Data Center Hosting Services – Procurement Best Practices & Sourcing Strategies

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Data Center Outsourcing Procurement Market Research Global Size

The data center outsourcing market is experiencing a significant expansion, as evidenced by data and investment activity. According to ELINT Market Research’s data center outsourcing procurement market research report, the global sector is expected to scale significantly, with projected sales of $223 billion by 2021-2022. This statistical study shows the size of the industry’s operations and the extent of the demand for outsourced data center services. Strong momentum in the industry is demonstrated by the recent infusion of significant investments, such as Partners Group’s noteworthy $1.22 billion investment to acquire a stake in the EdgeCore Digital Data Center Platform. These calculated expenditures are unmistakable signs of faith in the industry’s bright future and capacity for stable expansion.

The high level of investment in the EdgeCore Digital Data Centre Platform by Partners Group indicates the increased attractiveness of data center outsourcing. It has been well-calculated and aligns with international initiatives on the digital transformation trajectory and the fast-rising demand for digital infrastructure. The measured demand factor, of course, will usually lie with the fact that these reliable and adequately functioning data center services are put up for grabs by those business organizations putting greater emphasis on digitization. The data center outsourcing market size estimations and the heavy investments by the global players are expected to prevail with the opportunities for further development and innovation. ELINT, one of the leading procurement intelligence companies, provides insights into leading companies covering profitable business strategies.

Market Definition

Data center outsourcing has become vital for companies looking to maximize operational and financial efficiency. Businesses in today’s fast-paced digital economy depend increasingly on outside data centers to manage their IT infrastructure and storage requirements. By contracting out data center services, companies can avoid the headache of managing their infrastructure and benefit from cutting-edge facilities, cutting-edge security measures, and round-the-clock technical help.

Data Center Outsourcing Procurement Market Drivers

1. Efficient Digital Transformation: The constant push for digitalization across the economy drives the demand for managed data centers. Businesses want their outsourcing partners to provide them with scalable and effective data management solutions as their online presence grows.

2. Emphasis on Core Competencies: Companies are choosing to outsource data center operations to concentrate on their core skills. Organizations may improve their competitiveness and agility by outsourcing data management to specialized service providers and allocating resources to creative and strategic projects.

Data Center Outsourcing Procurement Market Challenges

1. Data Security Issues: Data security continues to be a top priority for data center outsourcing due to the increase in cyber attacks and strict regulations. Businesses must implement strong security measures and follow industry standards because they risk data breaches and compliance issues.

2. Integration Complexity: The principal challenge might be the complexity of the integration. IT applications and infrastructure should be well integrated with outsourced data center services. Poor planning and execution may raise the chances of bringing about compatibility problems, barriers to data transfer, and interoperability issues.

Data Center Outsourcing Procurement Market Opportunities

1. Adoption of Managed Services: Businesses have noted the benefits of managed services adoption, especially those that outsource data centers. Wholesome managed services that embrace observation and enhancement could help providers increase their offerings through increased customer satisfaction.

2. Hybrid Cloud Solutions: Such a hybrid cloud environment, familiar to most enterprises, will help one realize great hope for the companies involved in data center outsourcing to offer solutions, including the integrated on-premises infrastructure and public and private service.

Data Center Outsourcing Procurement Market Segmentation

1. Service Type: According to service type, the data center outsourcing procurement market research report classifies the market into Infrastructure Services, Managed Services, and Professional Services.

2. Organization Size: Based on organization size, the data center outsourcing procurement intelligence market research report divides the market into Large Enterprises and Small and Medium Enterprises (SMEs).

3. Vertical: As per vertical, the data center outsourcing procurement market research report segments the market into IT and Telecom, BFSI, Healthcare, Retail, Manufacturing, and Government and Public Sector.

4. End User: According to the end user, the data center outsourcing market research report divides the market into Enterprises, Government Organizations, Telecommunication Providers, and Healthcare Institutions.

5. Deployment Model: As per the deployment model, the data center market research report classifies the market into Public, Private, and Hybrid Cloud.

Regional Outlook of the Data Center Outsourcing Procurement Market

Different regions have different maturity levels, according to the data center outsourcing market’s regional perspective. The maturity of outsourcing markets for data centers, like Europe and North America, runs a course in most cases alongside establishing a perfect ecosystem with proper infrastructure and technology. In addition, there is an increasing need to deploy solutions that provide practical and scalable data management. The established businesses will improve the diversity in market dynamics and foster a friendly climate amidst competitors for innovation and opportunities for development.

Meanwhile, the data center outsourcing market is experiencing an incredible stage of maturity and expansion in medium-market maturity locations like Latin America (LATAM) and Asia Pacific (APAC). With the advancing technology and the significant tendencies in cloud computing, the digital world has enormous economic potential and potential for communication development. Moreover, the demand for outsourcing data centers is increasing in the APAC and LATAM markets, as more companies now prefer focusing on their core technical competencies and are pushed toward data storage and management solutions. Today’s market players have lucrative opportunities to profit from new trends and adjust to the changing needs of consumers.

Cost Component in the Data Center Outsourcing Procurement Market

Businesses wanting to outsource data centers and maximize their budgets must know the associated expenses. The most significant expenses, about 65%, are power and building rent. It highlights the importance of using resources wisely and making thoughtful decisions when selecting data center vendors offering these components at competitive pricing.

KPIs in the Data Center Outsourcing Procurement Market

A navigational tool for assessing the efficacy and efficiency of outsourced data centers is the Key Performance Indicator (KPI). Key performance indicators in this domain include failure prediction capabilities, device availability, proactive server monitoring, and supplier response times based on issue severity. The above signals guarantee smooth operations, prompt problem-solving, and proactive steps to minimize delays.

Contract Period in the Data Center Outsourcing Procurement Market

Data center outsourcing agreements function primarily according to the length of the contract. 3 to 4-year short-term contracts are standard in this industry. As technology advances, businesses can remain adaptable in vendor selection, service optimization, and response to shifting consumer needs.

Engagement Strategies in the Data Center Outsourcing Procurement Market

Engagement strategies for data center outsourcing include crucial decisions about partner models and vendor selection. In sum, specific company needs and being oriented toward strategic objectives make the tolerance of risk situations susceptible and, hence, require an in-depth analysis of the associated benefits and drawbacks of vendor engagement strategies.

Pricing Models in the Data Center Outsourcing Procurement Market

Data center outsourcing contracts are based mainly on several unique pricing methodologies that provide a range of client interests and needs as far as costing is concerned. Most clients agree on either price per square foot, power use per rack, a la carte pricing, or pricing based on SLAs (Service Level Agreements). Service customization, cost predictability, and performance goal alignment are unique and specific to each model.

Negotiation Factors in the Data Center Outsourcing Procurement Market

Significant components of any negotiation have huge impacts on the terms and even the scope of agreements for data center outsourcing. The factors that typically necessitate a balance in nature include types of servers, power requirements, utility pricing, and tier classification. Through this balanced nature, assurance is raised that the most suitable resources are put in place and, at the same time, less risky and cost-effective for data center outsourcing.

Leading Players in the Data Center Outsourcing Procurement Market

Major companies within the dynamic value chain marked by data center outsourcing are witnessing higher growth. They are developing unique, highly tailored solutions that meet complex business criteria in the corporate world. Leading companies include Digi Realty Trust, CloudSigma, BMC Software, Equinix, Lumen Technologies, and Cyxtera Technologies, among many others.