China, Korea to drive IT outsourcing

The Asia-Pacific market for the outsourcing of IT functions is expected to reach US$14 billion in 2006, spurred by demand in China and Korea.

The Asia-Pacific market for the outsourcing of IT functions is expected to reach US$14 billion in 2006, spurred by demand in China and Korea.

Key drivers include an increasing acceptance of outsourcing as a business practice, a re-focusing on core business strategies, rising competitiveness from globalization and the growing complexity of the applications environment, said research firm IDC.

By 2006, Australia and New Zealand's combined share of the regional IT outsourcing market is expected to fall to 30 percent from 52 percent last year, IDC added. Comparatively, the Greater China region is estimated to constitute 26 percent of the sector in 2006 from 15 percent in 2001.

Asia-Pacific realized revenues of US$4.7 billion from IT outsourcing last year, IDC said in a statement.

Rolf Jester, Gartner Asia-Pacific chief analyst for IT services, believes the region's IT outsourcing market will expand at rates two to three times greater than North America's. He attributed the relatively stronger growth to Asian businesses' cautious approach to investments.

"(IT outsourcing) is a way of doing things in a less risky fashion: paying a variable rather than a fixed, up-front cost," Jester said. He also alluded to higher equipment and labor commitments should businesses choose to house their IT functions internally.

Staff writer Irene Tham contributed to this report.

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