IDC: Companies are choosing to outsource in pieces

Rather than award huge service contracts, enterprises are choosing to outsource their IT infrastructure in parts.

SINGAPORE--Total end-user spending on outsourcing will overshadow that of all other IT services by 2009, according to research analyst IDC.

Businesses are still looking to outsource, both in 'low-value' services such as technology support and project-based IT services as well as 'high-value' outsourcing such as business process outsourcing, said Eugene Wee, IDC Asia-Pacific's senior analyst for services, during a seminar held here this morning.

The outlook for the outsourcing market is "massive", he said. IDC predicts that the Asia-Pacific, excluding Japan, IT services market will grow at a compound annual growth rate of 11.4 percent to US$45.3 billion by 2009.

Wee noted that businesses, however, are looking to "outsource discrete parts of their organization" instead of granting "enormous contracts". He explained that these areas largely involve network or application management.

In China, for example, there are a significant number of discrete contracts where the companies turn to outsourcing when they want to deploy new technology such as the management of a new network, he said.

Telecom carriers are also increasing their role as service providers and grabbing a bigger share of the outsourcing market, he noted.

Sandra Ng, vice president for communications, peripherals and vertical research for IDC Asia-Pacific, noted that telcos in the region excel in services such as managed converged--voice and data--communications and managed security.

Wee added that with the addition of such new players in the market, the outsourcing pie is no longer constrained to major outsourcing players such as IBM, EDS and Hewlett-Packard.

"There are a whole bunch of players coming in," Wee said. "Incumbents (in this market) cannot just do nothing, and think that nothing is going to change."