Features

IT Services Growth In APEJ to Reach USD 43.4 Bln in 2010; China, India Lead

By Sophia Mayengbam

The Information Technology Services marketplace in Asia/Pacific excluding Japan, which has seen tremendous growth in recent years is poised for further growth. According to a research by IT research firm IDC, the market will grow from USD 29.57 billion in 2005, to USD 48.37 billion in 2010. This represents a compound annual growth rate (CAGR) of 10% over the forecast period.

Among other countries in the region, the report identified China and India as the two top fast-growing markets. IDC sees People Republic of China (PRC) emerging as the largest market in 2011.

IDC forecasts that PRC will overtake Australia to be the largest opportunity for IT Services provision in the marketplace in 2010.

Additionally, on current projections, in 2011, it is forecast that India will overtake Korea to become the third largest market in the region. India is expected to contribute 13 percent of the IT services market in 2010, compared to Korea's 14 percent.

Southeast Asian markets--Hong Kong, Indonesia, Malaysia, Philippines, Singapore and Thailand--will each contribute between 1 percent and 4 percent to the total IT services market spend in 2010.

Asia/Pacific (Excluding Japan) IT Services Forecast, Country Breakdown 2010 (Source: IDC)

The research report "Asia/Pacific (Excluding Japan) IT Services 2006-2010 Forecast" said that discreet outsourcing would dominate the market over traditional outsourcing. The reason is that decision making process is much longer in traditional outsourcing because large scale outsourcing decision is taken by the collective board.

"Systems integration, enterprise-wide IT outsourcing, and hardware support are going to be the largest engagements, but the discrete outsourcing environment will see the strongest growth rates, clearly at the relative expense of traditional outsourcing," says Phil Hassey, Director, Asia/Pacific Services Research, IDC Asia/Pacific.

However, Hassey pointed out that the outsourcing providers are not fully exploiting the growth opportunity of the region.

"There is a gap to excellence for many vendors in the region. Clearly this is a frustration for enterprises who often have outcomes that do not match expectations," said Hassey.

Key factors that will drive the IT Services market include the following:

• Managing around the sensitivities of offshore and “on-demand” delivery. While this is attractive for many enterprises, vendors must be aware that each enterprise will have a unique viewpoint on this
• While enterprises want a low cost opportunity, they are also aware of the dangers of paying too low for a services, as a result balance between price and value is critical
• Standardised offerings that are able to drive out cost
• Company environmental factors, such as profitability, future strategy and geographic framework

Enterprises attitude to their service provider will also vary dependant upon the outcomes of any relationship, so true partnerships will typically only be formed if there is a transformational element to the engagement, otherwise it can vary from a commoditized relationship to a transformational one depending upon client needs and the ability of vendors to sell their capabilities.

In a separate report, IDC has forecasted that China and India together will contribute 65 percent of all incremental growth in the region's IT spending this year. IDC also expects total IT spending in the Asia-Pacific region to reach USD162.5 billion by the end of the decade.