Global research firm lowers IT growth forecast for Asia Pacific to 9.6% in 2009

MANILA, Philippines – Global research firm International Data Corp. (IDC) has lowered its growth rate forecast for the information technology services market in the Asia-Pacific region (excluding Japan) this year to a ‘post-crisis’ forecast of 9.6 percent, from the previous forecast of 11.2 percent.

Despite this, the regional IT services market is still expected to grow to $49.4 billion in 2009, driven primarily by continued demand for managed services and outsourcing, as cost management becomes a key focus for organizations in the region.

‘’The impact of the global economic crisis on the services market has to be viewed from a number of perspectives and these are changing constantly,’’ Philip Carter, associate research director for IDC Asia/Pacific services research, said.

The research group announced 10 key predictions which it believes will shape the IT services industry in the region this year.

First, IDC predicts a ‘back to basics’ move this year for the regional IT services market as organizations look to balance cost savings and corporate governance in a challenging market.

Second, IDC expects the economic slowdown to sustain demand for outsourcing services. It said outsourcing and managed services will be more resilient to any curtailment in ICT spending than adjacent ICT areas since they tend to be longer term in nature and are largely driven by cost savings.

Third, IDC projected the resurrection of Software as a Service (SaaS), which it said suffers from false starts from the day it was first made popular by Salesforces.com. This is due to several factors such as data security issues, bandwidth availability for enterprise intensive applications, and the lack of ‘’big name’’ service providers pushing this concept in the region.

Fourth, IDC sees a step toward greater industrialization of IT into predictable, dependable, professionally managed, plentiful and agile information resources that can be delivered in a more cost-effective way. The cost efficiency factor is what will increase the adoption of Platform-as-a-Service (PaaS) during the recessionary period.

Fifth, IDC predicts that energy consumption and space constraints will continue to drive investments in transforming the data center, with virtualization and consolidation of the server environment being the initial focus.

Sixth, the international IT research firm noted that the global economic crisis is increasing the pressure on organizations to cut their budgets and improve operational efficiency, particularly in the area of datacenter and infrastructure management.

Seventh, in 2009, IDC predicts a significant shift in the way that clients are looking to structure services contracts to ensure that they pay only for what they use, or , where possible, to ensure that vendors are more accountable for the business outcomes of the engagement. As a result, IDC expects pricing innovation to become a key driver shaping the services market in Asia-Pacific in 2009.

Eighth, in the wake of the global financial crisis, end users are increasing their efforts to reduce their IT operations expenditure. As the management and support of IT infrastructure and applications, as well as their associated staff, constitute a significant proportion of IT spending, new options for management and support services are being brought to market by vendors.

Ninth, IDC expects increased adoption of the PaaS models of delivering services via ‘’the Cloud’’ in an attempt to drive down costs in the current economic environment. This will be particularly relevant for the small and medium size businesses (SMBs).

And lastly, IDC pointed out that the competitive landscape is heating up dramatically as players try to move up the value chain to become hosting solutions providers by broadening their service offerings and including a whole spectrum of managed services.–Mary Ann Ll. Reyes, Philippine Star