Data Center Outsourcing Market Report Scope & Overview:

The Data Center Outsourcing Market size was valued at USD 141.8 billion in 2024 and is expected to reach USD 219.3 billion by 2032, growing at a CAGR of 5.60% during 2025-2032.

Data Center Outsourcing Market growth is driven by the increasing focus of organizations towards the core competencies, reduction of operational costs, and adoption of cloud-based infrastructure. The increasing need for scalable IT infrastructure and managed services is one of the major growth-driving factors. The other factors that increase the market growth include enhanced security, compliance, and disaster recovery.  The Data Center Outsourcing market analysis presents banking, healthcare, and retail as the top adopting sectors owing to the requirements of data efficiency and continuity. The data center outsourcing market trend also encompasses hybrid cloud integration and automation for seamless operations. The growth of the market in the future can be mainly attributed to the increase in the digital transformation across the industries, as the proliferation of IT over the past decade and the upcoming decade would only aid the market, driving a global shift towards agile, economical IT infrastructures.

U.S. Data Center Outsourcing Market Overview USD 44.8 billion in 2024, increasing to USD 68.0 billionby2032 at CAGR of 5.36% Some of the key factors driving the growth of the artificial intelligence infrastructure market include the increasing adoption of AI and machine learning, growing need for scalable IT infrastructure, and rising demand for improved data security and compliance. The growth in the cloud market is also aided due to increasing usage of hybrid cloud solutions and focus on low-cost, flexible delivery of IT services.

Market Dynamics

Drivers:

• Rising Operational Expenses and Demand for Flexibility Cause Businesses to Outsource for Efficient and Scalable Data Management.

However, organizations are now choosing data center outsourcing to lower capital expenditure and operational costs. As they have hardware, staffing, energy, and security demands, maintaining an in-house data center is no hydroponic garden, and you will be charged accordingly. Scalable solutions: Outsourcing provides scalable solutions that can expand as needed and do not require large upfront investments. Providers also provide cloud, automation, and cybersecurity services, capabilities that would be prohibitively costly to take on in-house. By catering to cost efficiency along with flexibility and access to state-of-the-art technology, outsourcing becomes alluring for enterprises regardless of the industry they serve. In addition, the trend toward digital transformation and hybrid cloud environments will further accelerate the demand for outsourced data center services.

For instance, businesses can achieve up to 60% in operational cost savings through outsourcing strategies.

Restraint:

• Fear of Breaches and Compliance Violations Prevents Organizations from Fully Embracing Outsourced Data Center Solutions.

While this is beneficial, the downside to data center outsourcing is data privacy, sovereignty, and compliance. The biggest concern of businesses when it comes to outsourcing critical operations is that of data being compromised, loss of control, or a third party mismanaging something. With heavy compliance mandates like HIPAA, GDPR, and CCPA, organizations cannot blindly trust external vendors without guarantees of compliance. Failure to comply can lead to expensive fines and damage to your reputation. In addition, certain sectors, like finance and healthcare,  handle some of the most sensitive data, meaning that they will need strong encryption, audit trails, and continuous monitoring, which not all outsourcing providers are able to offer at scale.

In 2024, 61% of organizations reported that security and compliance issues were primary obstacles in their cloud adoption strategies. 

Opportunity:

• Automation and Predictive Analytics Enhance Performance, Driving Increased Adoption of Outsourced Data Center Services.

While AI and automation are advancing, they are also now key enablers that can immensely improve the long-term landscape of the data center. Outsourcing companies are employing AI-powered predictive maintenance, resource optimization, anomaly detection, etc. It enables enhanced efficiency, lesser downtime, and decreased operational costs for the clients. AI also facilitates more dynamic and resilient IT landscapes by allowing for intelligent workload management, capacity planning , and automated issue resolution. For clients, this means a better level of service and less manual handling time. With enterprises embracing close-knit workforces and data-driven organisations, AI-augmented services will give a competitive edge to service providers in the outsourcing arena.

For instance, AI-driven automation can reduce equipment downtime by up to 45%, boost server utilization rates by 25%, and improve data processing speeds by 40%. 

Challenges:

• Dependence on Single Providers Causes Difficulty in Migration and Limits Customization of IT Services.

One of the most significant hurdles in data center outsourcing is vendor lock-in; that is, clients become overly dependent on one vendor for their technological infrastructure, tools, and processes. As such, it becomes challenging and expensive to switch vendors and high risk to the company since there is always a chance of data migration problems, service disruption, and contract limitations that hinder movement from one platform to another. Moreover, for some businesses with unique workflows or compliance needs, most of the standard outsourcing solutions may not provide the required flexibility. This inflexibility stifles innovation and delays digital transformation. However, firms can alleviate this problem by negotiating clear SLAs, guaranteeing data accessibility, and working with vendors providing modular and interoperable solutions that are more closely aligned with changing business needs.

Segmentation Analysis:

By Service

The managed hosting services segment dominated the data center outsourcing market and accounted for a significant revenue share in 2024, due to growing enterprise demand for reliable, scalable, and fully managed Infrastructure Services. Outsourcing is also preferred by businesses as they want to avoid annoying their internal IT, even while ensuring that they stay compliant and perform well. This segment is set to maintain its lead with greater adoption of hybrid IT models and higher digital workloads, especially in the case of SMEs and industries that prefer cost-effective solutions.

The security management services are expected to register the fastest CAGR during the forecast period, due to rising cyber threats, stringent data regulations, and the rise in demand for cloud. Enterprises want to safeguard against risk, maintain compliance, and respond to incidents without artificially inflating internal expenses. Over the next decade, it aims for this segment to grow substantially, as AI-based threat detection and zero-trust security models become mainstream in outsourced environments by 2032.

By Deployment

The on-premises deployment segment dominated the market and accounted for 68% of the data center outsourcing market share in 2024. Legacy systems, tight compliance requirements higher control over the data landscape, particularly in finance, healthcare, and government sectors. Organizations with critical security needs still opt for on-premises infrastructure. For mission-critical workloads, still a lot of large organizations maintain on-prem data centers to run workloads with slower growth still to large organizations and are still investing in modernization and hybrid integration.

The cloud segment is expected to witness the fastest growth rate owing to high scalability, affordability, and rapid digital transformation. Many businesses are moving towards the cloud to take advantage of these benefits, like scalable infrastructure, disaster recovery, and accessibility anywhere in the globe. This segment is expected to witness exponential growth across all key industries till 2032 as cloud-native applications, AI integration, and multi-cloud strategies advance.

By Enterprise Size

The large enterprise segment leads the data center outsourcing market and helds a revenue share of more than 75% of revenue share in 2024, as large enterprises operate the largest and most complex IT infrastructures, have a higher outsourcing budget, and require more complex data, making this segment lucrative. A tire that prioritizes ultimate performance, compliance, and global scale, usually in partnership with a leading provider. Large enterprises will continue to drive demand for data center outsourcing, with increased investment in hybrid models, AI integration, and data security.

Small and Medium-sized Enterprises are anticipated to grow at the fastest CAGR, owing to the rising number of SMEs outsourcing to minimize capital expenditure and gain access to enterprise-grade infrastructure. The dawning of affordable cloud, easy-to-hire managed services,  and horizontal scalability has created the right time for the SME transition to outsourced data centers. Above all,  the growth in the future bigger because of the digitalization trends, remote working employee models, and IT agility.

By End-Use

The IT sector dominated the data center outsourcing market and accounted for a significant revenue share in 2024,  due to its high dependency on data processing, cloud computing, and digital services. Outsourcing is a consistent investment of enterprises for better scalability, security, and innovation. As IT consists of the largest consumer of outsourced data center services in the world, sustainable demand is expected due to the penetrating adoption of AI, big data, and hybrid cloud solutions.

Telecom will have the fastest CAGR during the forecast period as 5G networks are implemented and data traffic volume rises. By outsourcing critical areas of operation, telecom operators are better positioned to meet the crippling demands placed on their infrastructures while simultaneously providing a more reliable network experience. In addition, the adoption of edge computing and growing IoT push will support the telecom segment to be a significant part of future growth in data center outsourcing.

Regional Analysis:

North America dominated the data center outsourcing market and accounted for 40% of revenue share in 2024, attributed to its advanced IT infrastructure, early adoption of cloud technologies, and the presence of several leading data center providers in this region. Data Center Outsourcing, High demand from sectors such as BFSI, healthcare, IT services, and outsourcing is complemented by stringent regulatory compliance as well as innovation in AI and automation, thus maintaining its leadership position.

Rapid digitalization, increasing penetration for the internet, and growing adoption of cloud across both SMEs and large enterprises will drive the fastest CAGR for Asia Pacific in the forecast period. The strong market growth until 2032 supported by government initiatives, increasing IT infrastructure investments, and demand in telecom and e-commerce sectors will help the region emerge as a future hot spot.

China leads the Asia Pacific data center outsourcing space owing to its large digital economy, robust government support, and quick acceptance of cloud technology. Tech giants, smart city projects, and 5G expansion are driving demand. A larger IT outsourcing and infrastructure investment growth will drive the market to grow even more.

Europe is expanding its market thanks to strict data regulations (such as the GDPR), growing use of the cloud, and demand for energy-efficient infrastructure. For enterprises, outsourcing is a means of fulfilling compliance and scaling requirements. The growth will be driven by green data center initiatives and accelerating digital transformation across industries, etc, and the market is expected to continue growing at least until 2032.

The UK dominated the European data center outsourcing market, driven by a well-established tech ecosystem, early cloud adoption, and a robust demand from the financial sector. The additional growth fueled by digital investments post-Brexit and the everlasting trend of hybrid work. With cybersecurity becoming more of an intrinsic part of business strategy and more companies embracing outsourcing in a regulatory-compliant manner, the market is expected to grow gradually.

Key Players

The major data center outsourcing market companies are IBM Corporation, HCL Technologies, Atos SE, Fujitsu Ltd., DXC Technology, NTT Data Corporation, Capgemini SE, TCS (Tata Consultancy Services), Wipro Limited, Cognizant Technology Solutions and others.

Recent Developments

• In February 2025, DXC Technology entered into a strategic agreement with Skanska AB to modernize Skanska’s global IT infrastructure. As part of this collaboration, DXC will manage Skanska’s Azure cloud and on-premises environments, enhance cybersecurity, and deliver modern workplace solutions, aiming to improve operational efficiency and security across Skanska’s operations in Europe and the United States. 

• In April 2025, NTT DATA released its first sustainability report for its data center division, NTT Global Data Centers. The report highlights the company's commitment to achieving Net-Zero emissions by 2030, with initiatives such as achieving 51% renewable energy usage for non-IT load globally and securing 1.7 TWh of renewable energy through Power Purchase Agreements.