Why the outsourcing and data centre market is hot

Today’s Canadian data centre market is valued at $4 billion and growing, and according to one IDC Canada analyst, there’s no better time than now for partners and end-users to take advantage of outsourcing and data centres.

Mark Schrutt, director of outsourcing services at IDC Canada, said that unlike other areas of the IT market that are down, such as PC shipments and software, the data centre space, which may consist of facilities management, Web hosting, managed services, and outsourcing contracts, is up and growing relative to other markets.

“Outsourcing is not down,” Schrutt said. “The growth is not high, but it’s growing nicely in the low single-digit range compared to other markets. Over the next few years, the data centre market is expected to grow upwards of three per cent.”

Especially with the down economy, Schrutt said businesses are constantly looking for ways to trim their bottom lines.

“People often look at IT to reduce their costs and they look at outsourcing as an avenue to do that,” he explained.

For Centrilogic, a Mississauga, Ont.-based managed IT services provider, business has been going so well that the company has built two data centres this year, in addition to the other two it already had.

Robert Offley, president and CEO of Centrilogic, said his business enables end-users to outsource their key infrastructure management to them, allowing customers to focus on activities that are more central to their business.

“We have four core data centres … two in the U.S. and two in Canada,” Offley said. “We provide data centre-centric solutions, managed services, virtualization, cloud computing services and more to mid and large-size businesses.”

The company also relies on a channel of about 40 partners to help it go to market, with plans to add more, Offley added.

“We plan to expand our partner base this year because we want to get to market more efficiently,” he said. “Some (partners) will provide a solution and need somewhere to host it, so we host it. Others will use some of our infrastructure, some need to manage software-as-a-service (SaaS), and others white label some of our core services.”

Offley said lately, he’s been seeing a lot of growth in outsourcing in the professional services market, which includes accounting firms, law firms, and even the healthcare sector.

Generally, companies look to outsource their data centres or their infrastructure components because they’re either running out of room or they don’t have a state-of-the-art facility, Schrutt said.

“There’s more demand than supply, so this is a good market for outsourcing in Canada,” he added. “In these times, you see vendors expanding their data centre footprint because outsourcing data and (facilities) is very stable and there’s a market for it.”

Even though Schrutt said there’s more demand for data centre space, he said he doesn’t think we’re headed for a crisis.

“It does take time, between 12 to 24 months, to retrofit or build a new data centre,” he said. “But instead of running out of data centre space, there would just be a premium charged by vendors as they continue their expansion plans. Because the cost of power has been going up as well, companies will pass (these costs) onto the customers.”

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Jim Love, Chief Content Officer, IT World Canada

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Maxine Cheung
Maxine Cheung
Staff Writer, Computer Dealer News

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