The global data center transformation market size was valued at USD 7.8 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 13.5%% from 2022 to 2030. The continuously increasing adoption of advanced technologies such as big data analytics, cloud computing, and the Internet of Things (IoT) by various organizations as a part of their digital transformation plans is putting a strain on data centers. This, in turn, fuels the demand for data center transformation globally. Additionally,the rising global demand for software-optimized data centers is expected to generate lucrative growth opportunities for the industry.
The COVID-19 pandemic had a positive impact on the data center transformation market. The growth of data centers has been fueled by increasing awareness of the benefits provided by cloud services to deliver highly secure and robust IT infrastructures and rising requirements for establishing local data centers.
A number of enterprises operating in numerous industries that rely on digital infrastructures have increased their requirement for data center services, resulting in a surge in demand for data center network services. As a large number of businesses and educational institutions are becoming online worldwide, it leads to a rise in the need for data centers to ensure required program availability and data security to them.
The process of modifying a data center to improve its overall functionality and performance is known as data center transformation. It is a large-scale change initiative that affects several essential aspects of data center use, such as hardware configurations, users, and business processes.
Growing awareness among organizations related to the consolidation of physical sites in recent years is leading to a rise in demand for the transformation of data centers. According to the Data Center Alliance, approximately 62% of data centers are attempting to consolidate as it reduces the total energy consumption, and reduces the carbon footprint of the organization.
The leading market players are widely investing in the development of cutting-edge data center technologies and the construction of new data centers to deliver cloud services to enterprises and government organizations, among other verticals. For instance, in May 2020, Microsoft Corporation announced a USD 1 billion investment in Poland for the construction of a data center that will offer cloud services to banking firms, and other organizations. As a part of this commitment, Microsoft Corporation entered into a partnership with a domestic cloud service provider, Chmura Krajowa to deliver cloud services throughout Poland and some parts of Central Europe.
Based on services the market is segmented into consolidation, automation, optimization, and infrastructure management services. The consolidation services segment held the maximum revenue share of 36.2% in 2021 and is expected to continue to dominate over the forecast period. The growth of the segment can be attributed to the growing emphasis on reducing high power usage and bandwidth in data centers coupled with the increased demand for disaster recovery and data backup services.
Based on verticals, the market is segmented into BFSI, IT and telecommunications, government and defense, manufacturing, oil and gas, and others. The IT and telecommunication segment accounted for the largest revenue of USD 2,098.7 million in 2021 and is projected to grow at a CAGR of over 12.0% over the forecast period. The increased demand for scalability, quick roll-outs, shorter time to market, and upgrades have resulted in a shift toward transformation in IT and telecom data centers.
The BFSI segment is expected to grow at the highest CAGR of over 14.0% during the forecast period. This can be attributed to the growing adoption of contactless and online payments which are becoming more common in emerging countries.
Based on end-user, the market is segmented into cloud service providers, colocation providers, and enterprises. The cloud service providers segment accounted for the largest revenue share of 46.2% in 2021 and is projected to grow at the highest CAGR of over 13.0% during the forecast period. The growth of this segment can be attributed to the growing awareness of businesses about the benefits of scalability and flexibility by not being limited by the constraints imposed by on-premises servers and the dependability of several data centers with multiple redundancies.
The colocation providers segment is likely at the highest CAGR of 14.2%, over the forecast period. The growing adoption of data centers among smaller businesses with limited IT resources is more likely to pick this alternative over creating their computing infrastructure as it is less expensive.
North America dominated the market with a share of 44.9% in 2021 and is anticipated to expand at a CAGR of over 13.0% over the forecast period. The early installation of data centers, as well as massive investments in technological advancements, are the major factors driving market expansion in this region. Furthermore, the rising use of data centers in education, healthcare, and BFSI segments is expected to remarkably contribute to the industry’s growth.
Asia-Pacific is expected to grow at the highest CAGR of over 14.0% during the forecast period. The market growth across the region can be attributed to the rapidly expanding due population and the advent of e-commerce. In addition, favorable government policies are fueling market expansion. The rise of cloud computing has propelled the mobile data center market growth in Asia.
The competitive landscape of the data center transformation is fragmented in nature, with numerous local and global data center players. The key participants are adopting advanced technologies to offer better solutions to their customers.
In December 2021, IBM introduced the IBM Z and Cloud Modernization Center to accelerate hybrid cloud. It acts as a digital portal to a wide range of tools, resources, training, and ecosystem partners to help IBM Z clients accelerate the digitalization of their apps, processes, and data in a hybrid cloud environment. Some prominent players in the global data center transformation market include:
Cisco Systems, Inc.
Schneider Electric SE
Market size value in 2022
USD 8.74 billion
Revenue forecast in 2030
USD 24.13 billion
CAGR of 13.5% from 2022 to 2030
Base year for estimation
2017 - 2020
2022 - 2030
Revenue in USD Million and CAGR from 2022 to 2030
Revenue forecast, company ranking, competitive landscape, growth factors, and trends
Services, end-user, vertical, region
North America; Europe; Asia Pacific; Latin America; MEA
U.S.; Canada; U.K.; Germany; France; Italy; China; India; Japan; Brazil; Mexico
Key companies profiled
IBM Corporation; Cisco Systems, Inc.; Dell EMC; Microsoft Corporation; Schneider Electric SE; HCL Technologies; Cognizant; Accenture; Atos; Wipro
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This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global data center transformation market report based on services, end-user, vertical, and region:
Service Outlook (Revenue, USD Million, 2017 - 2030)
Infrastructure Management Services
End-user Outlook (Revenue, USD Million, 2017 - 2030)
Cloud Service Providers
Vertical Outlook (Revenue, USD Million, 2017 - 2030)
IT & telecommunications
Government & Defense
Regional Outlook (Revenue, USD Million, 2017 - 2030)
Middle East & Africa
b. The global data center transformation size was estimated at USD 7.8 billion in 2021 and is expected to reach USD 8.74 billion in 2022.
b. The global data center transformation is expected to grow at a compound annual growth rate of 13.5%% from 2022 to 2030 to reach USD 24.13 billion by 2030
b. North America dominated the data center transformation with a share of 44.9%% in 2021. The early installation of data centers, as well as massive investments in technological advancements, are the major factors driving market expansion in this region
b. Some key players operating in the data center transformation include IBM Corporation, Cisco Systems, Inc., Dell EMC, Microsoft Corporation, Schneider Electric SE, HCL Technologies, Cognizant, Accenture, Atos, and Wipro
b. Due to the expansion of data centers and their growing dependability, there is an increasing demand for improved data center efficiency
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