APeJ IT services mkt to touch $ 52.9 bn by 2011

SINGAPORE: The total Asia Pacific excluding Japan (APeJ) IT Services spending in 2011 is expected to grow by 8.7 per cent over 2010 riding on dual waves of outsourcing services and new IT projects specifically on 'Cloud' and 'Smart Infrastructure', says the latest report by Springboard Research.

The Research report titled 'APeJ IT Services Report — 2010' reveals that the market is estimated to reach $ 52.9 billion by 2011, with China, Australia and India contributing 72 per cent to the total spending.

The research shows that 64 per cent of the IT services spending come from discrete services, majorly infrastructure support and integration related services and the remaining 36 per cent from outsourcing services.

“The high skew towards discrete services in the region clearly highlights the fact that the IT services market in APeJ is still in the maturing phase as opposed to some of the more mature economies of the west and Europe where outsourcing services can constitute close to 50 per cent of the total IT Services spend”, said Seepij Gupta, associate research manager - IT services at Springboard Research.

For more mature IT markets such as Singapore and Australia, growth is primarily led by investments into new technologies such as Cloud services and Smart Infrastructure. Some developing countries like India and China are also leapfrogging and adopting these new technologies and business models while driving the markets’ volume.

Springboard Research expects the IT services market in APeJ to continue its rapid development and maturation process, which will be driven by:

Shortage of resources and skills

Challenges in recruiting, training and retaining qualified IT personnel is becoming a major challenge for end user organizations and they are increasingly opting to outsource the management of their IT assets to one or several third party service providers.

Complex IT environments

As the IT sprawl of organizations continues to grow and become more complex with new technologies being adopted, it is becoming increasingly difficult for the organizations to manage their IT effectively and efficiently. The situation calls for access to best-of-breed functionalities and services which a service provider can provide. Springboard Research expects IT consulting services in particular to benefit from this trend.

Innovations in the Managed Services space

As more organizations seek to reap the benefits of a better integrated approach to managed services, there will be a clear move towards application outsourcing that combines infrastructure and application management to yield better application performance at a lower cost. As this trend continues to gain strength, the lines between SaaS and managed services will increasingly blur.

Proliferation of 'Everything-as-a-Service'

As cloud computing continue to gain market prominence, everything is increasingly being packaged/productized as a service to replace CAPEX outlays in favor of more variable OPEX spending. Perhaps too easily dismissed as a cheap marketing ploy, this dynamic is really a reflection of client demands for far greater flexibility, predictability and time to market when investing in information technology.

“These emerging trends will not only benefit the clients, as they pay only for what they consume, but will also help the IT services market to mature to a whole new level”, said Fred Giron, VP - IT Services, Springboard Research.