European data centre services market to grow 16% CAGR till 2018

European data centre services market is expected to see a compound annual growth rate of 16 percent up to 2018.

Despite several restraints, the United Kingdom, Germany, France and Benelux will be the largest data center markets in Europe, said Frost & Sullivan.

The cost advantage of outsourcing as well the growth in cloud, machine-to-machine connectivity and content-heavy applications are some of the growth drivers.

The report said 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,” said Frost & Sullivan Information and Communication Technologies Research Analyst Shuba Ramkumar.

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In the long term, 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 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. 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.

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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