In surveys of IT users that Gartner conducted in 2003 and 2004, 30 percent to 40 percent of the respondents said that they would not use an off-site backup service provider under any circumstances.

In 2005, however, that number plunged to 5 percent, mostly as a result of a number of high-profile data losses, Couture said.

"[Users] also have more confidence in the vendors," Couture said, adding that there are more than 100 vendors now offering hosted storage backup services.

Another factor driving companies to turn to off-site backup services is the added headache of having to encrypt all data at rest.

Couture said the difficulties involved in integrating encryption appliances, plus longer and more complicated backup processes, are pushing IT managers toward offloading the replication function.