India leads IT services growth in Asia

The Asia-Pacific IT services market is set to grow by a five-year compound annual growth rate (CAGR) of 10.5 percent to reach US$55.9 billion in 2011, according to new research.

Momentum in the region, excluding Japan, will be led by the Indian IT services market, which is forecast to grow at a CAGR of 18.6 percent, analyst house Springboard Research said Tuesday in a statement.

Phil Hassey, vice president of services research at Springboard, noted that the IT services market in the Asia-Pacific region is the fastest growing in the world, with a mix of mature and emerging markets. In 2007, the region's IT services market was valued at US$37.5 billion.

"The markets of interest [in the region] are not just the top four--China, India, Australia and Korea--but [also] emerging ones like Indonesia and Vietnam, which will register significant growth going forward."

China is expected to contribute significantly in dollar terms, and is ranked the most attractive market in terms of opportunities. Factors contributing to market attractiveness include local capabilities, service portfolio and presence, Hassey said. Nonetheless, factors such as existing relationships and prominent clientele can provide expansion opportunities even in limited growth markets such as Hong Kong or New Zealand, he added.

Application hosting, Springboard reported, will be the fastest growing area of IT services, with a forecast CAGR of 19.5 percent between 2007 and 2011.

In absolute terms, enterprise application integration or linking up various applications to improve business processes will overtake IT outsourcing to be the biggest segment of the IT services market in the region, contributing US$7.8 billion by 2011. IT outsourcing, the largest IT services segment in 2007, will shrink over the next few years due to a lack of demand from Chinese businesses, said Springboard.