A recent global survey commissioned by Cisco and conducted by Canalys reveals a promising outlook for IT channel partners focusing on hosting services in 2023. Despite ongoing global economic uncertainties, the hosting services sector is anticipated to grow significantly, with a projected 12.7% increase and a total market value of $472 billion. This expansion surpasses the expected overall growth in IT spending, which is estimated at 3.5%.
What’s Driving the Growth?
The driving force behind the surge in IT hosting services is the ever-pressing need for enhanced network security. With companies across the globe dealing with swiftly evolving threat landscapes, the demand for robust cybersecurity measures has never been greater. In addition to the global cybersecurity challenges and the shortage of IT talent, external factors are compelling numerous enterprises to turn to hosting service partners to obtain the required technical expertise. The research indicates that 56% of channel partners are optimistic about an increase in revenue from network security hosting services this year.
Alexandra Zagury, the Vice President of Hosting Services and Sales at Cisco, emphasizes the importance of providing flexible and value-driven consumption models for clients who are integrating technology into their operations. She explains that the landscape of IT channel partners offering hosting services is evolving rapidly. They are now modularizing and packaging custom solutions to meet the diverse needs and challenges of their clients. The aim is to drive more innovation and specialization in the hosting services sector, delivering unique business outcomes and exceptional experiences.
The Global Landscape
Confidence is soaring among channel partners who specialize in hosting services, primarily due to the global push for growth. The study conducted in June 2023 reveals that 35% of these channel partners anticipate a growth of at least 20% in their hosting service business for the year. This marks a substantial increase from the 27% reported in 2022, demonstrating the rapid evolution of hosting services across businesses of various sizes.
Robin Ody, a Senior Analyst at Canalys, underlines the pivotal role hosting services play in driving adaptation and growth within the global IT industry. He underscores the immense potential for businesses offering hosting services to chart new paths for their future development.
Cloud infrastructure management is another promising area for growth. As businesses increasingly digitize their operations and migrate to cloud-based platforms, they face challenges related to complex cloud infrastructure, distributed applications, and services that span both private and public cloud environments. Consequently, there is an increased demand for cloud infrastructure management and technical expertise. Over 55% of channel partners anticipate revenue growth in this area for the year.
The growing emphasis on IT investments for sustainability and the emergence of innovative technologies, such as artificial intelligence (AI), will further accelerate the growth of hosting service providers. The study indicates that nearly 59% of partners view AI as a significant source of business opportunities, with 39% believing that AI will bring substantial opportunities. Likewise, 57% of partners are of the opinion that customers are willing to pay extra for sustainable products and solutions.
In summary, hosting services are integral to ensuring businesses attain maximum returns from their technology investments. As new technologies continue to emerge, hosting service partners will play a critical role in an enterprise’s digital business strategy. By focusing on specific verticals, technologies, and geographic regions, hosting service partners are well-positioned to help clients overcome IT challenges, simplify IT complexities, and drive business growth.
The research points to a future where partners providing hosting services can expect substantial global growth. The anticipated compound annual growth rates (CAGRs) in all regions will reach double digits by 2025. In the Asia-Pacific region, the sector is forecasted to grow from $95 billion to a significant 14%. Europe, the Middle East, and Africa, with hosting services currently valued at $122 billion, are expected to see growth of up to 12%. In Latin America, a growth rate of 11-12% is projected, starting from a base revenue of $11.5 billion. Meanwhile, the North American region is anticipated to witness growth rates of 10-12% from its existing $190.6 billion revenue base.
This robust growth trend illustrates the hosting services sector’s essential role in driving the digital transformation of businesses around the world. As the demand for secure, flexible, and innovative IT solutions continues to rise, hosting services are poised to remain at the forefront of this technological revolution.
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