India to remain fastest growing IT services market in Asia Pacific
Thursday, March 27, 2008
The IT services market in Asia Pacific (excluding Japan) is poised to reach $55.9 billion by 2011, representing a compounded annual growth rate (CAGR) of 10.5 per cent, with India as the fastest-growing IT services market in the region and China representing the largest regional opportunity.
According to Springboard Research, the IT services market in Asia Pacific, which stood at $37.5 billion in 2007 is slated to touch $55.9 billion in 2011.
The report said that the Indian IT services market, with a CAGR of 18.6 per cent, would remain the fastest growing in the region, although as a region Greater China would offer the largest market opportunity in dollar terms at the end of the forecast period.
Ranking countries and individual IT services markets on the basis of growth opportunities, the report said that the top 10 countries in the region were China, India, Australia, Korea, Indonesia, Vietnam, Malaysia, the rest of ASEAN, Singapore, and the Philippines.
“For India and China, local capabilities, offerings and presence are just the start of a list of essential requirements for success.
On the other hand, existing relationships, marquee clients and strong partnerships can provide capabilities for expansion in markets such as Hong Kong and New Zealand with relatively limited opportunities,” Mr Phil Hassey, Vice President - Services Research at Springboard Research, said.
While the Asia Pacific IT services market was arguably the global leader in terms of growth, supplemented with a mix of mature and emerging markets, the markets of interest were beyond the top four (China, India, Australia and Korea), and included emerging ones such as Indonesia and Vietnam, it said.
According to the report, application hosting — with a CAGR of 19.5 per cent between 2007 and 2011— would register the fastest growth during the forecast period, although enterprise application integration at $7.8 billion would continue to be the largest component of the market by 2011.
While Enterprise IT outsourcing is the largest market in 2007, the reluctance of Chinese firms to use the Enterprise IT outsourcing model would reduce its relative size and weighting in the market by 2011.
The report predicts that challenges in accessing and retaining IT skills would accelerate the shift to external services providers, as enterprises will struggle to retain in-house key individuals and skill-sets.
More importantly, China would not challenge India as the home of offshore service delivery especially for English language requirements, as skill levels, quality and governance, are more suited to India being a hub of global delivery.