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Updated by Charles Bystock on 02/27/2023

Build or Outsource Data CenterYour company is growing, and that’s a good thing. But the more you grow, the more data center space you need. If you’re a multinational, or at least managing multiple locations, your problem may be increasing exponentially. So you’re faced at a crossroad: should you build or outsource data center operations?

Which option represents the better investment? The answer lies within your company itself and your plans for the future. Here are some key issues to consider:


There are considerable direct costs associated with building a data center and outfitting it with hardware and other infrastructure necessities. You’ll lose valuable capital resources. Or you’ll be saddled with significant debt. Or your line of credit will suffer a substantial dip, rendering it unavailable for other needs or when opportunity knocks.

Then you have operational costs for maintenance, upgrades, support, overhead, property taxes, labor, etc. Not to mention the indirect costs and distractions of managing the facility itself. Outsourcing can conserve capital resources as well as reduce ongoing operations expenses.


Whether or not to migrate your entire data center infrastructure depends on your comfort level. How much control do you really need? Is there anything you’re actually required to retain? If you build, you’ll certainly have 100% control over every physical and functional detail. If you outsource, you’ll still hold final authority over important decisions.

Disaster recovery.

This is a fundamental business planning component. Your choice to build or outsource data center functions must provide the most reliable, responsive and cost-effective ability to ensure business continuity. Many large, complex companies have found that outsourcing offers broader, more effective options, especially if off-site back-up is required or strongly recommended by your industry or government regulations.

External impact.

How might either choice impact external partners such as suppliers or investors? How might it affect customers, in particular customer service quality or deliverables?

Business management.

IT affects your day-to-day decision-making as well as overall planning and budgeting. Outsourcing is scalable, so it’s predictable. You can tailor SLAs and also pricing models and payment plans, so the entire package matches your enterprise-wide needs and expectations. Costs to build are predictable. But costs to operate are likely to fluctuate and certain to rise.

You have to evaluate your current situation and consider where your company is headed – what that will look like in the future relative to locations, projected service needs and levels and, of course, quality improvements you need to make.

The decision to build or outsource data center functions isn’t black and white.

You can pick a shade of gray. Thanks to commoditization and an increasing number of providers in the IT outsourcing arena, you can choose partial outsourcing, if that makes the most sense for your company and budget.

Cherry-pick selected services you most want to offload, or start small and grow into broader outsourcing that can lead to total transformation as your company expands and evolves. It’s all about strategy. You could outsource:

  • Technology architecture, software and system support and business continuity via IBM mainframes.
  • Design, architecture, migration and monitoring of platform-based midrange servers.
  • Cloud computing, for web-based software or infrastructure.
  • Co-location -- leasing guaranteed third-party facilities to house your equipment.
  • Managed services such as monitoring service levels, upgrades and hardware maintenance.
  • Remote infrastructure management -- similar to managed services but without the hardware maintenance component.
  • Applications, with your enterprise software hosted elsewhere.
  • Out-tasking of specific functions such as help desk, security management or specific infrastructure products.

It’s time to take stock. Will you decide to build or outsource your data center?  

Photo Credit: NeoSpire