What are the Key Differences Between Data Center Outsourcing and Colocation Services?

When it comes to managing IT infrastructure, businesses have a couple of options: data center outsourcing and colocation services. While the two may seem similar, there are some key differences between them that businesses need to be aware of. In this article, you will get insights into the differences between data center outsourcing and colocation services in more detail. You will learn the pros and cons of each option and the factors businesses need to consider when deciding which option is right for them. Let’s begin with understanding the meaning and functioning of colocation data centers and data center outsourcing.

What is Data Center Outsourcing?

An outsourcing data center is a specialized facility designed to create an ideal environment for your IT equipment. You can think of it as a luxurious spa resort for your servers where the temperature is carefully controlled to ensure the best performance. Data centers also have backup power systems in case of a power outage, and multiple internet providers for speed and reliability. Although playing whale songs may not be standard, data centers provide a peaceful and secure environment for your IT systems. They can be owned and operated by your company, such as Microsoft, Amazon, or Google, or rented out as storage racks by commercial enterprises known as multi-tenant data centers.

What is a Colocation Data Center?

Acolocation data centeror colo is a service that allows you to store your IT equipment in a data center, taking advantage of the infrastructure that commercial data centers offer. As your IT infrastructure grows, colocation becomes a great option. It can be expensive to pay for power and cooling for a small server room, but data centers have economies of scale that make colocation more cost-effective. Additionally, data center colocation services reduce the risks of on-premises server rooms, such as fire, flood, or theft, because data centers have built-in safeguards and are staffed around the clock to eliminate these risks.

A Data Center is a Place and Colocation is a Service.

Think of it this way: your server room is limited by space, budget, and cooling capacity. But with commercial data centers, you can easily expand your IT infrastructure as your business grows. Plus, these centers can take advantage of their larger size to be more energy-efficient and eco-friendly, which can align with your own sustainability goals.

Besides colocation data centers, commercial data centers can offer many other helpful services such as Remote Hands for small maintenance tasks and troubleshooting, cybersecurity, and cloud infrastructure. This means they can be more than just a physical location for your equipment, but a comprehensive solution for managing your infrastructure. By outsourcing these tasks, you can focus on your core business while having the peace of mind that your IT is being taken care of by experts.

What Does it Mean to Host in a Data Center?

Both colocation data center and cloud services allow your IT to be housed in a data center. However, the main difference lies in the ownership and control of your servers. With data center colocation services, you retain complete ownership and control over your servers. Whereas with cloud services, your data center provider is responsible for all hardware and you essentially lease it from them. Regardless of which option you choose, your IT infrastructure is safeguarded from downtime by the advanced infrastructure of a data center.

Colocation Services vs. Data Center: What are the key differences?

Here’s a differentiation table highlighting the key differences between colocation services and data centers:

CriteriaColocation Data Center ServicesData Center Outsourcing
OwnershipThe client owns and manages their own hardware and IT infrastructureThe data center owns and manages the facility and IT infrastructure
CustomizationThe client has more control over their IT environment and can customize it to meet their specific needsLimited customization options as data centers operate on a larger scale and cater to multiple clients
SecurityThe client is responsible for the security of their own equipment, but data centers provide security measures such as access controls, CCTV, and fire suppression systemsThe outsourcing data center provides high-level security measures to protect their clients’ equipment and data, including physical security, network security, and disaster recovery plans
ScalabilityColocation services provide flexibility in terms of scaling up or down IT resources as per business requirementsData centers offer the ability to scale IT resources as per the client’s requirement without any constraints
CostColocation services can be cost-effective as clients only pay for the space and power they require, with additional costs for any add-on servicesData centers can be expensive, as the cost includes infrastructure, maintenance, and additional services
MaintenanceThe client is responsible for the maintenance of their own equipment, although data centers may offer optional maintenance servicesData centers offer comprehensive maintenance services as part of their package
Power & CoolingThe client has control over their own power and cooling requirements, although data centers may offer some level of supportData centers provide power and cooling solutions to their clients, ensuring optimal conditions for equipment
LocationColocation services may be limited to the locations where data centers are availableData centers can be found in various locations, offering clients greater flexibility in terms of geographic coverage


Both data center outsourcing and colocation data center services offer businesses the opportunity to manage their IT infrastructure more efficiently and cost-effectively. While they share some similarities, there are key differences between the two that businesses need to be aware of when making a decision. A data center solution can be an ideal option for businesses that want to delegate infrastructure management to a third-party provider. Whereas colocation services can be a good option for businesses that want to retain ownership and control over their IT equipment. Ultimately, the choice between the two will depend on a variety of factors, including the size and complexity of the IT infrastructure, budget, and the specific needs of the business.

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