Enterprise spending on data centres and hosting services in Malaysia to grow at 5 per cent CAGR through 2025

More and more businesses in the country adopting cloud-based services and accelerating their digital transformation efforts.

The total addressable market size for data centres and hosting services in Malaysia, in terms of enterprise spending opportunity, is forecast to increase at a CAGR of 5 per cent over 2020-2025, with more and more businesses in the country adopting cloud-based services and accelerating their digital transformation efforts, according to GlobalData, a leading data and analytics company.

Saurabh Daga, Technology Analyst at GlobalData, comments: “The rapid pace of digitalization in the country with several enterprises accelerating the adoption of digital business models like e-commerce, net banking, OTT entertainment platforms and remote working/Work-from-Home (WFH) strategies will drive enterprise spending on data center services to reach $US430m by 2025.”

Several companies across Malaysia are now expected to adopt a hybrid approach or go completely remote over the forecast period. For instance, United Overseas Bank Malaysia is giving its workforce an option to work remotely two days a week even after the removal of COVID-19 restrictions. This shift towards remote/hybrid working model increases the demand for data centre services, as they provide a central point of access for data, collaborative tools like Zoom and other essential business applications.

Daga adds: “Favourable government policies, codified in the digital blueprint known as MyDIGITAL, which outlines various strategies and initiatives for strengthening digital adoption, are driving digital transformation and making Malaysia a regional hub for digital content. Against this backdrop, cybersecurity will also be crucial factor for growth of data centre & hosting services market in the country.

One of such key initiatives is the Digital Investments Future 5 Strategy (2021-2025) of Malaysia Digital Economy Corporation, which puts emphasis on five key technologies: artificial intelligence (AI), cloud computing, cybersecurity, data centres, and digital content tools.

Malaysia is witnessing many new data centre establishments, with the latest being the partnership announced in January 2022 between Chinese technology company Huawei and Malaysian real estate developer Hatten Land for developing data centre. In November 2021, Singapore-based Bridge Data Centres announced a new data centre in Malaysia, to be operational by end of 2022. In 2021, Microsoft announced its plan to launch first data centre region in Malaysia.

Application hosting and data centre services segment is expected to account for the larger market share, as enterprises generally prefer management of their applications and data being outsourced through a managed hosting services provider compared to a colocation centre mainly due to affordability.

Daga concludes: “While the large (1,001+ employees) enterprises will account for the largest share of the total data centre and hosting spending in Malaysia through the forecast period, the spending from micro, small and medium enterprises (1-1,000 employees) will increase at a marginally faster CAGR of 5.0 per cent over the forecast period. A major driver for data centre spending by SME’s is the Malaysian government initiative, which provides financial grants for SMEs to adopt digital marketing, electronic point of sale (e-PoS), HR and CRM systems, procurement systems, e-commerce, remote working and ERP/accounting and tax platforms.”



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