The Asia-Pacific IT services market will rebound to its growth trajectory to reach US$48.7 billion in 2010, notes IDC in a report Wednesday.
The research house said recovery will see a rise of 9.3 percent, over 6.5 percent in 2009. This growth will be driven by continued demand for outsourcing as hosted and managed services gain prominence in the Asia-Pacific region, excluding Japan.
According to the research firm, cost management will still be the top concern for most organizations. However, as cautious optimism returns to the market, selective investments will be made to take advantage of the potential recovery in 2010.
Philip Carter, Asia-Pacific associate research director for IT services at IDC, noted in the report that the financial turmoil in 2009 forced CIOs in the region to evaluate new service and delivery pricing models. The key focus was to "de-capitalize" IT in the face of significant budget constraints.
"As a result, the financial model of the cloud and 'everything-as-a-service' became more attractive. This has set the scene perfectly for the locus of power to shift from traditional enterprise hardware and software vendors to the services players, particularly in cloud services, in 2010," explained Carter.
He added that organizations that can successfully integrate these new models into existing technology architectures, and vendors that can develop mindshare with CIOs, will be best placed to "ride the recovery wave" in 2010.
Top 10 IDC predictions for the region's IT services sector in 2010:
1. Locus of power will move from the enterprise customer to the provider of services. Private clouds will become increasingly important to enterprises in 2010, and there will be fundamental changes within information, communications and technology (ICT) in the next three years as users consistently adopt externally sourced services.
2. "Chargeback" will "charge back" onto the CIO agenda. According to IDC, the IT world has been considering a capital expenditure (CAPEX) to operating expense (OPEX) migration even before the economic crisis. In 2010, there will be more emphasis on the need to justify the "business value" of IT infrastructure demands.
3. Services "productization" to move up the value chain. Service providers will look to adopt a template-based model for consulting services related to business transformation, compliance, governance and risk management.
4. System integration 3.0: New models = New services. IDC predicts that the adoption of cloud solutions, hosted delivery models and data center transformation will drive the need for a new system integration engagement model.
5. Emergence of Intelligent X: The services opportunity. Driven by a mix of government stimulus packages focused on e-governance initiatives and environment sustainability, where carbon footprint and intelligent infrastructure implementations will be the next big wave for public-private investment in 2010 and beyond.
6. Business process outsourcing (BPO) versus knowledge process outsourcing (KPO). Drivers for divestiture of captive BPOs are the lack of growth opportunities, need for a cash flow influx, focus of management on strategic and core activities. KPO will still be retained by the parent as organizations continue to be wary of outsourcing intellectual property.
7. Business analytics and pricing innovation will collide in the KPO market. IDC predicts that analytics will be incorporated into broader KPO engagements to lower costs, which will include a significantly higher proportion of business outcomes-based type of model.
8. The "Mobius strip" of business continuity will enter the boardroom. Business continuity and disaster recovery will become an integral part of the business strategy planning because of security concerns and business risk mitigation.
9. Connectivity and convergence: Growth in next-generation network services. Flexibility, customization of services, enhanced quality of service and reliability will drive the transformation toward next-generation "all-IP"-based networks.
10. Infrastructure vendors will make the most of the setting Sun.Infrastructure vendors will capitalize on Sun's decline in the market by building competitive strategies such as channel recruitment and target multi-vendor environments.