Australian data centre services revenues to exceed $1.7 billion by 2020

The Australian data centre services market recorded revenues of $698 million in 2013, a growth of 17.2% over 2012.

Revenue from co-location services increased by almost 17% during 2013 and accounted for about 69% of total market revenue. Managed hosting services revenue grew by 18%.

Frost & Sullivan’s Australian Data Centre Services Market 2014 report cites that there was just over 230,000 square metres of outsourced data centre space in Australia at the end of 2013, an increase of 16% from that available at the end of 2012. However, it is estimated that Australia still accounts for less than 1% of total global data centre space.

Australia’s data centre outsourcing levels are catching up with developed markets such as the USA, which has over 40 times the amount of outsourced data centre space currently available in Australia.

Organisations outsource data centre hosting for a number of reasons, mainly because they believe that an outsourced facility has better security features, as well as hosting not being their core competency, superior disaster recovery, better availability and lower operating costs from outsourcing.

The most significant challenge faced by Australian organisations running their own data centres are the lack of IT manpower or lack of skills or resources internally.

Strong local demand for data centres has attracted investments from both local and global service providers, with significant new builds over the past few years in Australia. This additional capacity has pressured prices downward, further stimulating take-up of outsourced services.

Data centre services revenue growth will be strong over the next three to five years. Customers typically begin with co-location services and then slowly migrate to managed hosting. The addition of capacity will be strong in 2014 and 2015. The total amount of outsourced data centre space available may approach 500,000 square metres by 2020.