Data Center Transformation Market worth $18.9 billion by 2028, growing at a CAGR of 10.5%: Report by MarketsandMarkets™

Chicago, Oct. 27, 2023 (GLOBE NEWSWIRE) -- The Data Center Transformation Market is projected to grow from USD 11.5 billion in 2023 to USD 18.9 billion by 2028 at a Compound Annual Growth Rate (CAGR) of 10.5% during the forecast period, according to a new report by MarketsandMarkets™.

The data center transformation market is gaining popularity across industries due to the rise in data center facilities and the growing adoption of AI and automation.

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Data Center Transformation Market Dynamics:


  • Leveraging digital transformation to drive data center evolution
  • Increase in cloud adoption and hybridization
  • Indispensable requirements to improve data center uptime and energy efficiency
  • Proliferation of data center colocation facilities globally


  • Data security and privacy concerns
  • Complexity related to transformation


  • Rise in number of data center facilities
  • Growing demand for AI and automation
  • Data center consolidation and optimization

List of Key Players in Data Center Transformation Market:

  • Dell (US)
  • Microsoft (US)
  • IBM (US)
  • Schneider Electric (France)
  • Cisco (US),
  • NTT (Japan)
  • HCLTech (India)
  • Accenture (Ireland)
  • Cognizant (India)
  • Google (US)
  • Wipro (India)

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Based on service type, the consolidation services lead the market. Emerging technologies and changing economic trends have led organizations across all verticals to rethink their operational priorities. Organizations are consolidating their hardware, platforms, technologies, and data centers to gain competitive advantages and remain cost-effective and agile. The most used data center consolidation services include the initial assessment of the hosted IT infrastructure setup; suggestions on the types of hosting models, including physical, cloud, hybrid hosting, and storage virtualization; server virtualization; cloud computing; and better capacity planning via process automation tools. Organizations also opt for data center consolidation to reduce the overall size of facilities or merge one or more facilities; this reduces the overall operating cost and IT footprint.

Based on tier type, the tier 4 segment holds the highest share of the market. Tier 4 data centers provide additional functionalities compared to tier 3 and the other data center types. They have an uptime of 99.995%, the highest among all tier types. Tier 4 data centers utilize a fully redundant infrastructure with the 2N+1 redundancy level. Tier 4 data centers encounter the lowest annual downtime of around 26.3 minutes and can bear up to 96 hours of power outage. These data centers require double the infrastructure of a tier 3 data center and are only used in large data centers. 

Based on vertical, the BFSI vertical holds the most prominent market foothold. The BFSI sector is witnessing an increased adoption of advanced and digitalized systems replacing legacy systems. The growth in data generated from adopting these systems further fuels the demand for advanced data center systems. The BFSI industry embraces digital banking and financial technology (fintech) solutions. This transition requires data center transformation to support online banking, mobile apps, and digital payment systems securely and efficiently. BFSI institutions increasingly rely on data analytics to gain insights into customer behavior, risk management, and fraud detection; this necessitates data centers with enhanced processing capabilities and storage capacity. The BFSI sector is a prime target for cyberattacks.

The data center transformation market includes the analysis of five regions: North America, Asia Pacific, Europe, the Middle East & Africa, and Latin America. Asia Pacific region holds the highest CAGR during the forecast period. Asia Pacific countries were undergoing rapid digital transformation across various industries. This transformation drove the need for data centers to support deploying IoT devices, real-time applications, and data-intensive services. The deployment of 5G networks was gaining momentum in many Asia Pacific countries. 5G’s low latency and high bandwidth requirements necessitated the establishment of data centers to deliver the promised performance for applications like autonomous vehicles, smart cities, and remote healthcare.

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