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Data Center Outsourcing (DCO)

Definition - What does Data Center Outsourcing (DCO) mean?

Data center outsourcing (DCO) is the allocation of all or portions of the day-to-day responsibilities of managing servers to a specialist third-party service provider. The DCO may be an annual or multi-year contract in which the data center service provider offers professional and product support services to ensure that the customer’s data center runs efficiently. Outsourcing a data center allows an organization to free up resources, reduce and control costs, and access resources not available internally such as equipment, processes, expertise, space, power and cooling.

Techopedia explains Data Center Outsourcing (DCO)

The ever-changing computing and data platforms, and the integration of numerous functions, require companies to implement flexible data centers capable of accommodating all these requirements. This, in terms of infrastructure and support measures, can be challenging to organizations without the capacity.

DCO allows a company to realize its business value at ready-to-run, cost-effective computing power and capacity, which can be customized to meet the company’s business needs as well as accommodate any changing needs.

It is important to evaluate service providers in terms of commitment to quality, proven competencies, price, data confidentiality, technology fit and scope of resources; other considerations include the provider’s geographical location, cultural fit, reputation and references.

Depending on the company’s requirements, various DCO options are available, the choice of which is influenced by the size, location, budget and investment strategy. Some companies prefer using multiple service providers and shorter contracts in addition to outsourcing to local providers, preferably in close proximity to one another or in the same time zone.

Typical DCO options include the following:

  • Co-location: The organization leases space, bandwidth, power and manpower.
  • Managed service provider: The provider oversees all or parts of the customer’s IT infrastructure, hence reducing manpower requirements.
  • Hosting providers: The organization leases the servers and associated services covering specific functions such as emails, databases, storage and e-commerce.

Advantages of outsourcing include:

  • Reduced equipment and operational costs
  • Predictable monthly costing
  • Flexibility to expand capacity
  • Ability to adopt new technologies
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