Data Processing and Hosting Services
Business for Sale Industry Economics
$196,533,000,000
Revenue
3.72%
Projected CAGR
2005 - 2021
Historical
2021 - 2027
Projection
3.72%
CAGR
$13,168,000,000
Profit
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Summary
The Data Processing and Hosting Services industry provides infrastructure used for a variety of information technology (IT)-related activities, ranging from online hosting to automated data entry services.
Over the five years to 2021, businesses have increasingly outsourced their IT infrastructure needs, directly benefiting industry operators. The advent and popularization of cloud computing, one of the industry’s fastest-growing product offerings, has similarly led to greater demand.
As a result, the industry has fared well during the majority of the five-year period, with revenue expected to grow at an annualized rate of 5.0% to $196.5 billion. However, the COVID-19 (coronavirus) pandemic is expected to lead to a decline in business investment in industry services, although this was tempered somewhat by increased usage of industry services in other capacities.
Industry revenue is expected to increase 1.7% in 2021, as the overall economy recovers from the economic fallout of the coronavirus pandemic. Profit is expected to decline slightly over the five years to 2021, as growth earlier in the period is countered by declines in later years.
Performance
The Data Processing and Hosting Services industry provides infrastructure for data hosting and processing services. As a result of an immense marketing push by some of its largest companies to popularize cloud computing, the industry has experienced steady growth over the five years to 2021.
In addition, the continued movement of media to online platforms has led to greater demand for industry services from internet-based companies that require industry operators to manage their information technology (IT) infrastructure needs.
As a result of these trends, industry revenue is expected to grow at an annualized rate of 5.0% to $196.5 billion over the five years to 2021, including the growth of 1.7% in 2021, as the immediate impact of the COVID-19 (coronavirus) pandemic gives way an economic recovery.
Outlook
Over the five years to 2026, the Data Processing and Hosting Services industry is expected to experience growth as the immediate impact of the COVID-19 (coronavirus) pandemic subsides to some degree, enabling the industry to return to more typical rates of revenue growth.
As the economy returns to more typical conditions, client companies are expected to continue the trend of outsourcing information technology (IT) services to third parties.
Efforts to improve operational efficiencies, coupled with the rising costs of handling IT internally, will drive this outsourcing by large companies. Moreover, the continued shift to online services will drive additional demand for industry services.
The aftermath of the coronavirus pandemic is likely to accelerate the trend of increased online services, further fueling growth in industry revenue. As a result, research expects industry revenue to grow at an annualized rate of 3.6% to $235.0 billion over the five years to 2026.
Industry
This industry provides data processing or hosting services. Data processing services provide specialized reports from information supplied by clients.
Hosting services can include web and application hosting. Services range from automated data entry to data processing.
Investment
The capital intensity of the data processing and hosting business is low. An anticipated $0.07 per $1.00 in salaries is assigned in 2021, a modest increase compared to 2016, for capital expenditures.
The sector requires a lot of work, skills, and expertise but also computer and software. Labor expenditure is an expected 33.2 percent of the income for industrial operators in 2021.
This means a number of expensive technicians, including computer support experts, computer systems analysis, and software developers, are employed by the usual industry operators.
But the industry needs large computer equipment capital investment. Rapid technological developments have compelled operators to remain competitive in the last five years to make considerable expenditures on new computer equipment.
Since this tendency is projected to continue in the next five years, some corporations may try to compensate for new equipment capital expenditures. Operators can avoid significant depreciation costs associated with the short life cycles of technical items via leasing equipment.
Volatility
The revenue volatility in the data processing and hosting sector is mild, mostly because of a volatile increase in the size of revenues, with the exception of a modest decrease owing to the impact of the COVID-19 Pandemic in 2020.
Typically, industrial clients subscribe to hosting services, so that revenue flows stay constant. Because the amount of data required continues to expand, cuts in industry prices are usually offset by greater client demand.
In addition, the need for industrial services has been boosted by new services, such as cloud and broader software as a service, which have increased revenues.
In the future, volatility is expected to decrease with industry revenues expected to expand consistently.