Sector Snap: Analyst upbeat on data outsourcing

Analyst sees growing demand for data outsourcing even as recession crimps near term growth

NEW YORK (AP) -- Companies that specialize in helping other firms store and manage data stand to gain in the long term as corporate customers outsource more of their IT infrastructure, a Boenning & Scattergood analyst said.

In a client note Thursday, Boenning & Scattergood analyst Steve Salberta told investors that "while corporate outsourcing is not new, the outsourcing of the corporate data center is relatively novel."

He said the growth of online content -- large video files, for instance -- and the need to send material over the Internet at high speeds should help the data outsourcing industry grow by 17 percent annually through 2012.

In the short term, however, Salberta sees mixed implications from the ongoing recession. On the one hand, incumbents with data storage capacity already in place stand to gain as tight credit markets make capital investment in new data centers scarce. But Salberta said revenue growth in 2009 is likely to be below estimates because of the weak economy.