Data Centre Colocation Market Size, Share, Industry, Forecast and outlook (2024-2031)

Global Data Centre Colocation Market is segmented By Type (Retail Data Centre Colocation, Wholesale Data Centre Colocation), By End-User (Banking, Financial Services, and Insurance (BFSI), IT and Telecom, Healthcare, Government and Defence, Others), and By Region (North America, South America, Europe, Asia Pacific, Middle East, and Africa) – Share, Size, Outlook, and Opportunity Analysis, 2024-2031

Data Centre Colocation Market Size

Global Data Centre Colocation Market size reached US$ 39.9 billion in 2022 and is expected to reach US$ 58.8 billion by 2031, growing with a CAGR of 6.3% during the forecast period 2024-2031.

The digital transformation era has led to exponential market growth in data generation across various sectors, including healthcare, finance, retail, and manufacturing. The proliferation of connected devices, the Internet of Things (IoT), and the increasing adoption of cloud computing have further intensified data generation. 

The global data center colocation market has experienced positive market trends in recent years, driven by the increasing need for secure and reliable data storage and management solutions. As organizations across industries rely heavily on digital infrastructure, the market opportunities for data center colocation services has surged.

The retail colocation segment is the fastest growing sector in the type segment with over 1/3rd of the market share. The primary reason behind the fast paced growth is driven by the increasing need for scalable and secure infrastructure to support the expanding digital ecosystem. Similarly, the North America is the largest region in the data center colocation market with over 1/4th market share. The growth and dominance of the respective region is mostly due to increasing demand for scalable and cost-effective data storage solutions.

Data Centre Colocation Market Scope

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Data Centre Colocation Market Dynamics

Rapid Growth in Data Generation and Surging Cloud Adoption

The digital revolution and the widespread adoption of connected devices have led to an exponential increase in data generation. As businesses collect vast amounts of data for various applications such as customer insights, analytics, and AI-driven decision-making, the demand for data storage and processing capabilities has soared. 

Data center colocation providers offer a viable solution by providing businesses with scalable and secure data storage facilities, ensuring seamless access to critical information. According to the U.S. Department of Commerce - Census Bureau, the data center colocation market in U.S. witnessed a 20% increase in revenues in 2021, compared to the previous year.

Similarly, cloud computing has emerged as a game-changer in the IT landscape, offering businesses flexible and cost-effective access to computational resources. The increasing adoption of cloud services has fueled the demand for data center colocation facilities, as businesses seek reliable and well-connected infrastructures to house their cloud servers. 

By colocating their cloud infrastructure in data centers, companies can enhance performance, security, and redundancy, ensuring uninterrupted service availability to their customers. Eurostat reports a substantial increase in cloud adoption across European countries, with an average growth rate of 15% in the utilization of data center colocation services by businesses, from 2020 to 2021.

Scalability and Flexibility in IT Infrastructure and growing Focus on Energy Efficiency and Sustainability

As businesses experience fluctuations in their data storage and processing needs, the ability to scale their IT infrastructure accordingly becomes crucial. For instance, in India, data center colocation adoption increased by 30% in 2021, with businesses acknowledging the advantage of scalable and flexible IT infrastructure offered by colocation providers. 

Data center colocation offers the flexibility to expand or reduce server space and computing power as per the business's requirements. The respective scalability eliminates the need for significant upfront investments in data centers and allows businesses to adapt their IT infrastructure to market demands effectively.

Further, the data center industry consumes substantial energy, leading to environmental concerns and increased operating costs. For instance, the UK government's data shows a significant 40% increase in the adoption of energy-efficient colocation services by businesses in 2021, highlighting the growing emphasis on sustainability in the data center colocation market. 

Data center colocation providers have responded by implementing energy-efficient measures, including advanced cooling systems, renewable energy sources, and waste heat recovery. Businesses are increasingly choosing colocation facilities that align with their sustainability goals, thereby driving the demand for green and eco-friendly data center solutions.

Lack of Data Security, Compliance and Connectivity and Latency Issues

One of the primary concerns in the data center colocation market is the security and compliance of data stored in these facilities. Governments around the world have implemented strict regulations and guidelines to protect sensitive data and ensure privacy. Compliance with data protection laws, such as the General Data Protection Regulation (GDPR) in the European Union, places significant responsibility on data center operators to secure and safeguard customer data. 

Any breach or non-compliance can lead to severe penalties and reputational damage. Data center colocation providers must invest in robust security measures, including physical security, data encryption, and access controls, to address these concerns and meet compliance requirements. Effective data center colocation relies on seamless connectivity and low latency to ensure fast and reliable data transmission. However, connectivity issues and latency can arise due to factors such as network congestion, bandwidth limitations, and geographical distance. 

The respective challenges can impact the overall performance and user experience of data center colocation services. Providers need to invest in robust networking infrastructure, establish strategic partnerships with network carriers, and optimize network routing to mitigate connectivity and latency issues.

Data Centre Colocation Market Segmentation Analysis

The global data centre colocation market is segmented based on type, end-user and region.

Increasing Demand for Scalable IT Infrastructure and Rising Need for Data Security and Compliance

In today's digital age, businesses of all sizes require scalable and reliable IT infrastructure to support their operations and cater to the growing volume of data. SMEs, in particular, face challenges in establishing and maintaining their data centers due to cost constraints and limited resources.

Retail colocation offers a viable solution, allowing SMEs to access enterprise-grade infrastructure and benefit from economies of scale. The respective fact has led to a growing demand for retail colocation services, fueling the growth of this segment in the global data center colocation market.

Moreover, with the increasing frequency and sophistication of cyber threats, data security has become a paramount concern for businesses across industries. Government regulations and industry standards mandate stringent data security and compliance measures, which can be challenging for SMEs to implement independently.

Retail colocation providers offer robust security measures, including physical security, network security, and compliance certifications. By colocating their IT infrastructure in secure facilities, businesses can enhance data security and meet regulatory requirements, driving the adoption of retail colocation services.

Data Centre Colocation Market Geographical Share

Robust Digital Infrastructure and Increasing Data Consumption

The global data center colocation market has witnessed significant growth in recent years, driven by the increasing demand for scalable and cost-effective data storage solutions. North America boasts a robust digital infrastructure, making it an attractive destination for data center colocation services. The region has a mature telecommunications network, advanced connectivity options, and a reliable power supply, creating a favorable environment for hosting data centers.

Additionally, North America has a strong presence of major technology companies and multinational corporations that require high-capacity data storage and processing capabilities. The respective factors contribute to the growth of the data center colocation market in the region.

The exponential growth in data consumption has driven the demand for data center colocation services in North America. Factors such as the proliferation of connected devices, the rise of social media platforms, and the adoption of emerging technologies like artificial intelligence and the Internet of Things (IoT) have contributed to the unprecedented generation of data.

To manage and store this vast amount of data, businesses are turning to data center colocation services. North America, with its large consumer base and tech-savvy population, is a major contributor to the growing data consumption trend.

Data Centre Colocation Market Companies

The major global players in the market include Equinix, Inc., CenturyLink, CyrusOne, China Telecom Corporation Limited, Digital Realty Trust (DuPont Fabros Technology), Telehouse (KDDI), NTT Communications, China Unicom, Global Switch Corporation and Teraco Data Environments.

COVID-19 Impact On Data Centre Colocation Market

COVID Impact

The outbreak of COVID-19 forced businesses to rapidly adopt remote work arrangements to ensure employee safety and maintain business continuity. The sudden shift resulted in a surge in demand for reliable and secure data storage and management solutions.

Data center colocation providers played a critical role in supporting businesses by offering scalable and secure infrastructure to meet the increased demand for remote work capabilities. As a result, the global data center colocation market experienced a significant uptick in demand during the pandemic.

Further, the COVID-19 pandemic accelerated the pace of digital transformation across various industries. As businesses sought to adapt to the changing landscape, they increased their investments in cloud computing, data analytics, and artificial intelligence.

Data center colocation services became a crucial component of these digital transformation initiatives, providing organizations with the necessary infrastructure to store, process, and analyze vast amounts of data. The pandemic acted as a catalyst, driving businesses to expedite their digital transformation plans and rely on data center colocation services to support their evolving IT needs. 

Russia-Ukraine War Impact

The ongoing Russia-Ukraine conflict has had far-reaching implications across various sectors, and the global data center colocation market is no exception. The Russia-Ukraine conflict has led to significant disruptions in the functioning of data centers located in the affected regions.

The conflict has resulted in power outages, internet disruptions, and infrastructure damage, severely impacting the availability and reliability of data center services. Data center operators in these regions are faced with the challenge of maintaining uninterrupted operations and ensuring data security in a volatile environment.

Further, geopolitical conflicts often give rise to heightened security concerns, especially in regions directly affected by the conflict. In the context of data center colocation, these concerns extend to the protection of sensitive and confidential data. The Russia-Ukraine war has increased cybersecurity risks, including the potential for cyberattacks and data breaches targeting data centers in the region. Businesses and organizations relying on data center colocation services in these areas are compelled to reassess their risk management strategies and invest in robust cybersecurity measures to safeguard their valuable data assets.

By Type

• Retail Data Centre Colocation
• Wholesale Data Centre Colocation

By End-User

• Banking, Financial Services, and Insurance (BFSI)
• IT and Telecom
• Healthcare
• Government and Defence
• Others

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Russia
  • Rest of Europe
• South America
  • Brazil
  • Argentina
  • Rest of South America
• Asia-Pacific
  • China
  • India
  • Japan
  • Australia
  • Rest of Asia-Pacific
• Middle East and Africa

Key Developments

• On May 8, 2023 Element Critical, a major interconnection and colocation vendor participated AFCOM annual global gathering hosted in Texas, U.S.
• On March 9, 2023, NTT, a major data colocation vendor announced the launch of three new data centers in India to boosts its presence in data center colocation market.
• On August 8, 2021, ABB partnered with IndoKeppel, a major Indonesian data colocation market player to supply Uninterruptible Power Supply (UPS) PowerWave 33 to the latter’s data center campus in Bogor, Indonesia.

Why Purchase the Report?

• To visualize the global data centre colocation market segmentation based on type, end-user and region, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development. 
• Excel data sheet with numerous data points of data centre colocation market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as excel consisting of key products of all the major players.

The global data centre colocation market report would provide approximately 53 tables, 47 figures and 182 Pages.

Target Audience 2024

• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies