IDC: Infrastructure outsourcing on the rise

Asian companies are now outsourcing beyond hardware support into infrastructure management, as they mature in their use of IT, finds new study.
Written by Lynn Tan @ Redhat, Contributor

Companies in the Asia-Pacific region, excluding Japan, are contracting out more work related to the management of IT infrastructure, according to a new study by research house IDC.

As companies mature in their use of IT, they progress from farming out just their hardware support to include network and desktop management as well, the IDC report noted. This movement is true across the entire region, it added.

IDC explained that the progression not only shows that organizations are seeking out "greater relationship depth offered by network and desktop outsourcing", but also signifies the general shift toward more sophisticated engagements with external IT service providers.

Findings from the report Support to Management: The Continuum of Infrastructure Services in Asia-Pacific, indicated that increase in infrastructure outsourcing activities will double the growth of hardware support services across the region. Countries covered in the study include Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand.

IDC estimated that the network and desktop outsourcing market will grow from US$2.1 billion in 2005 to US$4.5 billion in 2010. This represents a compound annual growth rate (CAGR) of 15.8 percent over the forecast period.

The region's hardware deployment and support market will grow at a CAGR of 7.8 percent to reach US$6 billion by 2010 from US$4.1 billion in 2005, IDC said in a statement released Wednesday.

Richard Pirrit, research manager of support services at IDC Asia-Pacific, said: "As far as the infrastructure is concerned, this means a progression throughout the region from less-intensive hardware maintenance contracts to the outsourcing of the network and desktop environment."

Pirrit noted that organizations throughout the region are "maturing in their understanding of IT's role in driving business strategic functions, as opposed to merely sustaining operations".

"Businesses can achieve competitive advantages and increased efficiencies by leveraging IT, [and] as businesses begin to understand the potential value-add that IT can bring, they are increasingly looking toward service vendors for value-add services" he said.

In addition, the IDC said there will be an increase in the supply of outsourcing services as new players enter the market.

Eugene Wee, senior market analyst for IT services at IDC Asia-Pacific, said: "While the provision of outsourcing had previously belonged to the domain of IT giants like IBM, EDS and CSC, we are seeing an increase in the supply of these services as niche players and telecommunication service providers have begun to offer these services to compensate for the decline of their core business."

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