-- While the outsourcing model remains popular, service providers face cultural, language and regulatory barriers
LONDON, July 21, 2014 /PRNewswire/ -- The cost advantage of outsourcing as well the growth in cloud, machine-to-machine connectivity and content-heavy applications is lending momentum to the European data centre services market. As companies look for ways to process an escalating amount of data without the hassle of managing an in-house data centre, the uptake of data centre services will continue to rise. In fact, the market is expected to see a compound annual growth rate of 16 per cent up to 2018 despite several restraints. The United Kingdom, Germany, France and Benelux will be the largest markets in the region.
New analysis from Frost & Sullivan, European Data Centre Services Market, which covers the retail colocation and managed hosting segments, finds that retail colocation will witness lower growth rates than managed hosting due to its market maturity. The retail colocation segment generated revenues of $2.83 billion in 2013 and is estimated to reach $5.27 billion in 2018; managed hosting revenues will increase from $2.01 billion to $4.90 billion over the same period.
"The pressing need to focus internal resources on innovative IT tasks and capitalise on economical IT management services compel enterprises to turn to managed hosting providers for data centre services," says Frost & Sullivan Information and Communication Technologies Research Analyst Shuba Ramkumar. "The growth of cloud services will also drive the colocation services market in the short term."
In the long term, however, increasing efficiency and security of the cloud will challenge the growth of the retail colocation market.
In addition, organisations across Europe are bound by regional data laws that complicate decisions with respect to availing outsourcing services. The location of data centres, therefore, becomes an important consideration for users when choosing a provider. The regional nature of European organisations also means that many of them are wary of foreign companies and prefer local providers. These cultural and language barriers are especially strong in countries such as France, Spain, and Italy.
"In order to widen their customer base across Europe, it is important for providers to offer services from a data centre located within a region," advises Ramkumar. "At the same time, they must provide efficient IT support as well as ensure data confidentiality and security to win the trust of potential customers."
Due to the need to implement different infrastructure frameworks based on application type, enterprises will use traditional data centre services alongside the adoption of cloud services. As a result, the European data centre services market is focussing on more hybrid data centre services that combine colocation, managed hosting and cloud solutions.
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SOURCE Frost & Sullivan