AT&T today announced an expansion of its data centers and its managed services portfolio, in response to a substantial growth in managed services business.

The company added new Internet Data Centers in San Jose, Calif., and in Shanghai, China, and expanded its New York City Internet Data Center capacity by 27%. The Chinese center is the fifth added to the international roster since 2004, but the U.S. additions are the first in a few years, according to Chris Costello, AT&T director of product management for Managed Hosting Services.

“We are seeing growth overall in managed services,” she said in a telephone interview. “We are building out in response to demand. San Jose has certainly been an area where we have been experiencing explosive growth. We’ve seen a lot of traction in the gaming industry, for example.”

Other industries, such as financial services, are also expanding rapidly but there is a general increase in demand for managed services across industries, particularly in security and storage, Costello said.

“We are also seeing the hosting industry begin to stabilize, from a service provider perspective,” Costello added. “More and more customers are beginning to out-task. They are not just looking for capacity and bandwidth, but also some type of monitoring and management, sometimes right up to applications management.”

After the boom and bust of the ASP market, enterprise clients are now getting comfortable trusting the service providers that weathered that storm and are offering services today, she added.

AT&T is adding three services to its Managed Hosting service portfolio, including AT&T Server and Operating System Support (SOSS), server virtualization capability and AT&T’s Managed Utility Computing Pay-Per-Use.

SOSS allows enterprise customers to outsource the underlying operations of their applications, while continuing to control custom code and other aspects, Costello said. “This is for customers who really want to focus on their core business applications and are looking for AT&T to help them with infrastructure management,” she said. “The customer can focus on their databases and business applications.”

The service provides all global support for hardware, security and troubleshooting including management of servers and OS.

The pay-per-use service allows enterprises to match their IT budgets to their IT needs, using the managed services as a utility.

“The technology is becoming more mature, and inherent with utility computing are capabilities like faster provisioning and lower costs,” Costello said. “We are definitely seeing utility computer more in customer RFPs.”

Server virtualization enables AT&T to offer more efficient use of server resources by running multiple applications and operating systems on a single server and adding capacity as needed through software to “virtually” expand server resources.

“The alternative is a guy running around the data center with a screwdriver,” Costello said.