Outsourcing Services Market Prospers in the Asia/Pacific Region, According to IDC

NORTH SYDNEY, JUNE 18, 2002 -The market for IT Outsourcing experiences significant growth across Asia/Pacific. IDC predicts that the Asia/Pacific IT Outsourcing marketplace will experience very strong growth rates across all three major Outsourcing service delivery areas.


Overall, the market will grow from US$4.7 billion in 2001 to nearly US$14 billion by 2006. Fuelled by the generally healthy demand for all types of outsourcing services, especially in Greater China and Korea, the region will experience a compound annual growth rate (CAGR) of 24%.

Within the broad outsourcing marketplace, the fastest growth rate is expected to be in Applications Outsourcing, with a CAGR of 51%.

The differing growth dynamics of the marketplace will have a tremendous impact. ANZ will lose its dominant position in the marketplace, falling from 52% to just over 30% of the total. The Greater China region is forecast to grow from 15% to 26% in the same period, said Phil Hassey, Senior Analyst, IS Outsourcing, IDC Asia/Pacific.

This changing of the ways will have a significant impact on the dynamics of the region. It will present significant challenges for existing service providers, and those who are looking to enter the market. However while the focus is quite rightly on the North Asia economies, there are still very large opportunities in each of the other regional countries, said Mr. Hassey.

The study compares and contrasts the three key types of IT Outsourcing: information systems (IS) outsourcing, applications outsourcing and network and desktop outsourcing.

Each type has its own distinctive characteristics and opportunities for service providers. Service providers must understand what offerings they are going to provide, and if they are doing so independently or through close strategic alliances. Very few vendors are able to truly offer all services, resulting in the need for meaningful partnerships, explained Mr. Hassey.

Key drivers for the outsourcing market beyond 2002 include: increased acceptance of outsourcing as a business practice across the region; organisations' focus on core business strategies; the need for fully reliable infrastructure; globalisation and competitive business environments; and, increased complexity of the applications environment.

Service providers that will thrive in the region are those who are proactive and aware of market trends that impact customer adoption of service delivery models. "It is critical for service providers to fully understand that each country is different, and universal offerings that do not consider individual countries business environment and culture will not succeed, commented Mr. Hassey.

Larger vendors also must ensure that they have offerings that are scalable to meet the needs of smaller scale companies, so that these companies are confident that they can get the required level of attention.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and eBusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts local and worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organisations, eBusiness companies and the financial community. Additional information can be found at www.idc.com.au