Market Research Future - Industry Analysis Report, Business Consulting and Research

The data center co-location market is expected to reach $120.62 billion by 2028, spurred by the shift towards colocation data centers by several companies and cloud service providers to significantly lower their IT infrastructural expenses. North America is the largest adopter of co-location services. In addition, Japan, China, and India would be leading countries in terms of number of data centers, driven by demand in IT, BFSI, telecom and social media sectors.

Segmentation Overview: Data Center Hosting Services

data-center-hosting-services

Data Center Hosting Services Market Outlook

The global data center outsourcing market is expected to grow at a moderate pace and reach $320.65 billion by 2028, mainly driven by growth in priority towards shared infrastructural services across enterprises. Data center colocation remains the top adopted segment in market. The growing demand toward infrastructure as a service (IaaS) in enterprises will reduce cost and improve productivity, acting as the primary factor for market growth. The market growth is also driven by a rapid increase in virtualized infrastructure and cloud computing. Changing business needs, increasing complexities of network architectures and fluctuating bandwidth are the potential challenges faced by end-users.

The growing focus for reducing IT operational and infrastructural expenses embolden enterprises to move toward cloud computing that is expected to predominantly to drive the data center colocation market.

When a customer leases a part of the data center, it is called retail colocation. It is generally preferred when organizations have limited IT budgets, limited space and time, low future scalability, low data volume to be stored, no capabilities to afford a data center and limited IT expertise to maintain them. The segment’s development may be attributable to the multiple advantages, such as managed services, which results in cheaper data center maintenance costs and high data security, among others.

When a buyer leases out a fully-built data center with the necessary hardware, it is called wholesale colocation. Generally preferred when organizations have limited IT budgets, but need more space, require at least one megawatt of power capacity, need to meet stringent regulatory standards, high future scalability and enhanced customization. Wholesale colocation is predicted to increase significant in the future, as it enables enterprises to install hundreds of servers at one location.

Data Center Hosting Services Best Practices

Fortune 500 organizations practice an optimum ratio of in-house vs. outsourcing while managing their data center. With co-located hosting prices falling gradually, organizations have started to outsource data center services more when compared to managing them in-house.

Cost reduction: Due to high economies of scale, vendors provide infrastructure services at a highly competitive rate, thereby reducing expenditure by 30–40 percent.

Moving from capital to operational expenditure: Through pricing models like pay as you go, organizations could group these expenses as operational.

Reduced refresh cycle complexities: Outsourcing helps organizations to get rid of evaluation planning, implementation and disposal of legacy equipment.

Dual vendor engagement is usually preferred by companies in order to reduce dependency on a single vendor. Ideally, companies engage with one vendor for their core data center operations and engage with another vendor for disaster recovery operations. Dual-vendor strategy helps to maintain a competitive environment, promotes innovation, ensures better negotiation power and avoids being locked in with one vendor in terms of high mark up and slow innovation.

Organizations prefer to engage with global vendors for data center services due to their brand value and wide geographic reach. Enterprises can also engage with local vendors, when in close proximity to the target client base or global vendors do not have capabilities to comply with local regulations, lack regional support, etc. In some scenarios, global vendors also set up onshore delivery centers or establish a local presence by partnering with local suppliers.

The space cost components will include space occupied by customer, security, building operations, fire protection equipment, cooling infrastructure, UPS and 24/7 access. Power usage charges are based on a meter and calculated based on per KW consumed. Apart from this, the pricing model will also be dependent on type of technology services used, internet connectivity, the type of co-location connect fiber required, per head charges for on-site and in-house employees working on outsourcing services, etc.

Data Center Hosting Services SLA

Server Management (Operating system patching, server firmware patching, anti-virus management, security management): The supplier should provide operational support, patch updates and system administration tasks and duties for the server environment to maintain server service availability on a 24/7/365 basis.

Infrastructure Monitoring (Proactive and reactive monitoring of server infrastructure): The supplier should provide monitoring services on a 24/7/365 basis and respond to alerts on a customer service level basis (i.e., defer response until 8 am, if the customer only has a 10/5/52 agreed service level).

Reporting (Storage availability and performance report, network device availability report): The supplier should be able to provide reports on a monthly basis in a presentable format (forecasted for minimum of 3–4 months).

Data Center Hosting Services Sustainability Initiatives

Energy: Colocation data centers are attempting to reduce power waste by using energy-efficient power infrastructure, transitioning to free cooling technologies, increasing server utilization via virtualization, and eliminating comatose servers from their facilities. Increasing rack power density has made the industry look for creative and adaptable rack designs with hot aisle containment systems and multiple electrical supplies.

Carbon Emissions: The growing power consumption of data centers and the need to reduce their carbon footprint have pushed several data center service providers to invest in clean, renewable energy sources to power their existing and future facilities. On-site power generation using renewable energy is projected to enhance physical security needs and attention on data center architecture.

Regional Market Insights

North America constitutes to about 45 to 50 percent of the global co-location market. EMEA constitutes to about 22 percent of the global co-location market. The business constraints on IT budgets and increased adoption of cloud services drive for a steady growth of the co-location market

The APAC is the fastest growing co-location market. It constitutes to about 30–35 percent of the global co-location facility distribution. The economic growth rate of developing countries is expected to increase enterprise co-location demand in the APAC region.

Supplier Intelligence

The supplier intelligence provides insights on key global and regional players such as Equinix, Digital Realty Trust, Lumen Technologies, Rackspace, Verizon, IBM, FIS Global, NTT Communications.

Vendors are differentiating themselves in the market by providing add-on services, such as simplified integration and also offering a broad portfolio of integrated data center solution for buyers, for example, service providers offering tenants with a range of insight, reporting, and local management capabilities through services, such as data center infrastructure management.

1. Executive Summary

1.1. Global Data Center Outsourcing – Market Outlook

1.2. MRFR’s Recommendations

1.3. Category Opportunities & Risks

1.4. Negotiation Levers

1.5. Impact of COVID-19 Section

1.6. Talking Points: PP

2. Global Market Analysis

2.1. Global Data Center Outsourcing Market Estimates & Forecast

2.2. Global Data Center Co-location Market

2.3. Market Trends

2.4. Drivers and Constraints

2.5. Regional Market Analysis

2.5.1. United States

2.5.2. Europe

2.5.3. APAC

3. market monitoring insights

3.1. Pricing Methodologies

3.2. Cost Analysis

3.3. Cost Drivers

4. TOTAL COST OF OWNERSHIP

4.1. Evaluation Framework Structure

4.2. Owning Versus Outsourcing – TCO Analysis

4.3. Case Study

4.4. Porter’s Five Forces

5. Software Defined DATA Center

5.1. Category Definition

5.2. SDDC Components

5.3. Key Drivers

5.4. Adoption Roadmap

5.5. Implementation Best Practices

5.6. Barriers

6. PROCUREMENT BEST PRACTICES AND PRICING ANALYSIS

6.1. In-house versus Managed Hosting Services

6.2. Risk Benefit Analysis

6.3. Enterprise Best Practices

7. SLAs AND KPIS

7.1. SLAs

7.2. KPIs

7.3. Contract Pointers

8. IMPACT OF REGULATIONS ON DATA CENTER

8.1. Impact of Data Sovereign Laws on Data Center

8.2. List of Data Sovereignty Laws across Countries

8.3. Data Center IT Regulations

8.4. Environmental Regulations Impacting Data Centers

9. PURCHASING PROCESS: RFP/RFI BUILDER

10. SUSTAINABILITY INITIATIVES

10.1. Sustainability Initiatives

10.2. Sustainability Best Practices

11. SUPPLIER SECTION

11.1. Supply Market Outlook

11.2. Key Global Hosting Suppliers

11.3. Key Global Supplier Profiles and SWOT

12. COVID-19 AND AFTERMATH

12.1. Category Summary – COVID-19 Impact

12.2. Impact of COVID-19