North America outsources 16% of data center load; Europe lags

The portion of the information technology (IT) load outsourced to wholesale and retail data centers in North America stood at 16.3% at the end of 2012.

09/10/2013


IHS Inc.The portion of the information technology (IT) load outsourced to wholesale and retail data centers in North America stood at 16.3% at the end of 2012 according to a recently released report by IMS Research, now part of IHS Inc.

The new IHS report, which covers the wholesale and retail data center—or colocation—industries, found that outsourcing was more than twice as prevalent in North America compared to Europe. It also projects that the share of outsourced data centers will continue to grow during the next five years.

“IT outsourcing is growing for several reasons,” according Jason dePreaux, an associate director for data center and critical infrastructure at IHS. “First, data centers are increasingly expensive to build and maintain. For many organizations, outsourcing allows companies to shift from having capital-intensive data-center builds to more predicable operating expenses. Second, wholesale and retail data centers are often built with energy-efficient designs and equipment that might not be feasible in smaller in-house facilities. Finally, projecting future capacity is difficult as IT technology evolves and requirements change. Outsourcing provides added flexibility to evolving demand.”

While the fundamental drivers for outsourcing are strong, dePreaux cautions that risks still abound.

“Overcapacity is a major worry for colocation vendors,” he noted. “Excess stock can drive prices down. We are seeing build-outs being done in smaller chunks to more closely match supply with demand.”

Other risks include commoditization as more vendors enter the industry and the ever-present threat of outages, which can seriously damage momentum toward outsourcing.

One reason North America leads in data-center outsourcing over Europe is because of the preponderance of vendors with both wholesale and colocation offers located in North America. The tax-advantaged status of being a real estate investment trust (REIT) in the United States means data center REITs can avoid paying corporate taxes by distributing profits to investors.

IHS forecasts that more than 1.3 GW of leased IT capacity will be added during the next five years between North America and Europe.

“While the wholesale and retail data center industry continues to mature, it has just scratched the surface of the available market,” dePreaux commented.



No comments
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
Water use efficiency: Diminishing water quality, escalating costs; Lowering building energy use; Power for fire pumps
Building envelope and integration; Manufacturing industrial Q&A; NFPA 99; Testing fire systems
Labs and research facilities: Q&A with the experts; Water heating systems; Smart building integration; 40 Under 40 winners
Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Protecting standby generators for mission critical facilities; Selecting energy-efficient transformers; Integrating power monitoring systems; Mitigating harmonics in electrical systems
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.