Rising Information Technology Complexity and Costs Trigger Demand for Latin American Data Center Services
Data Center providers will have to offer managed services to combat commoditization and price erosion, finds Frost & Sullivan's Digital Transformation team
SAO PAULO, Jan. 31, 2017 /PRNewswire/ -- As the Latin American data center services market approaches maturity, users are acknowledging the benefits of outsourcing infrastructure management. In response, data center service providers are expanding their existing facilities and building new ones, attracting high investments from private equity firms.
"The need for IT solutions is no longer exclusive to the IT sector," said Frost & Sullivan Digital Transformation Research Analyst Mauricio Chede. "Fields such as marketing, sales and finance are demanding and acquiring IT solutions for their operations, compelling providers to be as consultative as possible to present the best-fit solutions to all departments of the company."
Data Center Services Market in Latin America, Forecast to 2021 is part of Frost & Sullivan's IT Services & Applications Growth Partnership Subscription. The market generated $2.87 billion in 2016 and is likely to touch $4.37 billion in 2021. Dedicated hosting was the most popular service in 2016, accounting for 49.2 percent of the market share, followed by disaster recovery with 21.3 percent, storage with 19.4 percent and colocation with 10.1 percent. Although colocation services suffered due to commoditization and low margins, several providers have been focusing their strategy on offering it as cloud companies that do not have local infrastructure tend to rent space in a datacenter.
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Due to higher competition and client expectations, simply delivering an efficient data center service is no longer adequate. Service providers are offering value-added services such as cloud computing managed services to remain competitive, stave off commoditization, and prevent price erosion of more traditional services.
Clients also prefer the flexibility of the pay-as-you-go model enabled by cloud computing. Shared resources allow them to decentralize decision making and facilitate information sharing among dispersed workforces. Similarly, managed services will usher in an era of hybrid models that combine infrastructure with services to best suit client needs.
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Data Center Services Market in Latin America, Forecast to 2021
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