IDC: Asia's IT services market to keep growing in 2011

The overall IT services market in Asia-Pacific excluding Japan (APEJ) will continue its growth momentum in 2011, a 9.4 percent year-on-year increase fuelled mainly by outsourcing and project-oriented services and cloud services, according to a new report from IDC.

"IT-as-a-service and pay-as-you-go models have triggered the market to explore alternatives to traditional outsourcing models," said Natalie Wan, senior research manager of IDC's Asia-Pacific Services Research Group, in the study released Thursday.

Wan added that because of these new service models, there has been greater interest in hosted application management, such as public cloud, data center consolidation and virtualization initiatives.

However, Chris Morris, director of IDC Asia-Pacific's practice group, said in a September interview with ZDNet Asia that 2011 would be "a big year for private clouds". His reason is that CIOs in the region, fearing the security risks, u-turned from public cloud projects to private cloud deployments.

Incidentally, IDC's latest analysis in December revealed that security and risk assessment services remain high on the agenda to assist companies in evaluating the security issues prior to deploying new technologies, such as mobile, cloud computing and social networks. Strengthening governance for managing corporate data in the cloud was also tops.

IDC's observations were corroborated by a Springboard Research study earlier in August, which stated that cloud uptake was accelerating in the Asia-Pacific region in 2010. Springboard pointed out that 45 percent of organizations in the region (excluding Japan) had adopted or were planning to move to cloud, up from 22 percent in 2009.

The optimism expressed by IDC of Asia's increasing IT services market is in marked contrast to its reports in 2009, when the research firm said market growth would slow down due to bearish global economic conditions. The firm even lowered its previous growth forecast from 11.2 percent to 9.6 percent, because firms were shifting their focus to balancing cost savings and emphasizing less on business transformation projects at the time.

But in the following year, with the economy recovering, IDC estimated that the market would rebound on its growth trajectory to hit US$48.7 billion in 2010.

IDC's IT services forecast for 2011 also pointed out that server, storage and desktop virtualization and migration to next-generation data centers will also spur the network consulting and integrations service sectors.

Enterprise transformation was another trend that IDC identified to be responsible for pushing the growth trajectory of the IT services market in Asia. It noted a greater demand for business analytics solutions as more companies want to develop predictive capabilities to bank on the value of information and increase its competitiveness and time-to-market.

Asian organizations are also looking for end-to-end managed services, the IDC report pointed out, attributing this to companies realizing that extending the partner ecosystem is crucial to address growing requirements for compliance and disaster recovery.

Linus Lai, associate director of IDC's Asia-Pacific Services Research Group, said that "transforming IT infrastructure, modernizing applications and streamlining business processes are key drivers for enterprises' IT investment".

He added that there continues to be pressure to reduce CAPEX (capital expenditure), which in turn will spark innovation in outsourcing services over the next 12 months. At the same time, IT service management and governance will be in the spotlight for outsourcing systems, Lai noted.

An Ovum report, earlier released in September, estimated that China is rapidly hot on the heels of India as the outsourcing powerhouse globally, thanks to its cost-competitive rates and huge domestic market.