Data Processing & Hosting NAICS 518210
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Industry Summary
The 11,080 data processing and hosting companies in the US provide outsourced information technology services to businesses and other organizations. These services include automating business processes, website hosting, providing business software applications via the Internet, video streaming services, time-shared computer capacity, and data entry and reporting services.
Protecting Security of Customer Data
High profile incidents of computer hackers gaining access to social security and credit card numbers housed on a customer's behalf has increased security concerns for data processing and hosting companies.
Cloud Computing
Widespread adoption of cloud computing has increased demand for data processing and hosting companies.
Recent Developments
May 1, 2025 - High Demand Fuels Expenditure On Compute Power
- Data centers around the world may require $6.7 trillion in capital expenditures by 2030 to keep pace with the demand for compute power, according to management consulting firm McKinsey & Company. The hardware, processors, memory, storage, and energy needed to operate these data centers are collectively known as compute power. Data centers equipped to handle AI processing loads are projected to require $5.2 trillion in capital expenditures, while those powering traditional IT applications are projected to require $1.5 trillion in capital expenditures.
- The power required for AI data centers could be 2.6 times greater in 2027 than in 2023, according to research firm Gartner. This threatens to disrupt energy availability and lead to shortages that will limit the growth of new data centers for Generative AI and other uses starting in 2026, according to Bob Johnson, VP Analyst at Gartner. Gartner predicts that 40% of existing AI data centers will be operationally constrained by power availability by 2027.
- Private construction spending on data centers has more than doubled what it was in late 2022, according to the US Census Bureau. Companies are investing in data centers to get ahead in artificial intelligence, according to Bloomberg. Private construction spending on data centers has surged close to $30 billion a year.
- Data processing and hosting industry employment and wages for nonsupervisory employees increased slightly during 2024, according to the US Bureau of Labor Statistics (BLS). Data processing and hosting firms slightly increased their prices during 2024, according to the BLS.
Industry Revenue
Data Processing & Hosting
Industry Structure
Industry size & Structure
The average data processing and hosting company has about 44 workers and $29 million in annual revenue.
- There are about 11,080 data processing and hosting companies in the US that employ 490,000 workers and generate revenue of $318 billion.
- 61% of firms operate out of a single location.
- Large data processing and hosting companies include Automatic Data Processing, FISERV, Rackspace Hosting, and Alliance Data Systems. Web hosting and cloud computing services are also provided by units of large companies, such as AT&T, Amazon.com, Google and SS&C Technologies.
Industry Forecast
Industry Forecast
Data Processing & Hosting Industry Growth
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