APAC IT services to hit US$53B in 2011

Outsourcing and new IT projects, fueled by shortage of resources and skills and increasingly complex IT environments, will drive growth in region's IT services, study shows.
Written by Jason Ng, Contributor on

IT services spending in the Asia-Pacific region, excluding Japan, is expected to achieve a year-on-year growth of 8.7 percent over 2010 as more companies turn to outsourcing and embark on new IT projects, a new study revealed.

Released Tuesday, Springboard Research said the IT services market will grow to hit US$52.9 billion on the twin waves of outsourcing and new IT projects that revolve around cloud computing and "smarter infrastructure".

Delving deeper, the research showed that 64 percent of the spending on IT services will come from discrete services, major infrastructure support and integration-related services, The remaining 36 percent will come from outsourcing services, it noted.

"The high skew towards discrete services in the region clearly highlights the fact that the IT services market in Asia-Pacific, excluding Japan, is still in the maturing phase as opposed to some of the more mature economies in the West where outsourcing services can constitute close to 50 percent of total IT services spend," said Seepij Gupta, associate research manager of IT services at Springboard Research, in the study.

The research also showed that China, Australia and India will account for 72 percent of the total spend by 2011. Growth in more mature IT markets such as Singapore and Australia will be led by investments in new technologies such as cloud computing. That said, developing countries such as India and China will also be leapfrogging legacy IT to adopt these new technologies to further drive growth, the research stated.

IT services spending is not expected to slow down, either. Springboard Research identified three factors that will drive IT services investments, namely the shortage of resources and skills, complex IT environments and innovations in the managed services space.

First, organizations are finding it increasingly difficult to recruit, train and retain qualified IT professionals. As a result, companies have to outsource the management of their IT assets, the study revealed.

Second, as the IT sprawl continues unabated with companies continuing to adopt new technologies into its existing infrastructure, they are increasingly unable to manage their IT systems effectively. This, in turn, means they would look to service providers that can help them manage it, the research firm stated.

Third, and as an extension to the second point, the study also predicted that 2011 will see an expansion of managed services beyond basic infrastructure management to include more application-related services. As more organizations seek to reap the benefits of a better integrated approach to managed services, there will be a clear move towards application outsourcing that combines infrastructure and application management to yield better application performance at a lower cost, the research paper stated.

"We strongly believe that this shift to new services will transform the way IT is delivered and consumed and, moving forward, "as-a-service" will be an integral element for almost everything IT consumed by organizations," said Fred Giron, vice president of IT services at Springboard Research.

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