Data Center Managed Services: Evaluating Cloud Strategies Amid the Surge in On-Premises Repatriation

Enterprises are reconsidering their cloud strategies due to rising costs, security concerns, and regulatory requirements. To address these challenges, they are implementing cloud repatriation to regain control and enhance performance by moving their workloads to on-premises data centers. On the other hand, service providers are using generative AI (Gen AI) to optimize costs with automated infrastructure provisioning, enhance security by predicting threats, and improve compliance through real-time observability and control.

Both demand-side and supply-side trends are covered in our Data Center Managed Services 2024 Market Insights™ and Data Center Managed Services 2024 RadarView™, respectively. These reports present a comprehensive study of data center managed service providers and closely examine market leaders, innovators, disruptors, and challengers.

Avasant evaluated 48 service providers across three dimensions: practice maturity, partner ecosystem, and investments and innovation. Of the 48 providers, we recognized 20 that brought the most value to the market during the past 12 months.

The report recognizes service providers in four categories:

• • Leaders: Accenture, Capgemini, Cognizant, HCLTech, Infosys, LTIMindtree, TCS, and Wipro
  • Innovators: Atos, DXC Technology, Kyndryl, Tech Mahindra, and Unisys
  • Disruptors: Coforge, HPE, NTT DATA, Rackspace Technology, and Zensar
  • Challengers: Ensono and Red River

Figure 1 below from the full report illustrates these categories:

“Gen AI is transforming data center management by introducing capabilities beyond traditional automation,” said Avasant Partner Henry Guapo. “With Gen AI, enterprises can optimize operations, reduce costs, generate adaptive models for capacity planning, autonomously configure infrastructure, and implement self-healing monitoring.”

The reports provide several findings, including the following:

• • Infrastructure management and observability pose significant hurdles for enterprises managing data centers. These challenges arise from inefficient power and cooling of infrastructure, inability to manage the volume of observability data, and fragmented insights across the data center infrastructure.
  • Approximately 60% of the data center engagements adopt managed services and hybrid delivery models. The need for IT infrastructure management and maintenance, optimized performance, skilled talent to handle complex environments, and cost control have driven enterprises to prefer these delivery models.
  • Manufacturing and telecom sectors account for over 25% of the data center managed services revenue. Evolving needs for computational power, data storage, and low-latency processing are key factors driving the demand for data center managed services in these industries.
  • Service providers are increasingly collaborating with cloud platform vendors and hardware providers to manage high-performance computing workloads at on-premises data centers.

“Enterprises are implementing cloud repatriation to enhance infrastructure control and reduce cloud egress costs,” said Dhanusha Ramakrishnan, lead analyst with Avasant. “They are increasingly migrating critical workloads, which require low latency performance and continuous availability, to data centers.”

The Data Center Managed Services 2024 RadarView™ also features detailed profiles of 20 service providers, along with their solutions, offerings, and experience in assisting enterprises in their data center management journeys.

This Research Byte is a brief overview of the Data Center Managed Services 2024 Market Insights™ and Data Center Managed Services 2024 RadarView™. (click for pricing).