Infrastructure As A Service (IaaS) Market By Components (Storage, Network, Compute, Desktop, Disaster Recovery), Deployment (Private, Public, Hybrid), Industry Vertical (Banking, Financial Services and Insurance (BFSI), Government & Education, Healthcare, Telecom & IT, Retail, Manufacturing, Media & Entertainment), & Region for 2024-2031

Infrastructure As A Service (IaaS) Market Valuation – 2024-2031

The growing need for distributed cloud infrastructure to support modern, dynamic workflows. Distributed cloud computing, with its geographically dispersed infrastructure, enables services to operate closer to end users, often at the network’s edge, which reduces latency and minimizes network congestion. Thus, the increasing requirement of distributed cloud infrastructure to support modern workflows surged the growth of market size surpassing USD 67.42 Billion in 2023 to reach a valuation of USD 562.53 Billion by 2031.

The distributed cloud models offer a strategic advantage in data management by allowing organizations to store sensitive information within specific regions. This localized data storage helps meet compliance standards and enhances data security by enabling intelligent placement of data, and processing power. Thus, the improving intelligent placement data enables the market to grow at a CAGR of 33.50% from 2024 to 2031.

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Infrastructure As A Service (IaaS) Market: Definition/ Overview

Infrastructure as a Service (IaaS) is a cloud computing model where a third-party provider delivers essential IT infrastructure, such as networking, storage, and processing power, on a flexible, pay-as-you-go basis. By using IaaS, businesses can eliminate the need to maintain an on-site data center, significantly reducing upfront costs and simplifying infrastructure management. This service model provides highly scalable and adaptable resources, allowing companies to adjust their computing capacity as needed without extensive capital investments or ongoing maintenance demands. 

IaaS offers several key benefits that make it attractive, especially for small and medium-sized businesses. It enables remote accessibility, allowing teams to access resources and data from any location, which supports the growing trend of remote work. Additionally, IaaS enhances data security through robust, centralized safeguards and disaster recovery features, ensuring high data availability and resilience. IaaS also streamlines operations with automation, which boosts productivity and operational efficiency by reducing manual tasks.

Beyond these advantages, IaaS supports backup, recovery, storage, development, and testing needs, providing a comprehensive infrastructure solution. This level of flexibility and affordability makes IaaS an appealing choice for businesses looking to scale and adapt to evolving digital demands without the burden of traditional IT infrastructure management.

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How does the Growing Digital Transformation and Cost Optimization Surge the Growth of the Infrastructure as A Service (IaaS) Market?

The acceleration of digital transformation surges the growth of infrastructure as a service IAAS market. According to IDC, global spending on digital transformation reached USD 1.8 Trillion in 2022, with a projected growth rate of 16.3% annually. About 76% of enterprises reported accelerating their digital transformation initiatives in 2022. Cloud infrastructure spending surpassed traditional IT infrastructure spending for the first time in 2021, accounting for 51.8% of total IT infrastructure investments. In addition, the cost of optimization and flexibility accelerate the growth of infrastructure services.  Gartner reported that organizations implementing IaaS solutions reduced their infrastructure costs by approximately 30-40% in 2022. 65% of companies cited cost savings as their primary reason for adopting IaaS. Pay-as-you-go models helped businesses reduce capital expenditure by up to 45% compared to traditional infrastructure.

Microsoft reported that 66% of businesses were redesigning physical spaces to accommodate hybrid work in 2022. IaaS adoption increased by 41% in organizations supporting remote work during 2021-2022. 85% of managers believe that having teams with remote workers will become the new normal

Data Security and Compliance Requirements. Global cybersecurity spending reached $172.5 billion in 2022, with cloud security growing at 41.2% annually. 78% of organizations reported improved security posture after moving to IaaS platforms. Compliance-related cloud services grew by 48% in 2022 as regulations became more stringent

How the Data Security and Privacy Concern Impede the Growth of Infrastructure as A Service (IaaS) Market?

The data security and privacy concerns hamper the growth of the infrastructure as a service IAAS market. IBM’s Cost of a Data Breach Report 2022 revealed that cloud breaches cost companies an average of USD 4.35 Million per incident. 66% of organizations experienced at least one cloud-related security incident in 2022. 45% of companies delayed their cloud migration plans due to cybersecurity concerns. Regulatory compliance violations in cloud environments increased by 37% in 2022. Also, a lack of workforce and technical skill gaps. 80% of organizations reported a shortage of cloud computing skills in 2022. The average time to fill a cloud infrastructure position increased to 4.5 months in 2022. Training costs for cloud skills increased by 32% between 2021-2022. 63% of organizations cited a lack of qualified personnel as a major barrier to IaaS adoption

In addition, the legacy system integration creates challenges for the growth of infrastructure in a service IAAS market. 71% of companies faced significant difficulties integrating legacy systems with cloud infrastructure. Migration costs exceeded initial budgets by an average of 23% due to integration complexities. 55% of organizations reported project delays due to legacy system compatibility issues. Legacy system maintenance alongside cloud infrastructure increased IT costs by 28%. Also, the network dependencies and performance issues in the market. Average cloud service downtime costs reached $5,600 per minute in 2022. 58% of organizations experienced significant performance issues due to network latency. Internet bandwidth costs increased by 15-20% annually for cloud-dependent operations. 43% of companies reported service disruptions due to network reliability issues.

Category-Wise Acumens

How does the Improved Security in the IT Infrastructure Surge the Growth of Hybrid Segment?

The hybrid segment emerged as dominant in the Infrastructure As A Service (IaaS) Market, driven by its unique ability to offer flexibility, scalability, and enhanced security to IT infrastructures. By combining both cloud-based and on-premises resources, businesses can leverage the elasticity, cost efficiency, and advanced functionalities of cloud services while keeping core data and critical applications in-house. This model allows companies to optimize performance by balancing workloads across environments, ensuring that sensitive data remains protected within internal networks.

Hybrid cloud solutions are particularly advantageous for organizations looking to avoid potential risks associated with a single, centralized storage system. Storing all data in one location can leave companies vulnerable to unforeseen issues, such as data breaches or system failures. With hybrid models, data is distributed, reducing the risk of loss or theft and improving operational resilience. This strategic flexibility has become increasingly attractive as businesses focus on reducing expenses and enhancing data security. Consequently, the growing adoption of hybrid cloud models underscores their role in shaping the IaaS market, as organizations prioritize a balanced approach to data management, resource efficiency, and risk mitigation in today’s complex digital landscape.

How Does the Extensive Virtual IT Environment Surge the Growth of the IT and Telecom Segment?

The IT and telecom segment emerged as the dominating Infrastructure As A Service (IaaS) Market, owing to its extensive reliance on virtual IT environments for scalable and flexible infrastructure solutions. IaaS provides essential resources such as storage, bandwidth, and processing power, which are crucial for the IT and telecom sectors to meet the demands of data storage, network management, and resource optimization. With IaaS, IT firms can establish robust backup solutions and ensure sustainable, integrated data systems to support continuous operations.

The push for advanced technologies like AI and IoT is amplifying the need for powerful cloud infrastructures, positioning IaaS as a critical enabler in this digital shift. The wide geographic distribution of telecom networks and the focus on improving network capacity further strengthen the segment’s role in the market. IaaS also supports web applications in IT and telecom by delivering scalable storage, application servers, and networking resources on demand, enabling companies to reduce operational costs while achieving flexibility, efficiency, and enhanced security. Additionally, integrating IaaS with edge computing allows telecom providers to process data closer to the source, reducing latency and enabling real-time decision-making, thus consolidating their leading role in the IaaS market.

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Country/Region-wise Acumens

How the Strong Digital Infrastructure and Early Technology Adoption Surge the Growth of Infrastructure as a Service (IaaS) Market in North America?

North America substantially dominates the infrastructure as a service (IaaS) market with the robust digital infrastructure and early adoption of technology. According to the US Bureau of Economic Analysis, the digital economy grew 2.3x faster than the overall economy in 2021-2022. 89% of North American enterprises had adopted multi-cloud strategies by 2022, the highest rate globally. US companies invested approximately USD 200 Billion in digital transformation initiatives in 2022. Cloud infrastructure spending in North America grew by 32% year-over-year in 2022.  

In addition, the presence of major tech companies and a robust startup ecosystem accelerate the growth of the market in the region. North America hosts 60% of global cloud infrastructure providers. US tech startups raised USD 238.3 Billion in venture capital funding in 2022, with 35% focused on cloud technologies. The region accounts for 48% of global cloud data centers. AWS, Microsoft Azure, and Google Cloud (all US-based) controlled 65% of the global IaaS market share in 2022.

North American organizations increased cybersecurity spending by 42% in 2022. US federal cloud spending reached USD 7.8 Billion in 2022 under the Cloud Smart Strategy. 78% of US companies implemented enhanced cloud security measures following new data privacy regulations. The Canadian cloud services market grew by 27% in 2022 driven by data sovereignty requirements.

How does the Digital Transformation and SME Growth Accelerate the Growth of the Infrastructure as A Service (IaaS) Market in the Asia Pacific?

Asia Pacific is anticipated to witness the fastest growth in the digital transformation and growing small and medium industries. According to IDC, Asia Pacific digital transformation spending reached USD 1.1 Trillion in 2022, growing at 18.2% annually. SMEs in APAC increased cloud adoption by 45% between 2021-2022. In China alone, SME cloud spending grew by 32% in 2022, reaching USD 40 Billion. 72% of APAC SMEs cited cost-effective scalability as their primary reason for IaaS adoption.

In addition, the government initiative for digital and smart city projects increases the adoption of infrastructure services in the region. Singapore’s Smart Nation initiative invested USD 3.8 Billion in digital infrastructure in 2022. India’s Digital India program drove public cloud spending to reach USD 7.5 Billion in 2022. South Korea’s Digital New Deal allocated USD 49 Billion for digital infrastructure development. APAC smart city initiatives grew by 63% in 2022, driving cloud infrastructure demand. APAC mobile internet users reached 2.7 billion in 2022, with 73% smartphone penetration. China’s 5G network will cover 80% of its population by 2022, driving cloud service demand. Southeast Asia’s internet economy reached USD 200 Billion in 2022, growing at 20% annually. Mobile-first cloud applications grew by 56% in APAC during 2021-2022.

Competitive Landscape

The Infrastructure as a Service (IaaS) Market is highly competitive, with a few major players dominating the landscape. These companies compete based on factors like global reach, pricing, security, reliability, and innovative offerings.

The organizations are focusing on innovating their product line to serve the vast population in diverse regions. Some of the prominent players operating in the infrastructure as a service IAAS market include:

Oracle, Rackspace Hosting, Inc., Red Hat, Inc., Redcentric PLC, VMware, Inc., Amazon Web Services, Inc., EMC Corporation, Google, IBM, Microsoft.

Latest Developments:

• In December 2023, ZKTeco announced a cooperation with Amazon Web Services (AWS) to introduce the groundbreaking Minerva IoT platform and expand its cloud capabilities. The purpose of this collaboration is to use AWS’s powerful cloud infrastructure to create a secure, scalable IoT platform with sophisticated features.
• In November 2023, Leaseweb Global, a cloud services and Infrastructure as a Service (IaaS) provider, announced the launch of a new channel partner program in the UK. The program is aimed at managed service providers (MSPs). It establishes a structure for long-term sales partnerships, enabling MSPs to supply their customers with both strategic guidance and high-quality cloud services.
• In December 2022, F5 announced the launch of Distributed Cloud App infrastructure protection. The solution improves application observability and security for cloud-native.

Report Scope

Infrastructure As A Service (IaaS) Market, By Category

Components:

• Storage
• Network
• Compute
• Desktop
• Disaster Recovery

Deployment:

• Private
• Public
• Hybrid

Industry Vertical:

• Banking, Financial Services and Insurance (BFSI)
• Government & Education
• Healthcare
• Telecom & IT
• Retail
• Manufacturing
• Media & Entertainment

Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

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