Hybrid Cloud Market

Market Overview

The global hybrid cloud market size was valued at USD 73.5 billion in 2023 and is projected to reach USD 210.4 billion by 2032, registering a CAGR of 12.4% during the forecast period (2024-2032). Cost efficiency, scalability, agility, and security drive hybrid cloud market growth.

A hybrid cloud is a computing environment that combines on-premises Infrastructure, private cloud services, and public cloud resources, enabling organizations to integrate and manage workloads across multiple platforms seamlessly. In a hybrid cloud setup, some data and applications are hosted in private cloud environments, while others are deployed on public cloud infrastructure provided by third-party service providers.

Several major drivers are propelling the global hybrid cloud market forward. The widespread acceptance of digital transformation initiatives across enterprises, the increasing global use of the Internet and mobile devices, and the surge in Big Data consumption are among the most significant. The evolution of next-generation industrial solutions is expected to rely largely on cloud enablement, necessitating the development of robust cloud platforms to demonstrate their digital business capabilities. Furthermore, the growing adoption of the Internet of Things (IoT), the introduction of 5G technology, the rise of edge computing, and the integration of real-time analytics powered by Machine Learning (ML) and Artificial Intelligence (AI) are expected to raise the intrinsic value of computing technology among businesses, cementing cloud solutions' critical role in enabling these transformative technologies.

Highlights

• Services account for the largest share by component.
• Software as a service (SaaS) generates the highest revenue share by service model.
• Large Enterprise contributes significantly to the market by organization size.
• BFSI influenced the market by industry vertical.

Market Dynamics

Global Hybrid Cloud Market Drivers:

Digital Transformation Initiatives

Many organizations are embarking on digital transformation initiatives to modernize their IT infrastructure and embrace emerging technologies. Hybrid cloud solutions allow businesses to seamlessly integrate legacy systems with cloud-native applications, accelerating digital transformation efforts. Digitization is currently the top priority for 80% of businesses. According to International Data Corporation (IDC), digital transformation (DX) spending is expected to reach USD 2.3 trillion by 2023. This includes spending on technologies and services that aid in the digitization of business practices, products, and organizations. 

Further, a Deloitte survey shows that 79% of executives consider digital transformation their organization's top strategic priority. According to Gartner research, by 2024, more than 45% of IT spending on system infrastructure, infrastructure software, application software, and business process outsourcing will shift from traditional solutions to cloud services. 

Moreover, the growing emphasis on digital transformation initiatives drives the adoption of hybrid cloud solutions as businesses seek scalable, flexible, and cost-effective IT infrastructure to support their digital strategies. As businesses modernize their operations and embrace cloud-native technologies, demand for hybrid cloud platforms is expected to rise further, contributing to the growth of the global hybrid cloud market.

Global Hybrid Cloud Market Restraints:

Data Security Concerns

Data security is a top priority for organizations considering hybrid cloud adoption. Storing sensitive data in multiple environments complicates implementing consistent security measures. Any compromise in data security could have serious consequences, including data breaches, regulatory noncompliance, and reputational harm. In 2023, the average global data breach cost was USD 4.45 million, up 2.25% from 2022. The average data breach cost in the United States in 2023 was USD 9.48 million, up from USD 9.44 million in 2022. 

Further, according to a Ponemon Institute survey, 63% of organizations have experienced a third-party data breach, emphasizing the importance of data security across hybrid environments. According to Thales CPL, 39% of businesses experienced a data breach in their cloud environment in 2023, a four-point increase over 2022. 75% of businesses reported that more than 40% of data stored in the cloud is sensitive, a 26% increase from 2022. 

Moreover, concerns about data security are a significant barrier to hybrid cloud adoption, especially for organizations dealing with sensitive data and regulatory requirements. Organizations prioritizing data protection and compliance may hesitate to migrate critical workloads to hybrid cloud environments without adequate security assurances. 

Global Hybrid Cloud Market Opportunity:

Hybrid Workforce Enablement

The rise of remote and hybrid work models necessitates a strong IT infrastructure supporting distributed teams and facilitating seamless collaboration. Hybrid cloud solutions enable organizations to provide secure access to corporate resources and applications from anywhere, allowing for remote work while maintaining productivity and security. A multinational corporation implements a hybrid cloud strategy to support its distributed workforce across multiple geographies. When hybrid cloud solutions are used, employees can securely access corporate applications, data, and collaboration tools from their preferred devices and locations. This allows for seamless collaboration between remote and in-office teams, ensuring productivity and business continuity even in remote working environments.

According to Deloitte's 2023 survey, hybrid workers are happier with their jobs than other workers, and their relationships with family, coworkers, and managers have improved or remained unchanged. According to FlexJobs and Global Workplace Analytics, 74% of respondents believe that remote work has increased in their organization since the pandemic. Furthermore, according to a Gartner survey, 82% of business leaders intend to allow remote work at least some of the time as employees return to the workplace.

In addition, the shift to remote and hybrid work models has accelerated the adoption of hybrid cloud solutions as organizations strive to provide secure and seamless access to corporate resources for their distributed workforce. This trend is increasing demand for hybrid cloud infrastructure and collaboration tools that allow remote work while maintaining data security and compliance. As businesses prioritize workforce enablement and invest in hybrid cloud solutions, the market for hybrid cloud services will expand significantly in the coming years.

Regional Analysis

North America Dominates the Global Market

The global hybrid cloud market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

North America is the most significant global hybrid cloud market shareholder and is estimated to grow at a CAGR of 12.7% over the forecast period. Several companies in the region are moving beyond public clouds. They're entering a new era in which IT services are intended to integrate government, industry, and traditional Infrastructure. These businesses have adopted a hybrid cloud strategy to help them improve their operations and provide services to their customers. North America pioneered the bring-your-own-device (BYOD) culture, which was widely adopted. As a result, organizations have begun to shift away from traditional cloud models and toward hybrids to ensure the security of sensitive business information by using Private Cloud while providing employees with increased access to applications based on Public Cloud solutions, which is required for specific applications that require field access. This trend has been observed to benefit productivity and is expected to continue and grow over the forecast period. The BYOD trend is also becoming more common in Canadian companies. The country's BYOD growth is expected to accelerate, and it is likely that this will positively impact the Hybrid Cloud Market as tablets and smartphones become more commonly used for accessing business-critical information over the forecast period.

Furthermore, significant companies are merging with other businesses and investing in new projects to expand their consumer base and better meet demand across various applications. For example, in May 2023, IBM announced Hybrid Cloud Mesh, a Software-as-a-service offering that enables enterprises to manage their hybrid multi-cloud Infrastructure. IBM Hybrid Cloud Mesh is based on "application-centric connectivity" and automates the process, management, and observability of application traffic between public and private clouds to assist modern enterprises in operating their Infrastructure across hybrid multi-cloud and heterogeneous environments.

Overall, demand for flexibility, data security, cost reduction, digital transformation, enhanced analytics, and industry-specific requirements are some of the major factors driving the hybrid cloud market in North America. Because of these factors, businesses must use hybrid cloud solutions to balance agility, control, and innovation. 

Asia-Pacific is anticipated to exhibit a CAGR of 12.9% over the forecast period. Asia-Pacific is expected to have the highest CAGR in the hybrid cloud market. Hybrid cloud deployment has emerged as the preferred solution for organizations across multiple regions. Several key factors are poised to drive the market's growth even further. These include a rapidly changing business landscape, a growing trend of adopting multiple cloud services to drive cost savings, and an increasingly critical need to improve productivity and efficiency through centralized cloud governance.

The European hybrid cloud market is expanding rapidly, driven by various factors, including digital transformation initiatives, data sovereignty concerns, and the need for scalable and flexible IT infrastructure. Across Europe, organizations from multiple industries are adopting hybrid cloud for industry-specific use cases. Automotive manufacturers, for example, use hybrid cloud to support connected car initiatives and intelligent manufacturing, whereas media companies use hybrid cloud to deliver streaming services and manage digital content distribution. Furthermore, public-sector organizations use hybrid clouds to modernize citizen services and increase operational efficiency.

Segmental Analysis

The global hybrid cloud market is segmented based on component, service model, organization size, and industry vertical.

The market is further segmented by components into solutions and services.

The hybrid cloud market includes many professional and managed services provided by cloud service providers, system integrators, and consulting firms to help organizations plan, implement, and manage hybrid cloud environments. These services include cloud migration and integration, architecture design and planning, deployment and configuration, performance tuning, monitoring and management, security and compliance, and ongoing support and maintenance. Service providers use their knowledge of cloud technologies, best practices, and industry-specific requirements to help organizations navigate the complexities of hybrid cloud adoption, shorten time-to-value, and maximize the benefits of their hybrid cloud investments. Services are critical in bridging the skills gap, overcoming implementation challenges, and ensuring successful outcomes for organizations embarking on a hybrid cloud journey.

Hybrid cloud solutions include a wide range of Software, platforms, and tools that make deploying, managing, and optimizing hybrid clouds easier. These solutions typically include cloud management platforms (CMPs), hybrid cloud management software, orchestration tools, workload migration services, and hybrid cloud-specific security solutions. The solutions aim to simplify integrating on-premises Infrastructure with public and private cloud environments, automate provisioning and management tasks, optimize resource utilization, and ensure seamless interoperability between hybrid cloud components. They are essential in helping organizations achieve the desired balance of agility, scalability, security, and cost-effectiveness in hybrid cloud implementations. 

Based on the service model, the market is fragmented into Software as a service (SaaS), Infrastructure as a service (IaaS), and Platform as a service (PaaS).

The Software as a Service (SaaS) segment dominated the overall hybrid cloud market in 2023, and this trend is expected to continue during the forecast period, owing to increased demand for SaaS as many users seek more purpose-built and customized solutions that can meet their specific business outcomes. SaaS is a cloud computing model in which a third-party provider hosts and delivers software applications via the Internet. SaaS offerings allow organizations to access and use software applications deployed in both public and private cloud environments. Users can access these applications via web browsers or APIs, eliminating the need for on-premises infrastructure or software installations. SaaS solutions in the hybrid cloud market cover various business applications, such as productivity tools, CRM software, ERP systems, collaboration platforms, and more.

IaaS provides virtualized computing resources, such as servers, storage, networking, and virtual machines, over the Internet on a pay-per-use basis. IaaS allows businesses to use scalable and flexible infrastructure resources from public cloud providers and on-premises data centers in a hybrid cloud environment. This enables organizations to dynamically adjust their computing and storage capacities in response to workload demands while maintaining control over sensitive data and critical workloads. IaaS offerings in the hybrid cloud market give organizations the agility, scalability, and cost-efficiency they need to support a wide range of IT workloads and business requirements.

The market can be further bifurcated by organization size into large, small, and medium enterprises.

Large enterprises often have extensive IT infrastructure and complex business requirements, making them ideal candidates for hybrid cloud adoption. These organizations frequently run a variety of workloads and applications from multiple locations and data centers. Hybrid cloud solutions enable large enterprises to optimize performance, scalability, and cost efficiency by combining on-premises infrastructure, private cloud resources, and public cloud services. Large enterprises can use hybrid cloud to seamlessly extend their existing Infrastructure to the cloud, innovate using cloud-native services, and maintain control over sensitive data and critical workloads. These businesses frequently require customizable and scalable hybrid cloud solutions tailored to their unique business needs and regulatory requirements.

SMEs typically have fewer IT resources and budgets than large enterprises but still need scalable and cost-effective IT solutions to support their business operations. Hybrid cloud solutions enable SMEs to access enterprise-grade IT capabilities without the significant upfront investment and complexity associated with building and managing on-premises Infrastructure. By utilizing a hybrid cloud, SMEs can deploy and scale IT resources on demand, improve agility and responsiveness to market changes, and gain access to a wide range of cloud-based services and applications. Hybrid cloud solutions designed specifically for SMEs frequently emphasize simplicity, ease of deployment, and affordability, allowing these organizations to focus on core business activities while reaping the benefits of cloud technology.

Based on industry vertical, the market is classified into IT and Telecom, Healthcare, BFSI, Retail, Government, Media and Entertainment, Transportation and Logistics, and Manufacturing.

The BFSI segment dominated the overall hybrid cloud market in 2023 and is expected to continue this trend throughout the forecast period due to the increased adoption of hybrid cloud in the BFSI sector, which allows banks to manage costs with great flexibility and quickly provide resources across the entire Enterprise. BFSI organizations use hybrid cloud to modernize legacy systems, improve customer experience, and drive innovation in a highly regulated environment. BFSI firms can use hybrid cloud solutions to deploy new digital services like online banking platforms, mobile payment applications, and fraud detection systems while ensuring data integrity, compliance, and security.

The IT and telecommunications sectors were among the first to adopt hybrid cloud technology with the need for scalability, flexibility, and cost optimization. Hybrid cloud solutions enable IT and telecom companies to efficiently manage their massive Infrastructure, support dynamic workloads, and improve service delivery. These organizations use hybrid cloud for various applications, such as data analytics, network optimization, customer relationship management (CRM), and Software development.

Recent Developments

• March 2024- At Enterprise Connect, Cisco (NASDAQ: CSCO) announced new Webex cloud customer experience solutions offerings.
• February 2024- AWS CloudFormation introduces a new feature that makes it simple to create AWS CloudFormation templates and AWS CDK apps for existing AWS resources that are not managed through CloudFormation.
• March 2024- Expand hybrid cloud and AI adoption with IBM Power Virtual Server to gain a competitive advantage.