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Tuesday, Jun 18, 2002

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IDC expects strong growth in outsourcing

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THE Asia-Pacific IT outsourcing marketplace will experience ``very strong growth rates'' across all three major outsourcing service delivery areas, predicts IDC.

Overall, the market will grow from $4.7 billion in 2001 to nearly $14 billion by 2006, says IDC. A healthy demand is expected for all types of outsourcing services, with applications outsourcing expected to show the fastest growth at 51 per cent.

Region-wise, the Greater China and Korea region with a CAGR of 24 per cent has been rated the fastest growing.

``The differing growth dynamics of the marketplace will have tremendous impact. ANZ will lose its dominant position in the marketplace, falling from 52 per cent to just over 30 per cent of the total. The Greater China region is forecast to grow from 15 per cent to 26 per cent in the same period,'' said a press release quoting Mr Phil Hassey, Senior Analyst, IS Outsourcing, IDC Asia/Pacific.

This changing of ways will have a significant impact on the dynamics of the region. It will present significant challenges for existing service providers, and those who are looking to enter the market. "However, while the focus is quite rightly on the North Asian economies, there are still very large opportunities in each of the other regional countries," Mr Hassey said.

The study compares and contrasts the three key types of IT Outsourcing: Information systems (IS) outsourcing, applications outsourcing and network and desktop outsourcing.

Each type has its own distinctive characteristics and opportunities for service providers. ``Very few vendors are able to truly offer all services, resulting in the need for meaningful partnerships,'' explained Mr Hassey.

Key drivers for the outsourcing market beyond 2002 include increased acceptance of outsourcing as a business practice across the region; organisations' focus on core business strategies; the need for fully reliable infrastructure; globalisation and competitive business environments; and, increased complexity of the applications environment.

Service providers that will thrive in the region are those who are proactive and aware of market trends that impact customer adoption of service delivery models. It is critical for service providers to fully understand that each country is different, and universal offerings that do not consider individual countries business environment and culture will not succeed, commented Mr Hassey.

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