Data Center Colocation Market outlook 2026: Four trends fostering global industry growth

Data Center Colocation Market size is expected to witness a lucrative growth from 2020 to 2026 owing to the rising data traffic.

A business vertical of high repute, thriving immensely on the increasing need to manage the data center requirements, the global data center colocation market as of today, stands as one of the most outpacing industrial spaces. Industrialization, especially in the developing regions, has led to an evident increase in the number of organizations operating in various fields of the economy.

This has led to the generation of massive data which requires advanced technologies for effective management and security of the information. Moreover, the advent of IoT along with the rapid penetration of big data and cloud technologies has prompted different end-use sectors to lay focus on developing the physical infrastructure for IT services.

As per reports, the global data center colocation market size could surpass USD 130 billion in terms of annual valuation through 2026. Mentioned below are some of the integral factors likely to influence the industry size in the coming years.

Change in IT infrastructure

Colocation has gained massive traction globally and is being adopted with the intent of reducing the expenses related to the management and building of the data centers. With the growing need to manage data securely and to prevent any form of data-leak, companies are setting up new data centers or changing their existing infrastructure to large-scale data centers with the use of modern technologies.

A massive shift towards the colocation hosting by large enterprises and SMEs has led to huge investments, which will drive the revenue scale of the market in the near future.

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Coronavirus and the need to ensure business continuity
The coronavirus outbreak has driven the need for data center colocation services among corporates to ensure business continuity. With people across the globe working from home, due to the need to control the spread of infections at the workplace, there is a growing need to manage the huge data being generated in order to ensure there is no loss of work. As businesses have shifted to a remote work culture, the consumption of the internet has grown drastically. All this and the need to store data efficiently has boosted the demand for colocation data centers.

Heavy investments in Latin America

In Latin America data center colocation market, various business entities are increasingly investing towards the establishment of data centers due to the rise in the establishment of companies. Multinational giants such as Google, IBM, and Microsoft Corporation are aiming at increasing their presence in the region due to the growing opportunities. There are more than 100 colocation data centers across Chile, Peru, Colombia, Argentina, Brazil, and Uruguay. Brazil in particular has emerged as a major market opportunity for data center collocation over the last couple of years.

5G and the competitive market dynamics

The emergence of 5G technology in various countries along with the establishment of smart cities has further supported developments in the data center colocation market. Many companies noticing the robust demand for the commercialization of 5G services is entering into a partnership, strategic alliance, or acquisitions to strengthen their offerings and position in the market.

For instance, in the year 2018, the Chinese government was exploring the merger of the country’s leading wireless carriers with an aim to speed up the development of the 5G mobile network. The merger between China Unicom and China Telecom created a market capitalization of more than USD 70 billion. Such growth in telecom sector will certainly foster need for data center services.

Some of the prominent participants operating in the data center colocation market include KDDI Corporation, Digital Realty, Singapore Telecommunications Limited, CyrusOne, and Global Switch Corporation, to name a few.

The rapidly growing need to manage the vast gathering of crucial data from various sectors such as healthcare, education, BFSI, defense, and IT will continue to steer the global data center colocation industry trends.

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