Iron Mountain’s recently announced acquisition of LiveVault put the spotlight on what analysts say is a growing market for managed backup and recovery services.

A recent Gartner survey of IT managers showed that only 6% said they would not use a managed service, whereas the number stood at 40% two years ago.

“I am seeing a resurgence in outsourced storage services,” says Stephanie Balaouras, senior analyst for market-research firm Forrester. “Customers are looking to outsource some of the undifferentiated storage tasks, such as backup and archiving.”

Iron Mountain has significantly expanded its offerings, moving beyond storage of paper records and tapes to online backup and recovery services. Last year, the company added vaulting of desktop and laptop data to its portfolio via the $117 million acquisition of Connected.

The $50 million buyout of LiveVault adds to Iron Mountain’s arsenal the InSync managed backup and recovery service for small and midsize businesses and InControl back-up and recovery service for remote offices of large companies. LiveVault says it has 2,000 customers.

Iron Mountain already owned 14% of LiveVault and has resold its services for the past five years, as have British Telecom and IBM Global Services.

Managed back-up services have been on an upswing at Iron Mountain, which says revenue from that business has grown 20% from a year ago. In the third quarter, the company reported $84 million in managed-services revenue.

LiveVault started in 1992 as Network Integrity. In 2001, the company recapitalized and in 2002 brought in Bob Cramer, who has remained as president and CEO. Since 2001, LiveVault has acknowledged $25 million in funding. In 2003, the company cut two-thirds of its workforce, but has since grown back to 60 employees.

Expect further market consolidation in the months to come, says Dean Goodermote, CEO of data-protection software and services company NSI Software.

“There seem to be a lot of rumblings out there,” he says. “It’s not so much that these companies are peaking, but together various combinations make sense in going after this growing market.”