Infrastructure as a Service (IaaS) Market Size, Share & COVID-19 Impact Analysis, By Deployment (Public, Private, and Hybrid), By Service (Computing, Networking, Storage, and Others), By Industry (IT & Telecom, Healthcare, Retail & E-commerce, BFSI, Manufacturing, Education, and Others), and Regional Forecast, 2023– 2030

The global infrastructure as a service market size was valued at USD 108.81 billion in 2022. The market is projected to grow from USD 130.08 billion in 2023 to USD 531.84 billion by 2030, exhibiting a CAGR of 22.3% during the forecast period.

In the Infrastructure as a Service (IaaS) model, the cloud provider manages IT infrastructures, such as servers, storage, and networking resources, and makes them available to subscriber organizations through virtual machines accessible over the internet. IaaS benefits organizations in several ways such as by making workloads easier, faster, more flexible, and more cost-efficient. Thus, IaaS allows users to run any operating system or application on a leased server without paying to operate and maintain the server.

Infrastructure as a service helps businesses in multiple scenarios where rapid deployment and scalability are critical. In other words, fast-growing companies that lack the capital to invest in hardware are excellent candidates for the IaaS model. IaaS also benefits companies with constant application workloads that want to offload some of the day-to-day operations and maintenance associated with managing infrastructure. For instance,

• In March 2022: Oracle Cloud Infrastructure (OCI) introduced new features and services that help customers track their workloads faster, more securely, and at a lower cost. The new offering provides customers with truly flexible core infrastructure services that automatically optimize resources to meet application demands and dramatically reduce costs.

COVID-19 IMPACT

Increasing Cloud Computing Service Adoption to Drive Market Demand 

The outbreak of the COVID-19 pandemic has boosted market growth due to increased adoption of cloud computing services. Cloud computing has played a key role in enabling businesses and governments to apply solutions to crises and maintain continuity quickly. The growing number of employees working from home and using conferencing and collaboration services strains back-end support services and increases traffic on the networks that connect users to these services. Only providers with robust and abundant architecture that delivers an uninterrupted customer experience can manage the increased load.

Additionally, according to a study by Manage Engine, almost 97% of Indian businesses have increased their reliance on cloud technologies as a result of the COVID-19 pandemic, with businesses turning to adopting solutions such as Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS). Increased use of hybrid clouds, which integrate both public and private clouds, is another factor driving growth. It enables businesses to process data at high speeds, share large amounts of information via the cloud, and minimize the total cost of ownership. These are the major factors that contributed to the COVID-19 pandemic’s spread. For instance,

• In March 2020, HPE introduced a powerful Virtual Desktop Infrastructure (VDI) offering flexible funding criteria and new out-of-the-box remote work solutions. The company provides software and applications to industry and academic institutions to help researchers fight the pandemic.


• In March 2020, to leverage its response to COVID-19, Google launched the Rapid Response Virtual Agent program, which allows contact center agents to quickly handle conversations over online chats or phone calls.

LATEST TRENDS

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Distributed Cloud Computing and Cost Optimization will Drive Cloud Adoption and Bolster Market Growth

Businesses of the future will require distributed cloud infrastructure applications and databases to meet modern workflows and their requirements. Distributed cloud computing has a geographically dispersed infrastructure that runs services primarily at the edge of the network, helping organizations reduce latency, network congestion, and the risk of data loss. Additionally, users can keep sensitive data in specific regions across distributed cloud data centers to ensure intelligent placement of data, processing power, and storage. Additionally, applications moving to public cloud infrastructure as a service need to be optimized for cost-effectiveness. Cloud providers continue to enhance their native optimization capabilities to help organizations choose the most cost-effective architecture that can deliver the performance they need. The market for third-party cost optimization tools will also grow, especially in multi-cloud environments.

DRIVING FACTORS

Increase in Demand for Low-Cost IT Infrastructure and Faster Data Accessibility to Drive Market Growth

Organizations around the world are focused on developing a mobile workforce that allows employees to access data remotely through internet services. This requires virtualized IT components such as servers, storage, and networks. With standard IT infrastructure installations, Infrastructure as a service provides faster data access regardless of data center location. In addition, IaaS minimizes initial investment costs by eliminating the need for onsite data centers and ongoing service and maintenance costs. Moreover, the developing trend of digitization along with the increasing adoption of cloud computing services, is one of the key factors driving the growth of the market. Cost-effective IT infrastructure and increasing demand for high-speed data access by various industries are also driving the infrastructure as a service market growth. The market is gaining further momentum with the widespread use of Disaster Recovery as a Service (DRaaS) for organizations to protect sensitive data and recover effectively in the event of a natural or man-made disaster.

Additionally, the increasing deployment of a hybrid cloud that integrates both private and public Cloud is another growth-inducing factor. This enables organizations to process data at high-speed, share massive amounts of data via the cloud and reduce overall operational costs. Other factors, including several technical developments in the IT sector and extensive research & development activities in the field of wireless technology are estimated to drive the market further.

RESTRAINING FACTORS

Challenges Related to Hacking May Restrain Market Growth

The increased risk of numerous operational challenges, data breaches, and the risk of poorly installed infrastructure in some enterprises are impeding the IaaS market. Strict regulations regarding data security are likely to pose a challenge for the IaaS market. The biggest challenges for the market are high initial investment costs and the difficulty of accessing infrastructure services. Additionally, typical infrastructure as a service security threats include data leaks, interface and API hacks, cyberattacks, permanent data loss, lack of awareness of cloud capabilities, application vulnerabilities, and cloud service exploitation. As data distribution increases, I&O organizations face the challenge of providing data protection and control. Privacy concerns are expected to hamper the growth of the market. For instance,

• The EU Data Protection Act aims to keep personal data with the European Union. Additionally, multitenancy and de-provisioning can introduce challenges such as protocol violations, data compromise with other business entities, and complex password authentication methods.

SEGMENTATION

By Deployment Analysis

Adoption of Hybrid Model is Likely to Fuel Market Growth

As per the analysis, hybrid segment holds the highest market share due to increase in adoption of hybrid models. It has played an important role in enhancing the adoption of solutions in the IaaS market. Various organizations are expected to avoid assigning all of their data to a single system in a single location by utilizing hybrid cloud services. Storing all the data in one place makes organizations susceptible to unforeseen errors or data theft. As a result, when compared to other approaches, hybrid cloud architecture reduces the risks associated with data theft or loss. Moreover, the public cloud is expected to witness a significant growth rate owing to the increasing demand for this service from Small and Medium-sized Businesses (SMBs) and startups. These services are cost-efficient and provide high operational efficiency to end-users.

By Service Analysis

Increasing Demand for Computing to Bolster the Product Demand

As per our analysis, the computing segment holds the highest share in the market. Infrastructure as a service, also known as Hardware as a Service (HaaS), is one layer of the cloud computing platform. In the IaaS service model, the cloud supplier hosts infrastructure components that traditionally reside in the on-premises data center. IaaS provides various services, where computing as a service includes virtual center processing units and virtual main memory for the VMs that are provided to the end-users. This includes storage, servers, networking hardware, and the hypervisor, or virtualization layer. These services are becoming increasingly policy-driven, allowing IaaS users to implement higher levels of automation and orchestration for critical infrastructure tasks.

By Industry Analysis

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Rising Data Traffic in Several Industries to Boost the Market

On the basis of industry, the market is categorized into IT & telecom, healthcare, retail & e-commerce, BFSI, manufacturing, education, and others.

Healthcare is estimated to grow with the highest CAGR as many organizations migrate parts of their infrastructure to the cloud. Infrastructure delivered as a service can significantly reduce costs and give enterprises access to the latest hardware without installing, purchasing, or maintaining the tools in their own facilities. Furthermore, it helps to provide evidence-based care and more precise and quicker diagnosis for treatments, avoiding the recurrence of unnecessary investigations. Additionally, Electronic Health Records (EHR) support the industry with robust analytics for improved healthcare measures. However, the capability of IaaS to sustain control over access to patient data makes it a great tool for handling massive databases.

Furthermore, due to increased adoption of infrastructure services, the retail and e-commerce segment is expected to show moderate market growth. Growing data traffic in industries, such as healthcare, manufacturing, and telecom, is projected to propel the global infrastructure as a Service (IaaS) market.

REGIONAL INSIGHTS

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Geographically, the market is categorized into five key regions, North America, South America, Europe, the Middle East & Africa, and Asia Pacific.

According to our research, North America holds the largest infrastructure as a service market share. This region is considered one of the largest markets for IaaS. North America has the presence of numerous major players, making it a lucrative hub for market innovation. Several companies, such as Amazon Web Services, Inc., IBM Corporation, VMware, Inc., and others, offer a wide range of services to host, manage, and maintain all kinds of IT infrastructure in a private or public data center. The data center can be accessed via the internet and from multiple locations. For instance,

• October 2021: Ericsson announced a cloud-native and orchestration center in North America. The new center will use this expertise to develop, design, support, and implement lifecycle management of cloud-native solutions for clients around the world.

The Asia Pacific region has the highest adoption of faster internet connections, including 4G connections, a large population base, increased competition between telecommunications and IT service providers, and an increase in GDP. In addition, India and China are witnessing a growing trend toward digitization, increasing internet adoption, rising adoption of smart devices, and small and medium enterprises seeking enterprise-level computing power at low cost. IaaS adoption is also on the rise in the region.

Europe is expected to showcase a steady growth rate. The model's cost-effectiveness, simplicity, and innovation are the main factors contributing to its acceleration. Furthermore, increased enterprise migration from on premise IT services to hosted cloud services is expected to contribute to double-digit growth rates for the European market.

The market for cloud and colocation services in South America is rapidly expanding. The increasing popularity of service-oriented architecture will likely boost global market share in the region.

Similarly, rising government initiatives and investments toward digital transformations are driving the market in the Middle East & Africa.

KEY INDUSTRY PLAYERS

Companies Seek Competitive Advantage Through Mergers, Acquisitions, and Partnerships

The top infrastructure as a service players are focused on expanding their geographic boundaries by launching industry-specific solutions to get innovations and new product launches to attract a large customer base, thereby increasing sales. Innovations and new product launches attract a vast customer base, thus improving revenue. Additionally, our report provides a comprehensive infrastructure as services market information that vendors can utilize to gain a competitive edge during the forecast period. Many businesses are forming mergers & acquisitions, partnership, and collaboration strategies to enable market growth.

List of Key Companies Profiled:

• Amazon Web Services (AWS) (U.S.)


• Microsoft Azure (U.S.)


• Google Cloud Platform (GCP) (California)


• Alibaba Cloud (China)


• Oracle Cloud (U.S.)


• IBM Cloud (Kyndryl) (U.S.)


• Tencent Cloud (China)


• OVHCloud (France)


• DigitalOcean (U.S.)


• Linode (Akamai) (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• December 2022 – F5 announced the launch of Distributed Cloud App infrastructure protection. The solution increases application observability and security to cloud-native infrastructures.


• October 2022 – Lenovo announced improvements to its Lenovo TruScale Infrastructure-as-a-Service technology solution deployed across the enterprise. The new offering has extended partnerships with Nutanix, Veeam, and Red Hat and is gaining customer acceptance. This solution bids on the safety, control of on-premises Infrastructure, and flexibility of the hybrid cloud.


• August 2022 – 11:11 Systems, an infrastructure solution provider, acquired cloud management services from Sungard availability services. The acquisition provides cross-platform cloud deployments for future development, including scalability, compliance, and availability to the next level of clients to manage, optimize, and defend their mission-critical cloud environments.


• February 2022 – Akamai acquired IaaS provider Linode for USD 900 million. The acquisition builds a unique generation of applications from the cloud to edge, delivering unprecedented scale, reach, performance, reliability, and security.


• December 2021 – Viking mergers & acquisitions announced the acquisition of b: ok (Bytes of Knowledge) network infrastructure services by IT voice. This transaction involved large-scale buyer activity that allowed users to filter out the best customer outcomes.

REPORT COVERAGE

An Infographic Representation of Infrastructure as a Service (IaaS) Market

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The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

REPORT SCOPE & SEGMENTATION