Asia warms to network outsourcing

China and Thailand are expected to lead the region's growth in managed services, according to IDC's latest research.

The mounting demand for managed networks in China, India, Malaysia and Thailand is driving the Asian managed services market, according to latest research.

A new report from IDC has revealed that the biggest growth in demand for managed networks in 2006 will come from China, which is forecast to grow by 47.3 percent compared to 2005. Thailand is a close second at 46.5 percent, while India and Malaysia are expected to register growth rates of 25.2 percent and 22.6 percent, respectively.

The overall managed services market in the Asia-Pacific region excluding Japan is forecast to grow at a five-year compound annual growth rate of 16.3 percent to reach US$28.4 billion by 2010, IDC noted in a statement on Wednesday.

This year alone, the demand for managed services is expected to drive market spending to US$17.8 billion, a 21.9 percent jump over IDC's US$14.6 billion forecast for 2005.

Adrian Ho, research manager for managed services and networking at IDC Asia-Pacific, noted that Asian businesses need to lower IT infrastructure running costs and yet stay abreast of new technology shifts. "A well crafted managed services strategy and proper due diligence in selecting a managed service provider can go a long way in resolving these problems," he said.

Industry players such as Motorola and Wiproappear to recognize the greater number of opportunities in the managed services market. The two companies recently formed a joint venture to offer managed services to public and private network customers.

IT services provider Datacraft also announced Thursday a new service to help clients manage their IP telephony systems. The Singapore-based vendor said in a company statement that it has deployed over 2,000 IP networks and more than 60,000 IP handsets for clients in the Asia-Pacific region.

Adding value, driving growth
According to IDC, value added management services (VAMS) such as management network services, Web hosting and hosted application management will drive the growth of managed services in the region. The VAMS segment is expected to grow at a CAGR of 18.5 percent, from US$6.4 billion in 2006 to US$11.4 billion in 2010.

Emerging managed services such as managed security, managed converged networks and managed mobile solutions have also gained traction in the region, particularly in Australia, Korea and Singapore.

Managed network services, IDC added, will contribute the most to VAMS spending in 2006, at US$2.7 billion. Web hosting, managed application performance and hosted application management will contribute US$870 million, US$565 million and US$485 million, respectively.