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The data center colocation and managed hosting services market size is forecast to increase by USD 236.9 billion, at a CAGR of 16.82% between 2023 and 2028. The growth of the market depends on several factors, including the rising demand for data center colocation facilities, the increase in operational business needs, and the increasing number of investments in the construction of colocation data centers. Data center colocation is a type of data center in which the colocation service providers offer data center spaces for setting up end-user servers. Under managed hosting, a company takes a server on lease from the hosting service provider. The end-user has complete ownership of the server in data center colocation, unlike managed hosting. On the other hand, a managed hosting services provider leases the server and manages the operations at the site of the server.
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Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Conair Corp: The company offers different types of hair styling and care products such as clippers, dryers, trimmers, curling irons, and others.
Market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
The market share growth by the BFSI segment will be significant during the forecast period. The global driver for the banking and financial services sector is the growth of m-commerce and e-commerce in North America, Europe, and developing economies such as India and China in APAC. The financial and banking data shall include the customer's financial and account information, the cardholder's data, the transaction, and personal data.
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The BFSI segment showed a gradual increase in the market share of USD 36.90 billion in 2018. Global BFSI organizations frequently struggle with high operational expenses associated with traditional center ownership, which has an impact on their ability to grow their businesses. However, with the growing investment in high operational expenditure (OPEX), BFSI companies outsource colocation space from vendors or lease servers from managed hosting service providers. Such factors are expected to drive the growth of the BFSI segment of the market in focus during the forecast period.
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North America is estimated to contribute 47% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market in the region is experiencing substantial growth due to increasing investments in hyperscale data centers. For instance, Vantage Data Centers invested over USD700 million in Canada, and AVAIO Capital partnered with Adam Real Estate for its development in Quebec. The US houses major managed hosting service providers like Lumen Technologies and NaviSite.
The region's industries, including IT, manufacturing, healthcare, BFSI, retail, and education, have a strong digital presence, leading to heightened demand for network security. Key concerns include business continuity, availability, and service-level agreements. DCaaS providers like Rackspace Technology and cloud giants such as Google Cloud offer solutions. IT executives grapple with attack surfaces from malware and the need to secure on-premises infrastructure. Social media, retail industry digital services, online customer experiences, e-commerce, and mobile shopping apps create vast transaction histories, necessitating robust security and retail colocation. Cashier and sensor data add to the complexity.
The market is experiencing significant growth due to the increasing adoption of advanced technologies such as Artificial Intelligence (AI), Internet of Things (IoT) devices, and automation in various industries, including healthcare and pharmaceuticals, enterprises, and IT services. This expansion is driving the need for secure and efficient data management solutions, leading to an increased demand for colocation and managed hosting services. Cybersecurity is a critical concern for businesses, particularly those with distributed teams and hybrid work models. Data security is essential to protect sensitive information, and endpoint security and network monitoring are crucial components of a robust IT security strategy. HIPAA compliance is a significant consideration for healthcare organizations, making operational efficiency and regulatory compliance key differentiators for colocation and managed hosting service providers.
Deployment models, such as private, public, and hybrid, offer enterprises flexibility and scalability in managing their IT infrastructure. Colocation and managed hosting services enable businesses to leverage industry expertise and best practices, providing a competitive edge in terms of customer experiences and client relationships. Overall, the market is expected to continue expanding, driven by the need for secure, efficient, and cost-effective data management solutions.
The rising demand for data center colocation facilities is driving growth in the market. In the digital age, the market have gained significant traction among enterprises, particularly SMEs. These services enable businesses to rent physical infrastructure for their IT equipment, including servers, storage, and network equipment, in a secure and connected environment. Colocation offers numerous benefits, such as reduced capital expenditure on infrastructure, improved connectivity, and operational efficiency. Cloud computing, cybersecurity, data management, and remote work solutions are key drivers of the market. Artificial intelligence, automation, IoT devices, and hybrid work models are also transforming the industry. IT security professionals face increasing cyber threats, including data leakage, necessitating cyber hardening and network monitoring. Pricing pressures and differentiation are critical factors in the market ecosystem.
Customer experiences and client relationships are essential for gaining a competitive edge. Verticals such as IT & telecom, manufacturing, retail & consumer goods, healthcare & life science, energy & utilities, media & entertainment, and others are expanding their use of these services. Operational efficiency, HIPAA compliance, and physical infrastructure are essential considerations for enterprises in the healthcare and pharmaceuticals sector. Overhead cost savings, deployment models, and the metaverse concept are also shaping the industry's expansion. The market is expected to grow rapidly, offering significant opportunities for businesses seeking to enhance their IT infrastructure and digital capabilities.
The emergence of innovative data centers is a primary trend in the market. In the digital age, the demand for data management and processing is escalating due to the proliferation of cloud computing, IoT devices, artificial intelligence, and automation. This trend is particularly evident in the context of the smart revolution, which encompasses smart cities, grids, and homes. Consequently, there is a growing need for hyper-scale-data centers to manage the vast amounts of data being generated. Equinix Inc., among other providers, has announced its entry into the hyper-scale market. These facilities offer colocation and managed hosting services, enabling businesses to deploy their IT infrastructure in a secure and efficient manner.
With the shift to hybrid work models and distributed teams, there is a heightened focus on cybersecurity, network monitoring, and endpoint security. Moreover, the expansion of industries such as IT & telecom, manufacturing, retail & consumer goods, healthcare & life sciences, energy & utilities, media & entertainment, and others is driving the need for operational efficiency and regulatory compliance (e.g., HIPAA). In this competitive landscape, differentiation through superior customer experiences, client relationships, and competitive edge is crucial. Despite the opportunities, there are pricing pressures and cyber threats, including data leakage, that require cyber hardening and robust security measures. The metaverse concept and industry expansion are expected to further fuel market growth. Overall, the ecosystem is evolving to meet the needs of enterprises and verticals, offering overhead cost savings and physical infrastructure solutions.
The capital-intensive nature of the market in focus is a major challenge in the market. In today's digital age, cloud computing has become a game-changer for businesses of all sizes. The adoption of cloud-based services is on the rise due to their flexibility, cost benefits, and ability to scale resources as needed. This shift is particularly significant for Small and Medium Enterprises (SMEs) and start-ups, which can leverage cloud solutions to reduce capital expenditures (CAPEX) and operate more efficiently. Cloud computing offers several advantages, including quick implementation, operational efficiency, and cost savings. It enables remote work solutions, artificial intelligence, automation, and IoT device integration, making it an essential component of hybrid work models.
Cybersecurity is a top priority in the digital era, and cloud providers offer advanced security features, including network monitoring, endpoint security, and IT security professionals. The market is expanding rapidly, with industries such as IT & telecom, manufacturing, retail & consumer goods, healthcare & life sciences, energy & utilities, media & entertainment, and others adopting cloud-based solutions. The metaverse concept is also gaining traction, adding to the industry's growth.
The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Global Market Customer Landscape
The market refers to two distinct yet interconnected solutions in the IT infrastructure market. It involves renting space and power in a third-party data center to house an organization's IT equipment. Managed Hosting Services, on the other hand, offer organizations the use of a service provider's infrastructure and expertise to manage and maintain their IT systems. The market is essential for businesses seeking to optimize their IT operations. Colocation provides businesses with the benefits of reduced capital expenditures, improved reliability, and enhanced services offer businesses the advantages of expert management, increased scalability, and improved performance. The market is experiencing significant growth due to the increasing demand for IT infrastructure solutions that offer flexibility, reliability, and cost savings.
The market is driven by factors such as the growing adoption of cloud computing, the need for business continuity and disaster recovery solutions, and the increasing complexity of IT infrastructure. The providers offer various solutions to cater to different business needs. These solutions include dedicated servers, virtual servers, managed storage, and managed network services. Providers such as IBM, Amazon Web Services, Microsoft Azure, and Google Cloud offer these services to businesses worldwide. In conclusion, they are essential solutions for businesses seeking to optimize their IT operations. The market for these services is experiencing significant growth due to the increasing demand for flexible, reliable, and cost-effective IT infrastructure solutions. Providers offer various solutions to cater to different business needs, making it an exciting and dynamic market to watch.
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Market Scope |
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Report Coverage |
Details |
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Page number |
179 |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 16.82% |
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Market growth 2024-2028 |
USD 236.9 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
14.0 |
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Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
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Performing market contribution |
North America at 47% |
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Key countries |
US, Germany, UK, Japan, and China |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
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 dynamics |
Parent market growth analysis, Market Forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the market forecast period. |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Type
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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