Data Center Colocation Market Growing Demand for Secure and Scalable IT Infrastructure Drives Growth 2028

Increasing data traffic and demand for efficient data management are among the significant factors influencing the market growth.

The global data center colocation market is expected to reach USD 120.54 Billion by 2028, according to a new report by Reports and Data. Datacenter colocation provides two major advantages, namely scalability and improved operational efficiency. It lets enterprises to better allot their budgets to activities that are crucial to the functioning of their core business, while still having the option for improvement when the need for upgradation arises. For instance, 365 Data Centers provides right-sized colocation facilities in 10 key cities all over the U.S. This offers small and medium-sized data colocation options that local presence, yet can be accessed nationally through all leading carriers.

Renting space in a data center colocation facility enables organizations to keep complete control over IT hardware without the concern associated with incurring high cost storing, powering, securing, and cooling the servers in house. The benefits provided by the colocation providers to scale up the storage capacity while cutting down on maintenance and security costs is offering businesses especially, small & medium-sized enterprises substantial advantage enabling them to concentrate their efforts on achieving core business goals.

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  1. Control over IT hardware: By colocating their IT equipment in a data center facility, organizations retain complete control over their hardware. They can choose and manage their own servers, storage devices, networking equipment, and other infrastructure components.
  2. Cost savings: Housing and maintaining an on-premises data center can be expensive for organizations, particularly for small and medium-sized enterprises (SMEs). Colocation facilities provide a cost-effective solution by eliminating the need for organizations to invest in building and maintaining their own data centers. Instead, they can utilize the infrastructure provided by the colocation provider and share costs with other tenants.
  3. Scalability: Data center colocation facilities offer the flexibility to scale up or down IT infrastructure as needed. Organizations can easily add or remove servers, storage, and networking equipment based on their changing requirements. This scalability allows businesses to adapt to growth or seasonal demands without the need for significant upfront investments or long-term commitments.
  4. Maintenance and security: Colocation providers typically offer robust maintenance and security services, including power backup systems, cooling infrastructure, physical security measures, fire suppression systems, and 24/7 monitoring. These services ensure the uptime, reliability, and security of the colocated equipment, relieving organizations of the burden of managing these aspects themselves.
  5. Focus on core business goals: By outsourcing data center operations to a colocation facility, organizations can free up their IT staff’s time and resources. This allows them to concentrate on strategic initiatives and core business goals rather than spending time on day-to-day data center management tasks.

Top Companies Operating in the Global Data Center Colocation Market:

IBM Corporation, NTT Communications, Fujitsu Ltd., SoftBank Group Corporation, KT Corporation, British Telecommunications PLC, China Telecom Corporation Ltd., Tata communications, Terremark Worldwide Inc., and AT&T Inc., among others.

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The global market is further segmented into type and application:

Type Outlook (Revenue, USD Million; 2018-2028)

  • Retail Colocation
  • Wholesale Colocation

Organization Size Outlook (Revenue, USD Million; 2018-2028)

  • Small & Medium-Sized Enterprises
  • Large Enterprises

Industry Vertical Outlook (Revenue, USD Million; 2018-2028)

  • BFSI
  • Manufacturing
  • IT & Telecom
  • Energy
  • Government
  • Healthcare
  • Media & Entertainment
  • Others

Regional analysis provides insights into key trends and demands in each major country that can affect market growth in the region.

  • North America (U.S., Canada, Mexico)
  • Europe (Germany, U.K., Italy, France, BENELUX, Rest of Europe)
  • Asia Pacific (China, India, Japan, South Korea, Rest of APAC)
  • Latin America (Brazil, Rest of LATAM)
  • Middle East & Africa (Saudi Arabia, U.A.E., South Africa, Rest of MEA)

Further key findings from the report suggest

  • By type, retail colocation contributed to the largest market share in 2018 and is likely to grow at a rate of 12.7% in the forecast period. The market dominance of this segment is owing to the fact that retail colocation providers can accommodate enormous footprints while providing on-site staff, managed services, and carrier and cloud connectivity.
  • By organization size, large enterprises dominated the market in 2018 and is expected to grow at a rate of 12.4% in the forecast period. Reductions in OPEX and the ability to emphasize IT capabilities on core business, by data center colocation allows large organizations to maximize the potential within their companies.
  • By industry vertical, the healthcare sector is forecasted to witness the fastest CAGR of 13.7% in the forecast period. Increasing digital innovations and technological advancements are augmenting the growth of data in the healthcare industry. Several healthcare departments are gathering data from clinical trials and several outpatient records to analyze and derive meaningful insights from the collected data.
  • The market in the North America region held the largest market share in 2018 and is estimated to grow at a rate of 12.6% in the forecast period. The increasing demand from the end-user industries, as well as rapid increase in data traffic, are the factors causative of the growth of the market in the region.

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