Data Center Transformation Market Future Growth, Latest Technologies, Business Scenario, Key Segments and Forecast to 2028
The data center transformation market is expected to expand from USD 11.5 billion in 2023 to USD 18.9 billion by 2028, registering a CAGR of 10.5% over the forecast period. This growth is driven by a convergence of technological advancements, evolving business demands, and environmental considerations, all of which are reshaping how organizations manage and optimize their data center infrastructure.
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Automation Services segment to grow at the highest CAGR during the forecast period.
By service type, the data center transformation market includes Consolidation Services, Optimization Services, Automation Services, and Infrastructure Management Services. The automation services segment to grow at the highest CAGR during the forecast period. Data center automation automates IT processes across the computing, network, and storage layers in physical and virtual environments. Automation involves using software and tools to streamline and orchestrate various data center processes and tasks. It plays a crucial role in data center transformation by enhancing efficiency, reducing human error, and enabling rapid response to change demands.
Cloud Data Center segment to grow at the highest CAGR during the forecast period.
The various segments we have captured in the scope are – cloud, colocation, and enterprise data centers. The cloud data center segment would grow at the highest CAGR during the forecast period. Cloud providers utilize service models, such as private cloud, public cloud, and hybrid cloud, to offer enhanced services to their customers. With cloud computing adoption continuing to rise, cloud data centers are hosting more enterprise workloads. Major CSPs, such as Amazon, Microsoft, and Google, continue to build massive facilities in the US and worldwide to increase their cloud computing power.
The retail vertical will grow at the second-highest CAGR during the forecast period.
Retailers are embracing cloud computing, big data analytics, and digital transformation to expand their businesses and increase their customer base. They connect to consumer devices for various activities, such as analysis of their buying habits and promoting targeted sales. Due to the rising consumer purchasing power, the retail vertical is one of the fastest-growing verticals. With the advent of online retailing, retailers are adopting more innovative technologies such as cloud computing, big data analytics, digital stores, and social networks. Online retail vendors need a comprehensive cloud environment to offer their products and services to customers. Retailers are increasingly adopting edge computing to process data closer to the point of sale, enabling real-time analytics, inventory management, and personalized customer experiences.
North America segment to capture a significant market share during the forecast period.
The data center transformation market includes regional segmentation into Europe, Asia Pacific, North America, the Middle East and Africa, and Latin America. As per region, North America accounts for the largest market share in the global data center transformation market in 2023, and this trend will persist during the forecast period. North America has the most established data center adoption due to several factors, such as large enterprises with sophisticated IT infrastructure and skilled technical expertise. The US and Canada are North America’s two most significant contributors in the data center transformation market. It is a region with strict regulations for several economic sectors and advanced technology. North America is known for its technological advancements and early adoption of innovative solutions. The large enterprises in this region are rapidly adopting data center services to improve employee experience and tackle any business continuity challenges amid COVID-19. In North America, large enterprises and SMEs focus on developing innovative data centers integrated with technological advancements, such as 5G, IoT, AI, and ML; this would boost growth in the future.
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Unique Features in the Data Center Transformation Market
Organizations are increasingly shifting to hybrid and multi-cloud environments to enhance flexibility, scalability, and cost efficiency. This approach allows businesses to balance workloads between on-premise data centers, private clouds, and public cloud services, optimizing performance and security.
Artificial intelligence (AI) and automation are revolutionizing data center management by enabling predictive maintenance, workload optimization, and real-time monitoring. AI-driven insights help organizations reduce downtime, enhance efficiency, and proactively address potential issues.
Software-defined infrastructure (SDI) enables greater agility by decoupling hardware from software. Through software-defined networking (SDN), software-defined storage (SDS), and virtualization, businesses can dynamically allocate resources, improve scalability, and streamline management processes.
The rise of edge computing is driving data center transformation by bringing computing power closer to the source of data generation. This reduces latency, enhances real-time data processing, and supports applications requiring low-latency responses, such as IoT, autonomous systems, and smart cities.
Major Highlights of the Data Center Transformation Market
Organizations are increasingly adopting hybrid and multi-cloud strategies to optimize performance, enhance security, and ensure seamless workload distribution. Businesses leverage a mix of on-premise, private, and public cloud solutions to maintain flexibility while reducing operational risks.
AI-driven automation is revolutionizing data center operations by enabling predictive analytics, real-time monitoring, and automated resource allocation. These innovations enhance efficiency, reduce downtime, and lower operational costs while improving system resilience.
With the rise of IoT, 5G, and real-time data processing, edge computing is becoming an integral part of data center transformation. Businesses are deploying edge data centers closer to data sources to reduce latency, enhance network efficiency, and support applications requiring real-time processing.
Environmental concerns and rising energy costs are driving the adoption of sustainable data center solutions. Companies are investing in energy-efficient cooling systems, renewable energy sources, and AI-driven power optimization to reduce carbon footprints and improve sustainability.
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Top Companies in the Data Center Transformation Market
The key technology vendors in the market include Dell (US), Microsoft (US), IBM (US), Schneider Electric (France), Cisco (US), NTT (Japan), HCLTech (India), Accenture (Ireland), Cognizant (India), Google (US), Wipro (India), Atos (France), TCS (India), Hitachi (Japan), NetApp (US), Mindteck (India), Bytes Technology Group (UK), General Datatech (US), Insight Enterprises (US), Tech Mahindra (India), NETSCOUT (US), Dyntek (US), Softchoice (Canada), InKnowTech (India), Rahi Systems (US), Blue Mantis (UK), GreenField Software (India), Hyperview (Canada), FlexiScale (UK), LiquidStack (US), RackBank Datacenters (India), and Vapor IO (US). Most key players have adopted partnerships and product developments to cater to the demand for data center transformation.
IBM
The company has a robust global presence, brand name, and diversified product portfolio in the data center transformation market. It benefits from its extensive intellectual property portfolio, including more patents. The high economies of scale contribute to business capabilities to maintain a competitive position in the market. The increasing demand for cloud-based services provides IBM with a continued business inflow across verticals and regions. The company has a strong presence in the European, American, Middle East & Africa, and Asia Pacific regions. It caters to various industries, including BFSI, retail, IT and telecommunications, media and entertainment, healthcare, government, and education. IBM has received over 3,000 patents for cloud and hybrid cloud technology. IBM researchers developed a method for intelligently distributing data processing components among cloud, edge, and intermediate computing devices. IBM received over 2,300 AI patents as inventors created new AI technologies to assist organizations in expanding their use of AI. As businesses fight to protect sensitive data, particularly in highly regulated industries, IBM inventors have earned over 1,400 security-related patents.
Microsoft
Microsoft Azure is one of the leading cloud platforms globally. It provides a comprehensive set of services for data center transformation, including virtual machines, containers, storage, networking, and AI capabilities. Microsoft offers hybrid cloud solutions, allowing organizations to seamlessly integrate on-premises data centers with Azure. This hybrid approach provides flexibility and scalability. The company has strong domain expertise in all its solutions to cater to its clients better. The company extensively focuses on inorganic growth strategies, including strategic partnerships and acquisitions. Microsoft has a vast ecosystem of partners and third-party integrations, enhancing its offerings and enabling customers to build tailored solutions. The company is expanding in emerging markets through these inorganic growth strategies. Microsoft strongly emphasizes security and compliance, offering tools and services to help organizations protect their data and meet regulatory requirements.
Schneider Electric
Schneider Electric is a multinational company based in France, specializing in energy management and automation solutions. Founded in 1836, the company has grown to become a global leader in electrical distribution, industrial automation, and energy efficiency technologies. Schneider Electric offers a wide range of products and services, including electrical components, building management systems, and smart grid solutions. With a strong focus on sustainability and innovation, the company aims to help customers optimize energy usage and enhance operational efficiency. Headquartered in Rueil-Malmaison, France, Schneider Electric operates in over 100 countries and employs more than 135,000 people.
NTT
NTT (Nippon Telegraph and Telephone Corporation) is a major Japanese telecommunications company headquartered in Tokyo, Japan. Founded in 1952, NTT is one of the largest telecommunications companies in the world. It provides a wide range of services, including fixed and mobile voice communications, internet services, and system integration. NTT is organized into several key subsidiaries, such as NTT East, NTT West, NTT Communications, and NTT Data, each focusing on different aspects of the telecommunications and IT sectors. The company is known for its innovation in technology and its significant contributions to global telecommunications infrastructure.
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