Firms will increasingly outsource their IT needs, boosting demand for industry services.
New York, NY (PRWEB) February 17, 2014
The Data Processing and Hosting Services industry provides infrastructure used for a variety of information technology (IT)-related activities, ranging from web hosting to automated data entry services. “During the five years to 2014, businesses have increasingly outsourced their IT infrastructure needs, directly benefiting industry operators,” according to IBISWorld Industry Analyst Dmitry Diment. As a result, the industry has fared well over the period, with revenue growing at an estimated annualized rate of 4.4% to $90.2 billion, including growth of 4.4% during 2014.
Investment in outsourcing application hosting to specialized firms has been the primary driver of growth, as it has been an alternative to local hosting of enterprise software. Because data processing and hosting requires the use of complicated equipment and sophisticated technical skills, many firms have moved away from internal IT management, opting to outsource work to reduce costs without limiting performance. In addition, investment in internet firms, driven by the continued shift of media to online platforms, has benefited industry growth. “The continued movement by businesses toward online services has driven funding toward resellers and content purveyors that lease resources from industry data hosts,” says Diment. Although, the pullback in IT spending during the recession briefly hampered revenue growth, spending has picked up since 2011 and is expected to grow at an even faster rate in 2014.
As technology required to process and host data becomes more complex, the level of expertise needed to effectively manage large data centers will increase. Firms will capture increasingly more data, thus requiring the outside expertise of industry operators to manage their data needs. In addition, supply disruptions in the hardware space may push companies that managed their IT infrastructure needs in-house to opt for third-party providers. To meet these demands, the industry landscape will continue to move toward large companies and independent contractors. Consolidation among the industry's largest firms will accelerate as operators merge to meet the data demands of the industry's largest clients, while the number of nonemployers will rise as firms with limited IT budgets outsource work to freelancers.
For more information, visit IBISWorld’s Data Processing and Hosting Services in the US 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 data.
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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