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2024

Southeast Asia and Middle East Data Center Services Market

Southeast Asia and Middle East Data Center Services Market Size, Share, Competitive Landscape and Trend Analysis Report by Insurance Cover (Single- Southeast Asia & Middle East Data Center Services Market by Type, Data Center Size, Application : Opportunity Analysis and Industry Forecast, 2024-2032

IC : Software and Services

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Author's: Authors: Shrawanty Yadav| Bias Dey | Onkar Sumant
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Southeast Asia and Middle East Data Center Services Market, 2032

The Southeast Asia and Middle East data center services market was valued at $9,164.57 million in 2023, and is expected to reach $39,600.35 million by 2032, registering a CAGR of 18.0% from 2024 to 2032. Data center services include a comprehensive array of elements essential for the effective functioning of a data center. They include all activities associated with data center implementation, maintenance and operation and involve hardware, software, processes, and personnel. In addition, data center services are responsible for providing IT organizations with data backup and recovery, networking, website hosting, data management, and other critical functions. Furthermore, by outsourcing data center services to specialized providers, organizations can benefit from reduced capital expenditures, scalability, improved reliability, enhanced security, and access to expert support and resources. As a result, data center services enable businesses to focus on their core activities while leveraging robust and efficient IT infrastructure to drive innovation and growth.

Southeast Asia & Middle East Data Center Services Market

Factors such as rise in digital transformation initiatives, increase in the need for advanced data center services to support their evolving IT requirements, and growing adoption of emerging technologies such as 5G, cloud computing and edge computing across Southeast Asia and Middle East are positively impacting the growth of the market. In addition, organizations are embracing hybrid cloud strategies and growing awareness of environmental sustainability is driving the adoption of green data center practices, including energy-efficient infrastructure and renewable energy sources. Moreover, the surge in demand for artificial intelligence (AI) and automation technologies for enhancing data center efficiency, reliability, and security is expected to propel the growth of the Southeast Asia and Middle East data center services market during the forecast period.

Furthermore, rise in government initiatives, such as smart city projects and digital economy strategies, and urbanization and economic development in the Southeast Asia and Middle East regions are expected to provide lucrative growth opportunities for the market during the forecast period. In addition, expansion of footprint in Southeast Asia and the Middle East to cater the growing demand for localized and interconnected data center services, is anticipated to create numerous opportunities for market growth in the coming years. However, regulatory complexities, security concerns, and high upfront investment and operating costs hamper the growth of the Southeast Asia and Middle East data center services market.

By data center size, the large data center segment dominated the market in 2023 and is expected to maintain its dominance in the upcoming years. Increase in demand for scalable, reliable, and high-performance data center infrastructure to support digital transformation initiatives is a major growth factor for the large data center segment. However, the medium data center segment is expected to witness the highest growth in the coming years, as businesses seek flexible and reliable solutions to meet their evolving data processing needs.

Region-wise, Middle East dominated the Southeast Asia & Middle East data center services market share in 2023. This surge can be attributed to several factors, including the rise in adoption of cloud computing, digital transformation initiatives across various sectors such as IT & telecom, utilities, and the emergence of smart city projects. However, Southeast Asia is expected to witness the highest growth during the forecast period. Rapid digitalization and the proliferation of internet-enabled devices are driving demand for data storage and processing capabilities.

Segment Review

The data center services market is segmented into type, data center size, application, and region. By type, it is divided into installation & integration services, training services, consulting services, maintenance & support services, and others. By data center size, it is categorized into small data center, medium data center, and large data center. By application, the market is classified into BFSI, energy, government, healthcare IT & telecom, manufacturing, and others. Region-wise, it is analyzed across Southeast Asia and Middle East.

Southeast Asia and Middle East Data Center Services Market
By Type
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Maintenance & support services segment is projected as one of the most lucrative segments.

Top Impacting Factors   

Increase in adoption of cloud computing and edge computing

Rise in adoption of cloud computing and edge computing is driving the growth of the data center services market in Southeast Asia and the Middle East regions. In response to the region's growing digitalization efforts and expanding internet connectivity, businesses are turning to cloud solutions to optimize operations, enhance flexibility, and drive innovation. Cloud computing offers scalability, cost-efficiency, and accessibility, allowing organizations to rapidly deploy applications and services without the need for extensive on-premises infrastructure.

Moreover, rise in edge computing, driven by the proliferation of IoT devices and the need for low-latency processing, is fueling demand for localized data processing and storage capabilities closer to end-users. This trend is particularly relevant in urban centers in Southeast Asia countries such as Singapore, Vietnam, Thailand, and others. In addition, the Middle East countries such as UAE, with dense population and emerging smart city initiatives, created the need for real-time data processing and analysis. As a result, data center service providers are expanding their offerings to include edge data centers strategically located to support these emerging requirements. For instance, in March 2024, Zoho Corporation, announced the opening of the first two Middle East data centres in Saudi Arabia to ensure local data is stored within the geographical boundaries of the Kingdom, in line with Personal Data Protection Laws (PDPL). This investment demonstrates Zoho Corp's commitment to data sovereignty and compliance with local regulations while further enhancing service quality and security for its Saudi customers. Hence the Zoho Corp.'s new data centers, are expected to drive Saudi Arabia's future digital progress and reinforce the nation's digital capabilities.

Growth of hyperscale data centers to meet escalating demand

As digital transformation accelerates across industries in Southeast Asia and the Middle East, fueled by the proliferation of mobile devices, rise in internet penetration, and adoption of cloud-based applications, there is a huge demand for robust infrastructure capable of handling vast amounts of data. Hyperscale data centers, characterized by their immense scale and efficiency, are uniquely positioned to meet this escalating demand. These facilities offer unparalleled computing power, storage capacity, and networking capabilities, enabling organizations to leverage advanced technologies such as AI, IoT, and big data analytics to drive innovation and gain competitive advantage.

Southeast Asia and Middle East Data Center Services Market
By Application
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IT and Telecom is projected as one of the most lucrative segments.

Moreover, hyperscale data centers are adept at handling the surge in data traffic generated by the growing digital ecosystem, including e-commerce, social media, and online entertainment platforms. As a result, businesses in Southeast Asia and the Middle East are increasingly turning to hyperscale data center providers to support their evolving infrastructure needs, ensuring scalability, reliability, and performance to meet the demands of today's digital economy. For instance, in March 2023, Agility Logistics Parks (ALP), a leading developer of industrial and logistics real estate in the Middle East, Africa and South Asia, launched the tailored, master-planned data center campus sites in Saudi Arabia, Kuwait, Egypt and Ghana. The sites are being readied at ultra-modern ALP warehousing complexes in fast-growing markets and mega-cities that are looking to add hyperscale data center capacity and resolve data latency, security, and compliance challenges to speed their growth and improve competitiveness.

However, highly regulated industries, including financial services providers, government agencies, and critical infrastructure companies, wanted to protect customer data by storing the information on servers located in Singapore. For instance, in September 2022, SentinelOne, an autonomous cybersecurity platform company, launched the new data center in Singapore. The deployment of the new data center is expected to aid Singapore businesses and government agencies in their overall data protection and regulatory compliance efforts.

Competition Analysis

The report analyzes the profiles of key players operating in the Southeast Asia & Middle East data center services market such as Cisco Systems Inc., IBM Corporation, Schneider Electric SE, Dell Inc., Huawei Technologies Co., Ltd., Equinix, Inc., HCL Technologies Limited, Fujitsu, Hewlett Packard Enterprise, and AT&T Intellectual Property.  These players have adopted various strategies to increase their market penetration and strengthen their position in the Southeast Asia & Middle East data center services market.

Key Developments in the Southeast Asia & Middle East data center services Industry

  • In September 2023: Cisco partnered with Nutanix, to accelerate hybrid multi-cloud deployments by offering the industry’s most complete hyper-converged solution for IT modernization and business transformation.
  • In March 2022: IBM launched its Client Engineering team in Middle East and Africa (MEA) for clients and business partners. Located across four countries, Saudi Arabia, South Africa, Turkey and UAE, IBM Client Engineering is expected to drive innovation in the MEA region by providing an enhanced customer experience, focused on co-creation, technical eminence, and speed.

Key Benefits for Stakeholders

  • The study provides an in-depth Southeast Asia & Middle East data center services market analysis along with the current trends and future estimations to elucidate the imminent investment pockets.
  • Information about key drivers, restrains, and opportunities and their impact analysis on the Southeast Asia & Middle East data center services market size is provided in the report.
  • The Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the Southeast Asia & Middle East data center services industry.
  • The quantitative analysis of the global Southeast Asia & Middle East data center services market for the period 2023–2032 is provided to determine the Southeast Asia & Middle East data center services market potential.

Southeast Asia and Middle East Data Center Services Market Report Highlights

Aspects Details
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By Type
  • Installation & Integration Services
  • Training Services
  • Consulting Services
  • Maintenance & Support Services
  • Others
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By Data Center Size
  • Small Data Center
  • Medium Data Center
  • Large Data Center
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By Application
  • BFSI
  • Energy
  • Government
  • Healthcare
  • IT & Telecom
  • Manufacturing
  • Others
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By Region
  • Southeast Asia   (Singapore, Malaysia, Thailand, Vietnam, Indonesia, Rest of Southeast Asia)
  • Middle East   (UAE, Saudi Arabia, Oman, Qatar, Rest of Middle East)
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Key Market Players

IBM Corporation, Cisco Systems Inc., Dell Inc., Equinix, Inc., Fujitsu, HCL Technologies Limited, Hewlett Packard Enterprise, AT&T Intellectual Property, Huawei Technologies Co., Ltd., Schneider Electric SE

Analyst Review

In today's data-driven environment, data centers enable businesses to manage, store, and analyze their data efficiently and securely. They offer numerous benefits, including centralized data management, scalability, security, redundancy, and cost savings. With the rise in demand for reliable, high-performance network connections to support distributed and demand-intensive workloads, enterprises need flexible solutions to meet their evolving needs. As a result, data center services are becoming beneficial for the market growth across Southeast Asia and Middle East regions.

Furthermore, with the rapid and steady expansion of major cloud providers in the Southeast Asia region, paired with the growth of social media, mobile gaming, e-commerce, and other digital service provider such as internet service providers (ISPs), content providers and enterprises are requiring more data center capacity in these fast-growing markets, including in downtown locations in tier 1 cities. Thus, customers are also increasingly demanding facilities that cater to high-power density deployments such as AI. Southeast Asia is viewed as a favorable location for AI applications by companies investing in large language model (LLM) machine learning and latency sensitive AI deployments, requiring real-time or near-real-time decision-making or user-interaction capabilities. The region is particularly attractive for such deployments due to access to relatively low-cost power, favorable conditions for importing chipsets for GPUs, as well as existing and planned subsea cable infrastructure, which allows transmission of data to markets in the region.

Moreover, Singapore is one of the fastest-growing technology hubs in Southeast Asia and is home to a thriving business community. For instance, in February 2023, the Fivetran’s automated data movement platform, launched the AWS data center in Singapore, that is expected to provide local businesses with faster, more reliable, and secure access to data and help companies drive digital transformation initiatives in the region.

In addition, launch of the AWS data center in Singapore also demonstrates the commitment to data privacy and security. Singapore has a strong reputation for data protection and security, and the new AWS data center in the region is anticipated to provide customers with peace of mind, knowing that their data is protected and compliant with data residency requirements.

However, market players in the Middle East are exploring new technologies and applications to meet the increase in demand from customers. Product launches, collaborations, and acquisitions are expected to enable them to expand their product portfolios and penetrate in different regions. For instance, in March 2024, Coupa, the leading AI-driven platform that helps to operate smarter and grow faster, launched its first data center in the Middle East, which is to be inaugurated in collaboration with the Amazon Web Services (AWS) team in Dubai. The new data center highlights Coupa's commitment to invest in the region and drive growth and its dedication to providing enhanced service and data residency for clients across the UAE and the broader Middle East region. Such emerging enhancements are anticipated to create notable opportunities for the data center services market growth during the forecast period.

Author Name(s) : Authors: Shrawanty Yadav| Bias Dey | Onkar Sumant

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Southeast Asia and Middle East Data Center Services Market

Opportunity Analysis and Industry Forecast, 2024-2032