Infrastructure as a Service (IaaS) Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028

Global Infrastructure as a Service (IaaS) Market was valued at USD 57.44 Billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 21.07% through 2028. 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.

Key Market Drivers

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.

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.

Increase in cloud adoption across several industry verticals

Several business sectors, including banking, financial services, and insurance (BFSI), retail, healthcare, manufacturing, telecommunications & information technology, and media & entertainment are rapidly adopting cloud services. Furthermore, the banking industry has embraced IaaS on a big scale, owing to cost savings, data protection, and disaster recovery services. Furthermore, technical improvements in the IT industry and their applications in major organizations and SMEs in developed countries such as North America and Europe provide sufficient room for market development. For instance, in April 2022, NTT DOCOMO, INC. (DOCOMO), the largest mobile operator in Japan partnered with Oracle Cloud Infrastructure (OCI) to build its new development environment for ALADIN to improve service quality and enable faster delivery through automation of operation management utilizing Oracle Container Engines for Kubernetes.

Key Market Challenges

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 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.

Key Market Trends

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.

Growth in demand for low-cost IT infrastructure and faster data accessibility

Businesses all around the world are focusing on developing mobile workforces, in which employees may access data from remote locations via internet services, necessitating virtualized IT components such as servers, storage, networks, and others. Due to a common IT infrastructure installation, IaaS offers faster data access regardless of data center location. Furthermore, IaaS has a minimal initial investment cost as it does not require an on-premise data center, as well as ongoing services and maintenance expenditures. As part of their integrated cloud service offering, managed service providers such as Amazon Web Services, Inc., Microsoft Corporation, and IBM Corporation provide constantly available cloud service throughout the year. End customers see IaaS as a major cost savings service, owing to the fact that most responsive scalability characteristic of pooled cloud servers. Clients pay only for what they use. Furthermore, end users avoid the cost of getting individual servers up, which would otherwise be incurred. This is a primary aspect that is expected to fuel the IaaS infrastructure as a service market growth during the forecast period.

Segmental Insights

Deployment Model Insights

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.

Component Type Insights

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.

Industry Vertical Insights

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.

Regional Insights

The North America region is expected to dominate the market during the forecast period. 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.

Report Scope:

In this report, the Global Infrastructure as a Service (IaaS) Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

Global Infrastructure as a Service (IaaS) Market, By Component Type:

• Storage
• Network
• Compute
• Others

Global Infrastructure as a Service (IaaS) Market, By Deployment Model:

• Private
• Public
• Hybrid

Global Infrastructure as a Service (IaaS) Market, By Enterprise Size:

• Large Enterprises
• SMEs

Global Infrastructure as a Service (IaaS) Market, By Industry Vertical:

• BFSI
• Government and Education
• Healthcare
• Telecom and IT
• Retail
• Manufacturing
• Media and Entertainment
• Others

Global Infrastructure as a Service (IaaS) Market, By Region:

• North America
• United States
• Canada
• Mexico
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Indonesia
• Europe
• Germany
• United Kingdom
• France
• Russia
• Spain
• South America
• Brazil
• Argentina
• Middle East & Africa
• Saudi Arabia
• South Africa
• Egypt
• UAE
• Israel

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Infrastructure as a Service (IaaS) Market.

Available Customizations:

Global Infrastructure as a Service (IaaS) Market report with the given market data, the publisher offers customizations according to a company's specific needs.


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