduce their capital expenditures (CAPEX) and operating expenditures (OPEX) by leveraging cloud solutions. Small and medium-sized enterprises (SMEs) and start-ups particularly benefit from the scalability of hardware and resources offered by cloud providers. Cloud-based software offers several advantages, including quicker implementation through web browsers, improved customer experience with reduced processing times and error rates, enhanced data accessibility, and cost savings from eliminating the need for infrastructure procurement and installation. Vendors in the hosting infrastructure services market are responding to this trend by launching new cloud-based services, such as JFrog Ltd.’s expansion of cloud DevOps adoption in Canada and Microsoft Corp.’s new arm-based cloud service. These developments are expected to pose a challenge to the growth of the Data Center Colocation and Managed Hosting Services market during the forecast period.
• In today’s digital age, businesses face numerous challenges in managing their IT infrastructure. Cloud computing has disrupted traditional data center models, leading to the rise of colocation and managed hosting services. However, cybersecurity remains a top concern, with threats such as data leakage, malware, and cyber attacks increasing. Data management, remote work solutions, and the integration of IoT devices also pose new challenges. IT security professionals must adapt to hybrid work models, endpoint security, network monitoring, and HIPAA compliance in healthcare and pharmaceuticals. Pricing pressures and the need for differentiation require service providers to offer superior customer experiences and strong client relationships. Verticals like IT & telecom, manufacturing, retail & consumer goods, healthcare & life science, energy & utilities, media & entertainment, and others demand operational efficiency and regulatory compliance. Deployment models, including the metaverse concept, industry expansion, and the integration of artificial intelligence and automation, further complicate the landscape. Service-level agreements and business continuity plans are essential to ensure availability and mitigate cyber threats. Ultimately, physical infrastructure cost savings and a competitive edge are key drivers for enterprises in selecting the right colocation and managed hosting partner.

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Segment Overview 

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

1. End-user 
• 1.1 BFSI
• 1.2 Healthcare
• 1.3 E-commerce
• 1.4 Telecommunication
• 1.5 Others
2. Type 
• 2.1 Wholesale
• 2.2 Retail
3. Geography 
• 3.1 North America
• 3.2 Europe
• 3.3 APAC
• 3.4 Middle East and Africa
• 3.5 South America

1.1 BFSI-  The banking and financial services sector (BFSI) is experiencing significant growth in m-commerce and e-commerce markets in North America, Europe, and developing economies like India and China in APAC. Financial data, including customer financials, account information, cardholder data, and personal information, is highly regulated by the EU and other regulatory bodies, such as the GDPR. BFSI companies, including Goldman Sachs, JPMorgan Chase and Co., and Morgan Stanley, share sensitive information across networks and require optimal uptime, security, connectivity, and data integrity. Traditional data center ownership presents 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 in the data center colocation and managed hosting services market during the forecast period.

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Learn and explore more about Technavio’s in-depth research reports

The global containerized and modular data center market is experiencing significant growth, driven by increasing demand for scalable and efficient data solutions. Similarly, the global Data Center Infrastructure Management (DCIM) solutions market is expanding, fueled by the need for enhanced monitoring and management of data center operations. The global data center general construction market is also on the rise, supported by the surge in data center projects worldwide. These markets are propelled by advancements in technology, rising data consumption, and the need for robust data management infrastructure.

Research Analysis

The Data Center Colocation and Managed Hosting Services market is experiencing significant growth due to the increasing demand for secure and efficient data management solutions. With the rise of remote work solutions, hybrid work models, and IoT devices, the need for reliable and secure data center infrastructure has become crucial for businesses of all sizes. Cybersecurity is a top priority, with IT security professionals focusing on data security, endpoint security, and network monitoring to protect sensitive information. Artificial intelligence and automation are also driving innovation in the market, enabling operational efficiency and improved customer experiences. Deployment models, such as public, private, and hybrid, are differentiating offerings and catering to various industry needs. HIPAA compliance is a key consideration for healthcare and pharmaceuticals, while enterprises across industries seek a competitive edge through advanced data center solutions. The market expansion is fueled by the growing importance of client relationships and the need for a competitive edge in today’s digital landscape. Data center providers must continuously adapt to evolving technologies and customer demands to meet the unique needs of their clients 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 and deliver superior customer experiences. Cloud computing enables businesses to store, manage, and process data remotely, enhancing operational efficiency and reducing overhead costs. Cybersecurity is a top priority, with IT security professionals addressing cyber threats, data leakage, malware, and attack surfaces through cyber hardening and endpoint security. The market ecosystem includes various verticals such as IT & telecom, manufacturing, retail & consumer goods, healthcare & life sciences, energy & utilities, media & entertainment, and more. Hybrid work models and distributed teams require robust network monitoring and business continuity solutions. Pricing pressures and differentiation are key challenges, with IT executives seeking a competitive edge through DCaaS offerings. The industry expansion is driven by the Metaverse concept, IoT devices, artificial intelligence, automation, and the growing importance of data management in various industries. Key verticals like healthcare and pharmaceuticals, enterprises, and the retail industry are adopting these services for digital services, online customer experiences, e-commerce, and mobile shopping apps. Physical infrastructure, HIPAA compliance, and availability are crucial considerations, with service-level agreements ensuring business continuity and uptime. The market is also influenced by industry trends like the rise of social media, eBay, Amazon, and other online retail giants, which require robust and secure hosting solutions to manage transaction history and customer data. As the market evolves, businesses must stay informed about the latest cybersecurity threats and best practices to maintain a competitive edge.

Table of Contents:

1 Executive Summary

2 Market Landscape

3 Market Sizing

4 Historic Market Size

5 Five Forces Analysis

6 Market Segmentation

• End-user
• BFSI
• Healthcare
• E-commerce
• Telecommunication
• Others
• Type
• Wholesale
• Retail
• Geography
• North America
• Europe
• APAC
• Middle East And Africa
• South 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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