The Hindu Business Line : `More Asian cos opt to outsource'

Even as the US outsourcing market size continues to attract IT service providers in droves, the Asia Pacific outsourcing market is also beginning to look up. The outsourcing marketplace within the Asia Pacific region excluding Japan market, is likely to cross the $10 billion mark this year, according to global research firm International Data Corporation (IDC).

"With popular reference of outsourcing in the region revolving around the US outsourcing to India, the significance of the regional markets for outsourcing are often neglected. In the past 10 years, we've already seen significant spend by the mature Australian and New Zealand markets, but increasingly, companies within ASEAN, India and China, are becoming more open to the idea of letting the experts take care of their IT ecosystem," Mr Eugene Wee, Senior Analyst, Asia Pacific Services Research, IDC Asia Pacific said.

Growth Markets

In its latest report `Asia/Pacific IT Outsourcing 2006-2010 Forecast and Analysis', IDC forecasts that the market would grow from $9.58 billion in 2005, to $16.06 billion in 2010. This represents a compounded annual growth rate (CAGR) of 10.9 per cent over the forecast period.

"India and China will continue to be the high-growth markets in the next five years. With CAGR of 19 per cent and 31 per cent respectively over 2005-2010, these markets are not expected to have fully matured by 2010. This strong build-up is primarily driven by the large infrastructure growth over the past several years ," the IDC statement said.

On the other hand, Australia and New Zealand were clearly the most mature outsourcing markets in the region, it said adding their behaviour often dictated how other countries in the region would behave in several years after they increase in maturity.

Government Contracts

"The Singapore and Hong Kong markets will seem saturated with the limited room for expansion. However, there are opportunities in contract renewals and extensions to migrate from support contracts to managed or outsourcing contracts," it said.