The India data center colocation market size was valued at USD 1.20 billion in 2023 and is expected to reach USD 4.50 billion by 2029, growing at a CAGR of 24.68%

Snapshot img

Data Center Colocation Market Size 2025-2029

The data center colocation market size is forecast to increase by USD 78.56 billion, at a CAGR of 15.2% between 2024 and 2029.

The market is experiencing significant growth due to the increasing demand for secure and efficient IT infrastructure solutions. Companies are seeking colocation services to house their IT equipment in specialized facilities, enabling them to focus on their core business while benefiting from advanced technology and expertise. Innovative cooling solutions are emerging to address the challenge of managing heat generation in densely packed data centers, ensuring optimal performance and energy efficiency. Furthermore, containerized data centers are gaining traction as a flexible and cost-effective alternative to traditional colocation facilities, offering rapid deployment and scalability. However, the market faces challenges such as security concerns, power consumption, and the need for interconnectivity and bandwidth to support growing data traffic. Companies must navigate these obstacles by implementing robust security measures, optimizing energy usage, and investing in high-speed connectivity solutions to capitalize on the opportunities presented by the evolving data center colocation landscape.

What will be the Size of the Data Center Colocation Market during the forecast period?

Explore in-depth regional segment analysis with market size data - historical 2019-2023 and forecasts 2025-2029 - in the full report.
Request Free SampleThe market continues to evolve, driven by the increasing demand for advanced IT infrastructure solutions. Colocation facilities offer businesses the benefits of housing their IT equipment in secure, specialized environments, enabling them to focus on their core competencies. These facilities provide essential components such as cooling systems, green data centers, fire suppression systems, managed services, cloud connectivity, data storage, disaster recovery, object storage, security systems, and business continuity. Cooling systems ensure optimal operating temperatures, while green data centers minimize the carbon footprint. Fire suppression systems and physical security safeguard against potential threats. Managed services offer technical support and capacity planning, while cloud connectivity and network connectivity enhance access to cloud infrastructure. Data storage solutions cater to various needs, from traditional to object storage. Disaster recovery and business continuity plans ensure data availability and minimize downtime. Moreover, the integration of big data analytics, machine learning, and artificial intelligence into data center infrastructure enhances efficiency and performance. Energy efficiency is a key concern, with renewable energy and data center automation playing significant roles. Hybrid cloud solutions and network switches enable seamless integration of on-premises and cloud resources. The market dynamics continue to unfold, with edge computing gaining traction and software-defined networking, network-attached storage, and UPS systems enhancing network performance and reliability. The ongoing evolution of IT infrastructure management requires constant monitoring and adaptation to meet the ever-changing needs of businesses.

How is this Data Center Colocation Industry segmented?

The data center colocation industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments. TypeRetail colocationWholesale colocationEnd-userSmall and medium sized enterprisesLarge enterprisesGeographyNorth AmericaUSCanadaEuropeFranceGermanyItalyUKAPACChinaIndiaJapanSouth AmericaBrazilRest of World (ROW)

By Type Insights

The retail colocation segment is estimated to witness significant growth during the forecast period.In the realm of IT infrastructure, retail colocation data centers have emerged as a popular solution for businesses seeking to reduce capital expenditures (CAPEX) and operational expenditures (OPEX). These facilities offer enterprises the opportunity to rent rack space, cages, and private suites in large data centers, where they can house their servers and storage devices. The market for retail colocation is thriving, driven by the growing preference among Small and Medium Enterprises (SMEs) for this cost-effective solution. Environmental monitoring, access control, and security systems are integral components of these facilities, ensuring optimal conditions for IT equipment and data protection. UPS systems, cooling systems, and fire suppression systems maintain uninterrupted power and temperature conditions, while managed services and cloud connectivity facilitate seamless data access and disaster recovery. Energy efficiency and sustainability are essential

The India Data Center Market size is expected to reach a valuation of USD 25.41 billion in 2033 growing at a CAGR of 14.50%. The India Data Center market research report classifies market by share, trend, demand, forecast and based on segmentation.

India Data Center Networking Market Report Segments the Industry Into Components (By Product, by Services), End-Users (IT & Telecommunication, BFSI, Other End-Users). Data-Center Type(Colocation, Hyperscalers/Cloud Service Providers, and More). And Bandwidth( ≤10 GbE, 25–40 GbE, and More). The Market Forecasts are Provided in Terms of Value (USD).

The Mumbai data center market is experiencing robust growth, driven by the burgeoning digital economy, increasing cloud adoption, and the expanding presence of multinational corporations in India. With a current CAGR of 13.44%, the market, valued at an estimated XX million in 2025, is projected to reach substantial size by 2033. This expansion is fueled by several key factors: the strategic location of Mumbai as a major financial and commercial hub, increasing demand for robust IT infrastructure to support businesses operating in diverse sectors like BFSI, e-commerce, and media & entertainment, and government initiatives promoting digitalization. Significant investments in hyperscale data centers are further accelerating market growth. The market is segmented by data center size (small to mega), tier type (Tier 1-4), and absorption (utilized vs. non-utilized). Utilized capacity is categorized by colocation type (retail, wholesale, hyperscale) and end-user (cloud & IT, telecom, etc.). Key players, including Reliance Industries, Yotta Infrastructure Solutions, and Equinix, are competing for market share, leading to increased competition and innovation. The market faces constraints such as land scarcity and power limitations, but these are being addressed through innovative solutions and infrastructure developments. Future growth will likely depend on the successful management of these challenges and the continued expansion of digital infrastructure within the region. This report provides a detailed analysis of the Mumbai data center market and its future prospects. The strong growth trajectory is expected to continue throughout the forecast period (2025-2033). However, maintaining this momentum requires addressing potential challenges such as regulatory hurdles, ensuring sufficient power supply, and mitigating environmental concerns related to energy consumption. Strategic partnerships and technological advancements are likely to play a pivotal role in shaping the market landscape. The competitive landscape is dynamic, with both domestic and international players actively investing in infrastructure and services to cater to the growing demand. The market segmentation offers various opportunities for specialized service providers, focusing on specific niches like hyperscale data centers or particular end-user industries. Detailed analysis across all segments, focusing on capacity utilization, provides insights into specific growth drivers and market dynamics. Continued technological innovation, such as the adoption of edge computing and AI-powered solutions, will further drive demand for data center infrastructure in Mumbai. This in-depth report provides a comprehensive analysis of the Mumbai data center market, covering the period from 2019 to 2033. With a focus on the base year 2025 and a forecast period extending to 2033, this study offers invaluable insights for investors, businesses, and stakeholders seeking to understand the dynamics of this rapidly evolving sector. The report leverages data from the historical period (2019-2024) to create a robust foundation for future projections. Key search terms include Mumbai data center market size, India data center market, Mumbai colocation, hyperscale data center Mumbai, and data center investment India. Recent developments include: Jan 2023: The company announced that Web Werks will open a new data center in Mumbai, India. The building, known as the Mumbai-2 data center, will have a 120,000-square-foot (11,150 square meters) footprint and a 10 MW capacity. Mumbai-2 DC will give enterprise customers the densest interconnection ecosystem in APAC, with 200+ ISPs, all major carriers, internet exchanges, cloud service providers, and content delivery networks. Mumbai-2 DC will complement the current Mumbai-1 DC., Mar 2022: According to plans revealed by energy provider ZR Power Holdings, a big data center will be developed at Mahape in Navi Mumbai with an investment of over INR 1,700 crore. This is an increase over the investment the Maharashtra government approved last year.. Key drivers for this market are: Reduction in Power Consumption With the Use of Silicon Photonics Based Transceivers, Growing Need for High-Speed Connectivity and High Data Transfer Capabilities Across Data Centers. Potential restraints include: Risk of Thermal Effect. Notable trends are: Smartphones To Drive the Market Growth.

The Asia-Pacific (APAC) data center construction market is experiencing robust growth, driven by the region's burgeoning digital economy, increasing cloud adoption, and the expansion of 5G networks. The market's Compound Annual Growth Rate (CAGR) of 8.62% reflects this significant expansion, with a projected market size exceeding (estimated based on provided CAGR and assuming a 2025 market size of $XX million, a reasonable size considering the regional context) $YY million by 2033. Key drivers include government initiatives promoting digital infrastructure development, the rising demand for data storage and processing capacity from various industries (including banking, finance, IT, and telecommunications), and the increasing preference for colocation facilities. Significant investments in hyperscale data centers are also contributing to market expansion. China, India, Japan, and Australia are leading the growth, fuelled by increasing internet penetration, e-commerce activities, and the strategic need to support national digital transformation strategies. However, the market faces constraints such as high land costs in major metropolitan areas, regulatory hurdles in certain regions, and the need for skilled labor to manage and maintain sophisticated data center infrastructure. The segmentation of the market by infrastructure type (electrical, mechanical, general construction), Tier level (I-IV), and end-user industries allows for a granular understanding of growth opportunities within specific niches. The APAC data center construction market's segmentation offers valuable insights into specific growth areas. Electrical infrastructure, encompassing power distribution solutions (PDUs, transfer switches, switchgear), power backup solutions (UPS, generators), and related services, constitutes a significant portion of the market. Mechanical infrastructure, crucial for maintaining optimal operating temperatures, comprises cooling systems (immersion, direct-to-chip, rear door heat exchangers, in-row/in-rack cooling) and racks. The market's growth is significantly impacted by the size of data centers, ranging from small to mega-scale facilities. Tier-III and Tier-IV data centers, characterized by higher levels of redundancy and reliability, are attracting substantial investment, further boosting market expansion. Understanding the specific requirements and preferences of different end-user sectors—banking, financial services, IT, telecommunications, government, and healthcare—is key to navigating this dynamic market and identifying profitable opportunities. Competitive analysis across major players highlights the intense competition and strategic alliances that shape the market landscape. Recent developments include: June 2023: Bridge Data Centers announced expanding its hyperscale data centers with an IT power capacity of 64MW in Kuala Lumpur, Malaysia. This provides opportunities for Data Center Construction Vendors in the market., July 2022: L&T Construction's Buildings & Factories business bagged a contract from renowned data center service providers to construct data centers with a total capacity of 10.8 MW in Mumbai and Navi Mumbai.. Key drivers for this market are: 9.1 Growing Demand for SMAC (Social, Mobile, Analytics, and Cloud) Applications9.2 Growing Adoption of Hyperscale Data Centers in Large Enterprises9.3 Major Initiatives Undertaken by Governments to Promote Digital Economy and Connectivity Infrastructure. Potential restraints include: 10.1 Environmental, Cost, and Workforce-related Challenges. Notable trends are: China witnessing rapid data center construction activities.

Snapshot img

Data Center Market Size 2025-2029

The data center market size is forecast to increase by USD 535.6 billion, at a CAGR of 15.6% between 2024 and 2029.

The market is experiencing significant growth and transformation, driven by the increasing adoption of multi-cloud architectures and network upgrades. Businesses are recognizing the benefits of distributing their data across multiple cloud environments to improve agility, reduce costs, and enhance performance. This trend is leading to a surge in demand for advanced data center infrastructure and services. Another key driver is the implementation of Artificial Intelligence (AI) in data centers. AI is revolutionizing various industries by enabling automation, predictive analytics, and real-time insights. Data centers are no exception, as AI is being used to optimize energy consumption, improve security, and enhance operational efficiency.
However, this technological advancement also presents challenges. Cybersecurity issues are becoming increasingly sophisticated, with data centers being prime targets for cyberattacks. Ensuring data security and privacy is a major concern for organizations, necessitating significant investments in cybersecurity measures. Companies must navigate these challenges while capitalizing on the opportunities presented by the evolving data center landscape. To remain competitive, they must invest in advanced infrastructure, adopt innovative technologies, and prioritize cybersecurity to meet the demands of their customers and stakeholders.

What will be the Size of the Data Center Market during the forecast period?

Explore in-depth regional segment analysis with market size data - historical 2019-2023 and forecasts 2025-2029 - in the full report.
Request Free Sample

The market continues to evolve, driven by the ever-increasing demand for digital transformation and IT infrastructure growth across various sectors. HVAC systems, a critical component of data center operations, are continually advancing with precision cooling technologies to ensure optimal performance and energy efficiency. Modular data centers offer flexibility and scalability, while IT asset management solutions enable effective lifecycle management. Data center optimization strategies, including virtualization software and capacity planning, enhance operational efficiency and reduce costs. Surveillance cameras and access control systems ensure physical security, while fault tolerance and high availability ensure business continuity. Renewable energy integration and green data center initiatives prioritize sustainability.

Data center construction projects incorporate advanced designs and remote monitoring capabilities, while disaster recovery solutions safeguard against potential downtime. Support contracts and service-level agreements provide essential maintenance and backup systems. Network switches and load balancers facilitate seamless connectivity, and edge data centers extend network reach. Fire suppression systems and CRAC units maintain critical environments, while server virtualization and disaster recovery strategies ensure business continuity. Risk management and IT infrastructure strategies continue to adapt to the dynamic market landscape, with a focus on energy efficiency, network security, and data center design. The integration of virtual machines (VMs) and cloud computing further expands the market's potential.

Overall, the market remains a dynamic and evolving landscape, with ongoing advancements and applications across various industries.

How is this Data Center Industry segmented?

The data center industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

Component

  IT infrastructure
  Power management
  Mechanical construction
  General construction
  Security solutions


End-user

  BFSI
  Energy
  IT
  Others


Design

  Traditional
  Containerized
  Modular


Data Center Size

  Small and Medium Data Centers
  Large Data Centers


Tier Type

  Tier 1 and 2
  Tier 3
  Tier 4


Type

  Enterprise Data Centers
  Colocation Data Centers
  Cloud Data Centers
  Managed Data Centers
  Edge Data Centers


Geography

  North America

    US
    Canada


  Europe

    France
    Germany
    Italy
    UK


  Middle East and Africa

    UAE


  APAC

    China
    India
    Japan


  South America

    Brazil


  Rest of World (ROW)

By Component Insights

The IT infrastructure segment is estimated to witness significant growth during the forecast period.

The IT infrastructure of a data center encompasses all the necessary hardware, software, and solutions for establishing and expanding a data center. This infrastructure comprises server infrastructure, storage infrastr

Snapshot img

Data Center Colocation And Managed Hosting Services Market Size 2025-2029

The data center colocation and managed hosting services market size is forecast to increase by USD 306.2 billion, at a CAGR of 18.5% between 2024 and 2029. The market is experiencing significant growth, driven by the increasing demand for data center colocation facilities.

Major Market Trends & Insights

North America dominated the market and accounted for a 45% share in 2023.
The market is expected to grow significantly in Europe region as well over the forecast period.
Based on the End-user, the BFSI segment led the market and was valued at USD 63.40 billion of the global revenue in 2023.
Based on the Type, the colocation Services (Wholesale and Retail) segment accounted for the largest market revenue share in 2023.

Market Size & Forecast

Market Opportunities: USD 229.70 Billion
Future Opportunities: USD 306.2 Billion
CAGR (2024-2029): 18.5%
North America: Largest market in 2023

The colocation data center market continues to evolve, with businesses increasingly seeking secure and scalable infrastructure solutions to support their IT needs. Network infrastructure plays a crucial role in this dynamic landscape, with optimization and automation becoming key priorities to minimize network latency and ensure high availability clusters. Colocation data centers offer physical security measures, such as access control systems and CCTV surveillance, while managed security services provide an additional layer of protection against cyber threats. Capacity planning and hardware provisioning are essential components of colocation services, ensuring businesses have the bandwidth capacity and server rack density they require.

What will be the Size of the Data Center Colocation And Managed Hosting Services Market during the forecast period?

Explore in-depth regional segment analysis with market size data - historical 2019-2023 and forecasts 2025-2029 - in the full report.
Request Free Sample

The colocation data center market continues to evolve, with businesses increasingly seeking secure and scalable infrastructure solutions to support their IT needs. Network infrastructure plays a crucial role in this dynamic landscape, with optimization and automation becoming key priorities to minimize network latency and ensure high availability clusters. Colocation data centers offer physical security measures, such as access control systems and CCTV surveillance, while managed security services provide an additional layer of protection against cyber threats. Capacity planning and hardware provisioning are essential components of colocation services, ensuring businesses have the bandwidth capacity and server rack density they require. The healthcare segment is the second largest segment of the end-user and was valued at USD 55.00 billion in 2023.

Energy efficiency metrics, such as Power Usage Effectiveness (PUE), are becoming increasingly important as data centers strive for sustainability. Fiber optic connectivity and IP transit enable seamless network connectivity, while managed hosting services offer server monitoring tools and uptime guarantees. Redundant power systems and disaster recovery plans are vital for maintaining business continuity. Environmental controls, cooling technology, and compliance certifications ensure regulatory requirements are met. Virtualization technology, backup and recovery, and cloud connectivity further enhance the flexibility and scalability of colocation services. For instance, a leading financial services firm recently migrated to a colocation data center, resulting in a 30% reduction in network latency and a 20% increase in server uptime.

Industry growth in the data center market is expected to reach over 10% annually, driven by the ongoing demand for secure and scalable IT infrastructure solutions.

This trend is fueled by businesses seeking to reduce capital expenditures on IT infrastructure and improve operational efficiency. Another key driver is the growing investments in hyper-scale data centers by colocation providers, catering to the needs of cloud service providers and enterprises. However, the market faces challenges, including the high power consumption in data centers, which necessitates the adoption of energy-efficient technologies and strategies.

Additionally, ensuring data security and compliance with regulatory requirements pose significant challenges for market participants. Companies in this market must navigate these challenges while capitalizing on opportunities for innovation and growth. To stay competitive, they must focus on offering flexible, scalable, and secure solutions, while also addressing energy efficiency and sustainability concerns.

How is this Data Center Colocation And Managed Hosting Services Industry segmented?

The data center colocation and managed hosting services industry research report provides co

Data Center Colocation Services Market by Facility (Retail, Wholesale, Hybrid), Service (Space & Infrastructure (Rack, Cage & Cabinet, Suite), Disaster Recovery), Tier, Size, End User (Managed, Cloud, Enterprises), and Geography - Global Forecast to 2032

India Data Center Processor Market is Segmented by Processor Type (GPU, CPU and More), Application( Advanced Data Analytics, AI/ML Training & Inference, High-Performance Computing and More), Architecture (X86, ARM-Based, RISC-V and Power), Data Center Type (Enterprise, Colocation, Cloud Service Providers / Hyperscalers). The Market Forecasts are Provided in Terms of Value (USD).

By Market Structure:The market is primarily divided into colocation data centers, managed service providers. Colocation data centers dominate the market due to their ability to provide scalable, secure, and cost-effective infrastructure for enterprises. Managed service providers hold a significant share as they offer comprehensive IT solutions, including cloud management, which are crucial for businesses looking to outsource their IT operations. Cloud service providers, particularly those offering public cloud services, are also gaining traction due to the flexibility and scalability they offer to businesses of all sizes. India Data Center Market Segmentation What are the Regulations and Initiatives which have Governed the Market:

Colocation Data Center Market Outlook

The global colocation data center market size was valued at USD 50 billion in 2023 and is expected to reach USD 120 billion by 2032, growing at a CAGR of 10.1% during the forecast period. The market's robust expansion is driven by the exponential growth in data generation and the increasing demand for scalable and cost-effective solutions for data storage and management. Several factors such as enhanced operational efficiency, cost reduction, and improved disaster recovery capabilities are propelling the colocation data center market.

One of the foremost growth factors for the colocation data center market is the surge in data generation across various sectors, including IT and telecommunications, BFSI, and healthcare. With the advent of technologies like the Internet of Things (IoT), artificial intelligence (AI), and big data, the volume of data being generated globally has increased tremendously. Colocation data centers provide an efficient solution for businesses to manage this data surge without the need for substantial capital expenditure on building and maintaining their own data centers. By opting for colocation services, companies can focus on their core competencies while ensuring their data is stored in highly secure and scalable environments.

Another significant driver is the increasing adoption of cloud computing. As businesses migrate their operations to the cloud, there is a growing need for reliable and scalable data centers to support these cloud services. Colocation data centers offer the necessary infrastructure and connectivity, allowing companies to extend their cloud capabilities without the hardware and maintenance overhead. This trend is particularly pronounced among small and medium enterprises (SMEs), which might lack the financial resources to set up and maintain their own data centers. With colocation services, SMEs can leverage state-of-the-art data center facilities while managing costs effectively.

Additionally, regulatory requirements and data sovereignty laws are influencing the growth of the colocation data center market. Many industries, especially those handling sensitive information like healthcare and finance, must comply with stringent data protection regulations. Colocation data centers often come with high levels of security and compliance certifications, making them an attractive option for businesses needing to meet regulatory standards. This trend is critical in regions with strict data privacy laws, where companies must ensure that their data is stored and processed within specific geographic boundaries.

From a regional perspective, North America holds the dominant share in the colocation data center market due to the presence of major technology companies and high data consumption. However, the Asia Pacific region is expected to witness the highest growth rate during the forecast period. The rapid digitalization, expansion of cloud computing, and increasing investments in data center infrastructure in countries like China, India, and Japan are key factors driving the market in this region. Europe and Latin America are also significant markets, with steady growth anticipated due to rising data generation and cloud adoption.

Type Analysis

The colocation data center market can be segmented by type into retail colocation and wholesale colocation. Retail colocation refers to the leasing of smaller amounts of space within a data center, such as a single rack or a few racks, typically used by small to medium-sized businesses. This type of colocation is ideal for companies that require flexibility and do not need large amounts of space. Retail colocation providers offer additional services such as managed services, which can be beneficial for businesses lacking in-house IT expertise. The demand for retail colocation is driven by its cost-effectiveness and scalability, allowing businesses to expand their data storage needs incrementally.

Wholesale colocation, on the other hand, involves leasing larger spaces, such as entire rooms or suites, within a data center. This type is generally used by large enterprises with substantial data storage and processing needs. Wholesale colocation offers economies of scale, making it a more cost-effective option for large companies with significant space requirements. Additionally, wholesale colocation agreements usually come with more personalized infrastructure and power arrangements to meet the specific needs of large clients. The growth in wholesale colocation is driven by large-scale cloud service providers and enterprises seeking to consolidate t

The hyperscale data center industry is experiencing robust growth, projected to reach a market size of $101.23 billion in 2025 and maintain a Compound Annual Growth Rate (CAGR) of 5.29% from 2025 to 2033. This expansion is fueled by several key drivers. The exponential increase in data generated by cloud computing, the Internet of Things (IoT), and big data analytics necessitates massive data storage and processing capabilities, driving demand for hyperscale data centers. Furthermore, the increasing adoption of artificial intelligence (AI), machine learning (ML), and high-performance computing (HPC) applications further intensifies this demand. The shift towards digital transformation across various industries, coupled with the growing need for enhanced network connectivity and low latency, is also contributing significantly to market growth. Hyperscale colocation facilities are gaining traction, offering businesses a scalable and cost-effective alternative to self-build data centers. Competition among major players, including IBM, Hewlett Packard Enterprise, Alphabet, Cisco, Microsoft, Amazon Web Services, Huawei, Quanta Computer, Alibaba, Facebook, and Nvidia, is fierce, driving innovation and efficiency improvements within the sector. Geographical distribution reveals a strong presence in North America and Europe, driven by mature digital economies and robust IT infrastructure. However, the Asia-Pacific region is witnessing rapid growth, particularly in countries like India and China, fueled by increasing digitalization and government initiatives to support the development of digital infrastructure. Despite the positive growth trajectory, challenges remain. These include the high initial capital investment required for building and maintaining hyperscale data centers, the escalating energy consumption, and the growing concerns regarding data security and privacy. Addressing these challenges will be crucial for sustainable and responsible growth in the hyperscale data center market throughout the forecast period. The industry is likely to see further consolidation and strategic partnerships as companies seek to leverage economies of scale and expand their market reach. Recent developments include: November 2022 - Big Data Exchange (BDx), PT Indosat Tbk (Indosat Ooredoo Hutchison), and PT Aplikanusa Lintasarta announced their plan to build a 100MW data center complex on 12 acres of land. This new data center campus, CGK5, will be located in Karawang, West Java, east of Jakarta, and will be part of the company's third availability zone. The BDx Indonesia joint venture is a key component of the BDx platform, and the construction of CGK5 is BDx's 11th data center in the Asia-Pacific region. With more than USD 1 billion in committed investment funding, BDx's strong development trajectory across Asia allows scaled innovation in the most challenging markets., June 2022 - Equinix Inc., one of the leading global digital infrastructure companies, and PGIM Real Estate, the real estate investment and financing arm of PGIM, Prudential financial's global asset management business, announced the opening of the xScale data center in Sydney, named SY9x. This achievement followed the completion of the parties' USD 575 million joint venture., May 2022 - NTT Ltd in India announced the launch of its new hyperscale data center facility in Navi Mumbai, beginning with the NAV1A data center. This increases NTT's data center presence in the nation to 12 facilities, covering more than 2.5 million sq ft (232,258 m2) and 220 MW of facility power, solidifying its position as India's market leader in this segment., March 2022 - Yondr Group, one of the global leaders in developer, owner-operator, and service provider of data centers announced its expansion into the Malaysian market with a planned 200MW hyperscale campus to be developed on 72.8 acres of land acquired from TPM Technopark Sdn Bhd, a wholly owned subsidiary of Johor Corporation. Yondr's hyper-scale campus will be built in phases and have a total capacity of 200MW when completed, with the first phase anticipated to be completed in 2024. With at least 600MW of capacity, black fiber connectivity, and scalable utilities and infrastructure.. Key drivers for this market are: Growing Demand for Cloud Computing and Other High Performance Technologies. Potential restraints include: High Costs and Operational Concerns, Concerns related to Geoprivacy and Confidential Data. Notable trends are: Growing Demand for Cloud Computing and Other Hight Performance Technologies Driving the Market.

Snapshot img

Data Center IT Infrastructure Market Size 2025-2029

The data center IT infrastructure market size is forecast to increase by USD 106.6 billion at a CAGR of 7.3% between 2024 and 2029.

The market is driven by technology refresh cycles as organizations continually seek to upgrade their hardware to support the latest advancements in artificial intelligence (AI), machine learning (ML), and deep learning (DL) technologies. These emerging technologies require significant computational power and data processing capabilities, leading companies to invest in new IT infrastructure to meet their evolving business needs. However, the market also faces challenges, with data security concerns and increasing cybersecurity threats posing significant risks.
Additionally, the growing complexity of IT infrastructure and the need for interoperability between various systems create further challenges for organizations. Strategic data center migration and cloud migration services are essential for businesses seeking operational agility and reduced on-premise dependency. Companies must navigate these obstacles to effectively capitalize on market opportunities and maintain a competitive edge. To succeed, they must prioritize investments in secure, scalable, and efficient IT infrastructure solutions. As businesses continue to digitalize their operations and store sensitive data in the cloud, they must ensure robust security measures are in place to protect against potential breaches.

What will be the Size of the Data Center IT Infrastructure Market during the forecast period?

Explore in-depth regional segment analysis with market size data - historical 2019-2023 and forecasts 2025-2029 - in the full report.
Request Free Sample

In the dynamic market, network latency reduction and data center consolidation are key trends driving growth. Companies are seeking to optimize their data center footprint by migrating to cloud services and improving rack space utilization. Cooling system efficiency and server room design are crucial factors in operational efficiency improvement. IT infrastructure audits help identify areas for upgrades, including power distribution units and network traffic analysis. IT service management and network security protocols are essential for maintaining system resilience and reliability.

Data center expansion and modernization require careful planning for storage capacity, virtual machine scalability, and server maintenance schedules. IT infrastructure cost reduction is a constant concern, with system performance optimization and virtualization strategy playing significant roles. Server load balancing and system reliability improvement are also critical components of a robust IT infrastructure. These solutions help reduce the initial capital outlay for enterprises during their data center server refresh cycles.

How is this Data Center IT Infrastructure Industry segmented?

The data center IT infrastructure industry research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

Component

  Server infrastructure
  Storage infrastructure
  Software-defined data center
  Network infrastructure
  Others


End-user

  BFSI
  Energy
  Information system
  Others


Type

  Hyperscale data center
  Colocation data center
  Enterprise data center
  Edge data center


Geography

  North America

    US
    Canada


  Europe

    France
    Germany
    Italy
    UK


  APAC

    China
    India
    Japan


  South America

    Brazil


  Rest of World (ROW)

By Component Insights

The Server infrastructure segment is estimated to witness significant growth during the forecast period. In the dynamic IT infrastructure market, data center servers continue to dominate costs due to their essential role in processing data, running applications, and storing application data. To optimize server investments and reduce costs, enterprises and data center providers are transitioning from capital expenditures (CAPEX) to operational expenditures (OPEX) models. This shift enables better server utilization and addresses challenges related to space, power, and cooling. Hyperconverged infrastructure and software-defined networking (SDN) are gaining popularity for their ability to streamline IT operations and improve energy efficiency. Energy efficiency metrics, such as Power Usage Effectiveness (PUE), are essential for data centers, and redundant power supplies ensure uninterrupted power.

Rack density optimization and IP address management help maximize server utilization, while data center automation simplifies infrastructure management. Network infrastructure design plays a crucial role in ensuring network performance metrics, such as bandwidth optimization and fiber optic

Colocation Data Center Market Outlook

According to our latest research, the global colocation data center market size reached USD 62.1 billion in 2024, reflecting robust growth driven by the increasing adoption of cloud computing and digital transformation initiatives across industries. The market is projected to expand at a CAGR of 12.4% from 2025 to 2033, reaching a forecasted value of USD 176.7 billion by 2033. This impressive growth trajectory is largely attributed to the rising demand for scalable, secure, and cost-effective data storage and management solutions, as enterprises continue to outsource their IT infrastructure needs to specialized colocation providers.

One of the most significant growth factors for the colocation data center market is the relentless surge in data generation from IoT devices, artificial intelligence applications, and the proliferation of digital services. Enterprises are increasingly seeking reliable and high-performance data center solutions to handle the exponential growth in data volumes, which has made colocation an attractive alternative to building and maintaining in-house data centers. The ability of colocation providers to offer advanced security measures, redundant power supplies, and high-speed connectivity further enhances their value proposition. Additionally, the growing emphasis on business continuity and disaster recovery planning is prompting organizations to leverage geographically diverse colocation facilities, thereby fueling market expansion.

Another critical driver is the escalating need for energy efficiency and sustainability in data center operations. As environmental regulations tighten and corporate social responsibility becomes a priority, organizations are turning to colocation data centers that invest in green technologies and renewable energy sources. These facilities are designed to optimize power usage effectiveness (PUE) and minimize carbon footprints, helping clients achieve their sustainability goals. Furthermore, the economies of scale achieved by colocation providers enable them to implement cutting-edge cooling and power management solutions that are often cost-prohibitive for individual enterprises. This focus on sustainability not only reduces operational costs but also enhances the marketability of colocation services to environmentally conscious customers.

The rapid adoption of hybrid and multi-cloud strategies is also propelling the growth of the colocation data center market. As businesses strive to balance the benefits of public and private cloud environments, colocation facilities serve as critical hubs for interconnecting various cloud platforms and on-premise infrastructure. This hybrid approach enables organizations to optimize workloads, enhance application performance, and ensure regulatory compliance. The flexibility and scalability offered by colocation providers allow enterprises to quickly adapt to changing business requirements and technology trends. Moreover, the integration of managed services and value-added offerings, such as direct cloud connectivity and security solutions, further strengthens the appeal of colocation data centers in the evolving digital landscape.

From a regional perspective, North America continues to dominate the global colocation data center market, accounting for the largest share in 2024, followed closely by Europe and Asia Pacific. The presence of major technology companies, robust digital infrastructure, and high demand for cloud services underpin North America's leadership position. Meanwhile, Asia Pacific is witnessing the fastest growth, driven by rapid digitalization, expanding internet penetration, and substantial investments in IT infrastructure across emerging economies such as China, India, and Southeast Asian countries. Europe remains a key market due to stringent data privacy regulations and the increasing adoption of green data center initiatives. Latin America and the Middle East & Africa are also experiencing steady growth, albeit from a smaller base, as enterprises in these regions embrace digital transformation and cloud adoption.

The Bengaluru data center market is experiencing robust growth, driven by India's burgeoning digital economy and its position as a major IT hub. A compound annual growth rate (CAGR) of 11.43% indicates significant expansion potential. This growth is fueled by increasing cloud adoption across various sectors – including cloud & IT, information technology, media & entertainment, BFSI (Banking, Financial Services, and Insurance), government, manufacturing, and e-commerce – demanding substantial data storage and processing capabilities. The market is segmented by data center size (small to mega), tier type (Tier 1 & 2, Tier 3, Tier 4), and absorption (utilized – further categorized by colocation type (retail, wholesale, hyperscale) and end-user – and non-utilized). The presence of major players like Sify Technologies, STT Telemedia, Reliance Industries, and CtrlS indicates a competitive landscape with established players and emerging businesses vying for market share. While precise market size figures for Bengaluru are absent, extrapolating from the provided national CAGR and considering Bengaluru's prominence as an IT center, a reasonable estimation places the 2025 market size in the hundreds of millions of dollars. The market's future growth hinges on continued investments in infrastructure, government policies supporting digitalization, and the increasing demand for low-latency, high-bandwidth connectivity. Challenges may include land availability, power infrastructure limitations, and the need for skilled workforce to support the expanding data center ecosystem. The significant growth trajectory suggests a promising investment opportunity within the Bengaluru data center market. However, careful consideration of market segmentation and potential constraints – like power supply and skilled labor – is crucial for success. The competition amongst established and emerging players underscores the need for strategic differentiation and innovative service offerings. The expanding end-user segments, particularly in technology and finance, highlight the long-term viability of the market, indicating sustained growth potential beyond the projected forecast period. Factors such as the implementation of robust data privacy regulations and the adoption of sustainable practices will significantly impact the future growth of this sector. Recent developments include: March 2023 - The Web Werks and Iron Mountain Data Centres Joint Venture (IMDC) announced opening their first data center on their Bengaluru, India, campus in March 2023. The data center is ideally situated as a gateway to Southern India because it is located in the prestigious Whitefield neighborhood of Bengaluru. The BLR-1 is a Tier III data center with 80,000 square feet of space that can accommodate up to 4MW of IT load., April 2022 - Web Werks and Teleindia Networks invested around USD 95.8 million and 12.8 million to set up their data center units in Banglore.. Notable trends are: Government policies would advance the Investment of Data Centre.

Data Center Colocation Services Market Outlook

The global data center colocation services market size is projected to reach USD 120 billion by 2032, up from USD 55 billion in 2023, exhibiting a robust CAGR of 9.5% during the forecast period. This remarkable growth can be attributed to the increasing demand for scalable, cost-effective solutions for data management and storage, driven by the proliferation of big data, cloud computing, and the Internet of Things (IoT).

One of the primary growth factors fueling the data center colocation services market is the rapid digitization across various sectors. Enterprises are increasingly migrating their operations to digital platforms, which necessitates substantial data storage and management capabilities. Colocation services offer a practical solution by providing businesses with the necessary infrastructure without the burden of investing heavily in in-house data centers. The cost-efficiency, scalability, and enhanced security offered by colocation services make them an attractive choice for organizations looking to streamline their IT operations.

Another significant driver is the exponential growth of data traffic globally. The rise in high-bandwidth applications, online streaming services, and data-heavy technologies has led to an unprecedented surge in data generation. Data centers must, therefore, expand their capacity and improve their performance to handle this increased load. Colocation services are positioned to meet these demands effectively by offering advanced facilities and infrastructure that support high-performance computing and data storage requirements, thereby ensuring seamless data flow and operational continuity.

The ongoing advancements in technology, such as the development of edge computing and 5G networks, are also contributing to market growth. Edge computing brings data processing closer to the source, reducing latency and improving response times. Colocation services play a pivotal role in facilitating edge computing by providing localized data centers that can efficiently handle the data processing needs of edge devices. Similarly, the rollout of 5G networks is expected to further accelerate data generation and consumption, thereby driving the demand for robust colocation services to manage the associated data loads.

As organizations continue to seek efficient ways to manage their IT infrastructure, Data Center Outsourcing and Infrastructure Utility Service have emerged as viable alternatives to traditional data center management. These services allow businesses to offload the complexities of data center operations to specialized providers, who offer advanced infrastructure and expertise. By outsourcing their data center needs, companies can focus on their core competencies while benefiting from reduced operational costs and enhanced scalability. This approach also enables organizations to quickly adapt to changing technological demands and market conditions, ensuring they remain competitive in an increasingly digital landscape.

Geographically, North America and Europe dominate the data center colocation services market, driven by the presence of major technology companies and a mature digital infrastructure. However, the Asia Pacific region is expected to witness the highest growth rate, attributed to rapid industrialization, a burgeoning digital ecosystem, and increasing investments in data center infrastructure. Countries like China, India, and Japan are at the forefront of this growth trajectory, owing to their significant strides in technology adoption and digital transformation initiatives.

Type Analysis

The data center colocation services market can be segmented into retail colocation and wholesale colocation. Retail colocation involves leasing smaller amounts of space within a data center, typically ranging from individual servers to several racks. This segment is particularly popular among small and medium-sized enterprises (SMEs) that require scalable solutions without the need for significant upfront investments in infrastructure. Retail colocation offers flexibility and cost savings, allowing businesses to focus on their core operations while outsourcing their data management needs to specialized service providers.

Wholesale colocation, on the other hand, involves leasing larger spaces, often entire floors or sections of a data center, to single tenants. This model is favored by

The Asia Pacific data center market is experiencing robust growth, driven by the increasing adoption of cloud computing, the proliferation of big data, and the expanding digital economy across the region. The surge in e-commerce, digital media consumption, and the need for robust IT infrastructure to support these activities are key factors fueling demand. Significant investments in digital infrastructure by governments and private enterprises in countries like China, India, Japan, and Singapore are further propelling market expansion. While the market is segmented by data center size (small to massive), tier type (Tier 1-4), absorption (utilized/non-utilized), colocation type (hyperscale, retail, wholesale), and end-user (BFSI, cloud, etc.), the hyperscale segment is witnessing particularly strong growth fueled by the needs of major cloud providers. The increasing demand for low latency and high bandwidth is leading to the development of edge data centers, particularly in densely populated areas. However, challenges remain. High infrastructure costs, particularly land acquisition and power supply constraints, represent significant restraints. Regulatory complexities and data sovereignty concerns also impact market development, although government initiatives are increasingly focused on improving regulatory frameworks to encourage investment. The forecast period (2025-2033) anticipates continued growth, although the rate may fluctuate slightly year-on-year due to economic factors and geopolitical events. The focus on sustainability, including the use of renewable energy sources in data center operations, will be a key trend shaping the industry's future. Competition amongst established players and new entrants is intense, pushing innovation and driving efficiency improvements. The market is poised for considerable expansion, driven by ongoing digital transformation across diverse sectors and a significant increase in data generation. Recent developments include: December 2022: HGC Global Communications has established an agreement with Digital Realty to boost customers’ edge connectivity. Under the agreement, Digital Realty will use edgeX by HGC services for over-the-top (OTT) customers in its three Singapore data centres.November 2022: Equinix announced its 15th international business exchange (IBX) data centre in Tokyo, Japan. The company said that it has made an initial investment of USD 115 million on the new data centre, touted TY15. The first phase of TY15 will provide an initial capacity of approximately 1,200 cabinets, and 3,700 cabinets when fully built out.September 2022: NTT Ltd announced the commencement of the construction of its sixth data centre in Cyberjaya. NTT plans to initially invest over USD 50 million in the sixth data centre, which is also known as Cyberjaya 6 (CBJ6). Further, CBJ6 and CBJ5 will have a total facility load of 22MW, spanning a combined 200,000 sq ft.. Notable trends are: OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT.

Colocation Market Outlook

According to our latest research, the global colocation market size reached USD 62.1 billion in 2024, fueled by escalating demand for scalable and secure data storage solutions among enterprises worldwide. The market is expected to expand at a robust CAGR of 13.4% from 2025 to 2033, reaching a projected value of USD 192.6 billion by 2033. This remarkable growth is primarily driven by the increasing adoption of cloud computing, digital transformation initiatives, and the surging need for reliable IT infrastructure across various industry verticals.

Several critical factors are propelling the rapid expansion of the colocation market. Organizations are increasingly seeking to optimize their IT expenditures by shifting from traditional on-premises data centers to colocation facilities, which offer cost-effective, scalable, and secure alternatives. The need for enhanced data security and regulatory compliance is also compelling businesses to leverage colocation services, which provide advanced physical and cyber-security measures. Furthermore, the proliferation of data-intensive applications, the Internet of Things (IoT), and artificial intelligence (AI) workloads are driving enterprises to seek high-performance, low-latency infrastructure, which colocation providers are well-positioned to deliver.

Another significant driver is the growing trend of hybrid cloud adoption. Enterprises are increasingly opting for hybrid IT environments that blend private, public, and colocation-based infrastructure to achieve greater agility and operational efficiency. Colocation facilities serve as critical interconnection hubs, enabling seamless integration between on-premises resources and cloud platforms. This trend is particularly pronounced among large enterprises that require flexible, high-capacity solutions to support their digital transformation journeys. Additionally, the rising cost and complexity of building and maintaining in-house data centers continue to encourage organizations to migrate to colocation services, further fueling market growth.

Sustainability is emerging as a pivotal growth factor in the colocation market. With mounting pressure to reduce carbon footprints and comply with environmental regulations, enterprises are prioritizing green IT initiatives. Leading colocation providers are investing heavily in energy-efficient infrastructure, renewable energy sources, and advanced cooling technologies to minimize environmental impact. This focus on sustainability not only enhances the appeal of colocation services but also aligns with the corporate social responsibility (CSR) goals of client organizations. As a result, sustainability is becoming a key differentiator in the competitive landscape, driving both customer acquisition and retention.

From a regional perspective, North America currently dominates the global colocation market, accounting for the largest share due to its advanced digital infrastructure, high concentration of technology-driven enterprises, and strong presence of leading colocation providers. However, Asia Pacific is emerging as the fastest-growing region, propelled by rapid digitalization, expanding cloud adoption, and robust investments in data center infrastructure across countries such as China, India, and Singapore. Europe is also witnessing significant growth, driven by stringent data protection regulations and the increasing demand for secure, compliant data storage solutions. Collectively, these regional dynamics underscore the global nature of colocation market growth and highlight the diverse opportunities for stakeholders worldwide.

Service Type Analysis

The colocation market is segmented by service type into retail colocation, wholesale colocation, hybrid cloud colocation, and others. Retail colocation remains a dominant segment, particularly favored by small and medium-sized enterprises (SMEs) and organizations with limited IT requirements. Retail colocation services offer clients the ability to rent space within a shared