Managed services demand is growing steadily in the data hosting and storage sector as companies increase IT spending in terms of dollars at a steady pace, says James D. Breen, CFA, Analyst at William Blair & Company, L.L.C.
“It’s going to be a pretty steady climb each year,” Breen said. “So whereas maybe 10% or 15% of IT dollars are outsourced today, it maybe another incremental 5% or 10% each year for the next 10 years.”
Breen likes Rackspace Hosting (RAX), a provider of managed hosting and cloud computing services. He says Rackspace is focusing on growth and trying to gain market share as the curve toward IT outsourcing and managed services improves.
“Rackspace showed year-over-year growth that accelerated to around 32% from 29%, maintained margins in the low-30% range and talked about those margins remaining stable as they continue to grow,” Breen said. “They’re seeing continued solid growth within their existing business.”
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