Managed Data Center Services Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The managed data center services market is expected to register a CAGR of 20.5% over the forecast period. According to a recent AFCOM State of the Data Center Industry study, the percentage of respondents with more than 1,000 employees increased by 12 points from the previous year to 54%. Additionally, they observed a fantastic variety of industries in the report from the prior year. Healthcare and pharmaceuticals, education, computer/data processing/IT services, finance/banking/investment, and construction/engineering/architecture are the top five sectors that are represented.

Key Highlights

• Enterprises could move away from physical infrastructure owing to managed data center services, enabling overhead cost savings. The cost of owning a data center is considerable, there are many linked devices on the market, and the metaverse concept is just starting to take off as a major element driving industry expansion. It is also expected that data center services will become more popular because they offer businesses a cheap way to expand their IT operations without having to invest in more hardware.
• The market is expanding due to rising cyber threats and the possibility of data leakage. One of the most popular managed services for data protection is replication. One of the most popular managed services for data protection is replication. Cyber hardening reduces attack surfaces and prevents malware from spreading uniformly. Data center security teams eliminate a whole class of threats by hardening software binaries.
• Business continuity and availability are two of the main data center services issues. Applications used by data centers may become inaccessible if there is a provider or WAN outage. Unexpected downtimes are anticipated to have significant consequences, even though a service-level agreement covers the availability of data center services. Additionally, as data center services are a part of cloud computing, they are susceptible to various online dangers. It is expected that data security and availability would hinder industry expansion.
• The COVID-19 outbreak caused the halting of numerous operations in numerous industries and the construction of multiple data centers. Due to social conventions favoring social distance and corporate work-from-home cultures, this had little to no effect on the DCaaS industry. Due to increasing data volumes, numerous businesses were forced to move their entire IT infrastructure to the cloud due to the pandemic outbreak. Many businesses are likely to choose data centers as a service because they have far greater volume and data handling capacity than on-premises data centers.
• A poll of more than 1,400 IT executives in the previous year by Rackspace Technology and Google Cloud found that 51% of them said their infrastructure is currently in the cloud, and 49% said they have plans to move workloads from on-premises infrastructure to the cloud. Additionally, the epidemic raised worldwide data volumes by encouraging more people to use social media and other digital tools. The popularity of data centers as a service is projected to be fueled by the growing shift toward cloud computing. So, the COVID-19 outbreak was good for the market. During the pandemic, the market grew, and this is expected to continue for the rest of the forecasted period.

Managed Data Center Services Market Trends

Retail Industry to Dominate the Market

• In the modern world, data centers are essential elements of retail operations since they provide digital services and online customer experiences. When interacting with brands, whether online or in a physical store, consumers now demand a highly tailored and pertinent experience. A lot of data and information are needed to customize a campaign or experience to meet the needs of specific customers.
• E-commerce and online retail are essentially an extension of traditional and physical shopping. Numerous businesses only operate online and digitally, with eBay and Amazon being the two most prominent players. Now that consumers are utilizing smartphones more frequently for in-store comparison shopping, large brick-and-mortar retailers are placing a lot of emphasis on their online experiences and rolling out more mobile shopping apps.
• Personalizing the shopping experience means customers' transaction history is recorded so that the retailer can provide recommendations. Due to the increasing number of shoppers, robust data centers have become mandatory.
• A major area of concentration for implementing new technologies has emerged in retail. With its Amazon Go concept store, which lets customers take items and walk out without a cashier, Amazon has transitioned from an online retailer to a physical store. Sensors on the merchandise and the shopper's mobile app are used to track transactions. The more contemporary or cutting-edge solutions are in addition to some of the usual data center uses in retail that many companies are just beginning to experiment with. Innovative digital signage, like that based on Magic Mirror AR technology, is a prime example.

Asia-Pacific to Witness the Highest Growth

• The expansion of data centers to handle enormous data volumes can be attributed to it. Additionally, the region's growing use of digital services and wide telecom network are anticipated to support market expansion. In addition, the region's expanding startup and SME population is expected to accelerate the use of data center services. Asia-Pacific is seeing a rise in the amount of data made by digital products and services. This is because the region's population is growing and e-commerce is on the rise.
• There are two significant data center marketplaces in the Asia Pacific region: those that cater to local demand, like those in Hong Kong and Singapore, and those that cater to domestic demand, like those in Tokyo, Shanghai, and Australia. Indonesia and India are interesting Tier II markets because their populations are growing quickly and they need more data center space.
• The market for data centers in Sydney is also still expanding. Despite its remote location, Australia has a strong demand due to its highly digitalized populace. The world's highest cloud use is found in Australia. In Australia, there are numerous international corporations.
• India is home to the second-largest and one of the youngest populations in the world. They must deal with a massive data surge. Many people own multiple cell phones. India only has 252 MW of data center power, but this number will rise dramatically. In India, particularly in Mumbai, there are a lot of buildings for large data centers.
• Cloud technology is slowly gaining momentum in Asia-Pacific. Thus, the demand for managed services is increasing due to speed and agility. It will give a boost to cloud-based deployments.
• Regulators play a crucial role in enabling - or impeding - the growth of managed data center services. While some APAC regulators are clarifying outsourcing rules and guidelines to help firms achieve compliance, regulatory restrictions and cloud adoption blockers still exist.

Managed Data Center Services Market Competitor Analysis

The market for managed data center services is fragmented, with the majority of the giants providing services like data center management and enterprise network services, resulting in business continuity. Some major players in the market are Fujitsu Ltd., Cisco Systems Inc., Dell EMC, and IBM Corporation. New companies are also entering the market as the entry barrier is quite low.

In November 2022, in an era of growing connectedness and unpredictability, Fujitsu Limited announced plans to establish a new center for research and development in Tel Aviv, expediting the hiring of top personnel to drive innovation in data and security.

In October 2022, Cisco, a US-based global provider of technology services and telecom equipment, said it would invest in a dedicated data center in India for WebEx, its suite of services for remote conferencing, file sharing, and call center operations.

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