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Asia-Pacific IT outsourcing to exceed US$10B

Latest IDC research reveals growing interest in Asean, and forecasts high-growth rates for India and China.

A new market report forecasts regional outsourcing spend to cross the US$10-billion mark this year, suggesting that companies in the Asia-Pacific region are open to contracting out more IT work.

In its latest forecast of the Asia-Pacific IT outsourcing marketplace, excluding Japan, research vendor IDC estimated that US$10.5 billion will be spent on IT outsourcing within the region in 2006, topping US$16 billion in 2010. This represents a compound annual growth rate (CAGR) of 10.9 percent over the forecast period.

"In the past 10 years, we've already seen significant spend by the mature Australian and New Zealand Markets," said Eugene Wee, a senior analyst for IDC's Asia-Pacific services research, in a statement. "But increasingly, companies within Asean, India and China, are becoming more open to the idea of letting the experts take care of their IT ecosystem."

India and mainland China will continue to be high-growth markets in the next five years, driven primarily by large IT infrastructure growth in past years. With CAGR of 19 percent and 31 percent, respectively, over 2005-2010, these markets are not expected to have fully matured by 2010, IDC said.

According to the report, Singapore and Hong Kong--despite some market saturation--continue to offer opportunities in contract renewals and extensions, where companies look to migrate from support contracts to managed or outsourcing contracts.

A recent survey conducted by ZDNet Asia also revealed a growing interest among Singapore SMBs (small and midsize businesses) to contract out selected IT functions. Areas that are most likely to be outsourced include application development and maintenance, as well as Web site development and hosting, the survey revealed.