Downturn dampens Asia's services outlook

The slowing of the U.S. economy and weaker greenback will dampen the consulting and systems integrator (C&SI) market in the region over the next 12 months, according to IDC.

In a statement late Thursday, the research analyst said it has revised downward its growth estimates for the C&SI market in the Asia-Pacific excluding Japan region. IDC now forecasts a 10.2 percent growth rate between 2008 and 2009, down from the previous estimate of 11.2 percent.

The C&SI market in the Asia-Pacific region excluding Japan will grow at a five-year compound annual growth rate (CAGR) of 11 percent from US$15 billion in 2008 to US$22.6 billion in 2012, IDC predicted. In the revised estimates, the analyst pointed to a slight increase in market size for the region.

C&SI market forecast for Asia-Pacific excluding Japan region

Source: IDC

China, Korea and India will be the key drivers of growth for the industry over the next few years. By 2010, China is expected to have the largest contribution to C&SI spend in the region.

Mayur Sahni, IDC's senior market analyst for IT services opportunities research, said: "The key challenge for IT service providers is addressing the evolving buying behavior of CIOs as they question the business value of IT spending in a challenging economic environment.

"In order to be successful, IT service players need to build vertical-specific and business-consulting capabilities into their offerings to gain a favorable perception in the market," he added.