An increase in data volume and IT complexity will boost demand for industry services
Los Angeles, CA (PRWEB) February 24, 2013
The Data Processing and Hosting Services industry is benefiting from businesses that are increasingly outsourcing their information technology (IT) infrastructure needs. According to IBISWorld industry analyst Andrew Krabeepetcharat, “The industry provides services related to hosting or data processing used for a variety of IT-related activities ranging from web hosting to automated data entry services.” The industry performed well during the past five years with revenue expected to grow at an average annual rate of 3.8% to $4.5 billion in 2013. In 2013 alone, industry revenue is expected to grow 4.3%. The current year's fast growth reflects a recovering economy and an increase in the use of industry services.
During the past five years, the Data Processing and Hosting industry grew as a result of increased investment in outsourcing application hosting to specialized firms as an alternative to in-house hosting. “As revenue is earned through a subscription basis, the reduced spending on IT services during the recession slowed the rate of revenue growth,” says Krabeepetcharat. Since 2009, spending grew during the years to 2013 as firms increasingly outsourced their IT needs to third party companies. Mergers and acquisitions (M&A) are anticipated to increase during the next five years as firms consolidate to increase the subscriber base.
In 2013, IBISWorld estimates that the four largest operators in the Data Processing and Hosting Services industry will account for about one-quarter of industry revenue. The level of concentration in the industry is low, primarily due to the range of services that data processing and hosting service companies can provide. While market share concentration is low, it is gradually increasing because of a number of recent acquisitions among major companies. Hewlett-Packard's recent acquisition of Electronic Data Systems, formerly one of the largest operators, has made HP the largest player in the industry. The industry's smaller operators face increasingly difficult competitive conditions, as large companies with falling costs look to control broader segments of the market.
Consolidation in other industries will motivate businesses to outsource IT needs as systems become too costly to maintain in-house. At the same time, the growth in IT complexity will increase the skills needed to manage data processing and hosting centres. As companies begin using more data, they will increasingly require outside expertise to manage their data collection, hosting and processing. As a result, revenue is forecast to grow.
For more information, visit IBISWorld’s Data Processing & Hosting Services in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry provides specialized data processing or hosting activities. Data processing services provide specialized reports from information supplied by the clients. Hosting services can include web and application hosting. Services range from automated data entry to processing that data. The industry does not include websites themselves or the revenue earned by their owners.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.