The global green IT services market size was valued at USD 12.3 billion in 2021 and is estimated to reach a predicted value of USD 30.5 billion by 2030, registering a CAGR of 10.6% during the forecast period (2022-2030).
Businesses all across the world have started increasing operational efficiencies. The implementation of creative and sustainable solutions is justified by the need to decrease waste, efficiently use resources, and reduce carbon footprints. Green IT services are expanding as more emphasis is placed on lowering carbon footprints, and there is a greater demand for environmentally friendly services.
As a result, many governments worldwide have enacted strict laws and guidelines for businesses to manage emissions and lessen environmental harm. This is influencing the uptake of green IT services. To comply with the regulations and enhance brand impression, the businesses are also allocating monies to lower their carbon footprints. By including sustainability as a feature, desktop virtualization, cloud services, green data centers, and SaaS (software as a service), all become green IT solutions. Hence, businesses and organizations invest in these products and services, contributing to the market's expansion.
Enterprises are looking forward to becoming more sustainable across business models, and the concern for reducing carbon footprint is increasing. For instance, in August 2019, the Business Roundtable, a group that includes CEOs from leading US companies, committed to modernizing the purpose of a corporation, thereby challenging the old idea that a business exists to maximize profits for the owners or shareholders. The executives agreed that companies must also protect the environment "by embracing sustainable practices."
Because of the need for rapid decarbonization, the primary driving parameter for the market is the introduction of various carbon emission policies. The Carbon Research Management Initiative (CaMRI) is the latest program by the Center on Global Energy Policy (CGEP), which focuses on speeding up decarbonization and reducing the impact of climate change through carbon management. A few other measures have also been undertaken by various enterprises worldwide. For instance, in January 2020, Microsoft announced its plan to become carbon negative by 2030. By 2050, it aims to diminish all the carbon that the company has emitted, directly or through electrical consumption, from the environment. All the factors mentioned above drive segment growth.
The strengthening of regulatory and non-regulatory frameworks is expected to drive green business development. While some governments have been relaxing the enforcement of crucial environmental policies and regulations, primarily owing to the pandemic, maintaining long-term commitments and following their implementation will be crucial. At the same time, the pressure from non-regulatory stakeholders, such as industry associations and civil society organizations, has also motivated businesses to improve their products and processes.
The European governments have continuously strengthened their regulations on carbon emission norms for businesses operating in multiple domains. Owing to this, companies operating in the region are expected to increasingly adopt greener services in order to comply with government-mandated standards.
Companies promoting environmentally friendly methods as a part of their business have been proven to attract new customers who intend to buy products and services from environmentally friendly businesses. Apart from this, various government regulations are forcing businesses to manage their carbon footprint, positively impacting the demand for green IT services.
The higher initial cost of green IT services, as compared to traditional IT services, is one of the significant factors limiting the growth of the market, as multiple SMEs have very limited or no budget for such green IT resources.
Organizations have been traditionally concerned about the higher costs involved in going green. These technologies are making business progress and are not only ecologically sustainable but also cost-effective. However, this transition is not easy because the existence of the legacy systems that are being used by a majority of companies globally cannot be overlooked. Most of these systems have been running on old hardware built with power-intensive designs. Even today, many organizations are reluctant to replace multiple mission-critical legacy systems, owing to the associated costs and business risks. All such factors hinder segment growth.
Due to an increase in the user base of social media platforms, the Internet traffic and requirement for cloud space storage have also increased significantly. The installation of high-capacity, energy-efficient, powerful servers replacing legacy servers plays a crucial role in market growth. Hence, these factors provide immense potential for market growth.
The global green IT services market is segmented by type, end user, and region.
By type, the global green IT services market is segmented into software and services. The services segment dominated the market and is estimated to grow at a CAGR of 12.6% during the forecast period. The companies are increasingly providing design and consulting services and customized education to a wide range of enterprises, including commercial, government, and non-profit enterprises. The service providers in the industry are expanding their range of offerings to cater to a broader range of organization requirements, such as design, management, and education. Holistic solutions are being provided by prominent companies operating in the market, which cover various segments from planning and designing to complex integrations in the industry. Also, the provision of services enables the end user to focus on more principal issues and develop other aspects of the business model. Also, design and consulting is one area, which is expected to pose enormous opportunities for service providers over the forecast period.
The software segment is the second largest. Green IT primarily takes care of using computing resources efficiently. This software is known for its broader, economy-wide capacity for energy saving and its potential to affect rapid and profound change across various facets of government, industry, and consumers. These green IT software help identify weak points and prioritize actions, cover the entire infrastructure, and analyze key performance indicators to identify and improve performance. All such factors drive segment growth.
By end-user vertical, the global green IT services market is segmented into government, BFSI, IT and telecom, industrial, healthcare, and other end-user verticals.
The industrial segment dominated the market and is estimated to grow at a CAGR of 9% during the forecast period. Industrial facilities are the largest energy-consuming sectors globally, and demand-side management (DSM) in industrial facilities provides an opportunity for substantial amounts of energy cost savings. As per EIA, in 2019, the industrial sector accounted for 35% of total US end-use energy consumption and 32% of total US energy consumption. The industrial sector uses electricity for operating industrial motors and machinery, lights, computers, and office equipment, and equipment for facility heating, cooling, and ventilation. Further, the mining industry is gradually committing itself to decrease current energy use by employing efficient energy utilization plans that can drastically cut the amount of electricity mining companies use without reducing productivity. Countries such as Chile are using the cluster method of grouping multi-sectoral organizations together—such as a university, mining company, and government department—to achieve the benefits of various technologies. Green IT services in mining are making operations more productive. This can be seen in robotics operating 24 hours a day, real-time monitoring of minerals and metals through mines and processing plants, and simulations at the mine design stage to test different solutions before implementation. All such factors drive segment growth.
The IT and telecom segment is the second largest. The dependence on networks, servers, and other infrastructure is critical in the IT and telecom industry, as the number of people utilizing the service is massive. Hence, there is a need for heavy infrastructure. In many countries, including China, the green telecom initiative is so central to the government that they have appointed dedicated directors to oversee the implementation of green initiatives across the country. Moreover, across the sectors, consumers look at companies that take responsibility and put green technologies into practice to improve sustainability. Throughout the projected period, it is expected that more IT and telecom providers will adopt green innovations to change how the industry operates, which may also encourage the equipment vendors and hardware manufacturers to commit to better solutions.
By region, the global green IT services market is segmented into North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa.
North America accounted for the largest market share and is estimated to grow at a CAGR of 9% during the forecast period. Various government initiatives are contributing to market growth. For instance, the Green New Deal aims to reduce carbon emissions in the United States. It envisions sourcing 100% of the country's electricity from renewable and zero-emission power, digitizing the nation's power grid, and upgrading every building in the country to become more energy efficient. In March 2019, the United Nations, several tech giants, and many policies, finance, and science communities partnered during the UN Science-Policy-Business Forum to launch major pushes about using modern technology to create cleaner, greener, and more efficient solutions for sustainable development. The UN Research-Policy-Business Forum on the Environment, which was established at the UN Environment Assembly in December 2017, intends to find and promote opportunities for green investments driven by advancements in science and technology, empowering policies, and creative finance.
Europe is the second largest region. It is predicted to reach an expected value of USD 9 billion by 2030, registering a CAGR of 10.2%. Europe occupies a significant market share due to the European Commission's active nature in undertaking various initiatives. The New Consumer Agenda'sAgenda's first effort, the Green Consumption Pledge, was just unveiled by the European Commission. It is a component of the European Climate Pact, an EU initiative that encourages communities, groups, and individuals to take action on climate change and create a greener Europe. A green transition will be accelerated, according to signatories. In December 2020, the European Commission announced a new EUR 7.5 billion Digital Europe Programme. Investments made through the Digital Europe Programme help the Union achieve its dual goals of a digital revolution and a green transition while also boosting its resilience and open strategic autonomy. The program is a component of the upcoming long-term EU budget, which will finance initiatives from 2021 to 2027.
Additionally, it will complement other EU initiatives like the Connecting Europe Facility for digital infrastructure and Horizon Europe, the EU'sEU's program for research and innovation, on which a political accord will be achieved by the end of 2020. One specific EU initiative, H-CLOUD, demonstrates how green ICT is being explored at the European level. By the goals of the Green Deal, H-CLOUD was especially entrusted with researching green computing and developing suitable rules for cloud computing. All of these measures fuel the segment's expansion.
Asia-Pacific is the third largest region. The development and adoption of policies supporting the expansion of the renewable energy market are causing the market to grow in the region. Many countries are also demonstrating a strong commitment to sustainability. Japan and Singapore have set up carbon taxation norms. By forbidding facilities with significant power demand, China is aggressively attempting to limit the carbon footprint of data centers in Beijing. By its pledges to a global climate agreement in 2015, China has promised to peak its overall emissions by roughly 2030. Carbonstop, a leading carbon management software and consulting service provider helps enterprises in China to calculate, analyze, manage and report carbon emissions. Furthermore, the region is witnessing the entry of global players to accelerate market development. For instance, in June 2020, ENGIE Impact expanded its offerings to the Asia-Pacific region, where the company will help businesses, cities, and governments develop sustainability strategies and implement solutions to drive economic and environmental benefits.
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