APeJ IT Services to be resilient with 6.5% value growth YoY in 2016 – Digital Transformation and Smart City Driving Demand: IDC
06 Dec 2015
Singapore, 7 December , 2015 – IDC Asia/Pacific expects APeJ IT Services to be resilient – posting a 6.5% value growth year-on-year (YoY) (in US dollar) in 2016. The IT services market faced difficulties this year due to the depreciation of Asian currencies against the US dollar and the slowdown in China economy. Despite this, IDC believes APeJ IT services will remain positive next year with digital transformation and smart city initiatives driving demand for IT services.
“Demand is primarily being driven by digital transformation initiatives across verticals, particularly banking, retail and public sectors. Enterprises are increasingly leveraging 3rd platform technologies to build a cohesive digital agenda that focuses on achieving business outcomes. Smart City initiatives in countries such as China, India and Singapore have also fueled the demand for cloud, analytics, mobility and security solutions”, said Vidhika Sehgal , Senior Research Manager, Services, and IDC Asia/Pacific.
China, which has the largest IT services spend in APeJ, is expected to close the year with 9.4% YOY value growth in US dollar. Though historically known to have double digit growth, current estimates of 9.4% is still one of the highest growth markets in the region. In 2015, China saw the continued struggle of foreign players in the domestic market due to regulatory policies while local vendors witnessed a tapering in growth due to slower domestic demand.
“While exchange rate volatility can have a large impact on US dollar growth forecast in 2016, it is expected that growth in local currency will pick up in markets such as India and ASEAN, which should also contribute to an overall revival in APeJ IT services growth” adds Ms. Sehgal.
Within IT services segments, the market is being driven by growth in IT consulting, systems integration and hosting infrastructure service, mainly because of an increased migration to cloud. These three segments together contribute nearly 30% to APeJ IT services market. Consulting and integration services are in demand as companies look for third party services for identifying and implementing 3rd platform solutions to migrate legacy systems and also complement the existing IT architecture and contribute to business outcomes.
Growth in traditional outsourcing services continue to be adversely impacted by the shift to cloud, especially as deal size, duration and structure moves in favor of a more hybrid IT environment.
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Asia/Pacific Semiannual Services Tracker
The Asia/Pacific IT services market is the fastest growing in the world. More importantly, it has enormous diversity in terms of the maturity of the country markets. Driven by the 3rd Platform investments and government support, enterprises are gearing up for the much more tech-savvy generation. IDC's Asia/Pacific Semiannual Services Tracker® is designed to help our end-user clients understand these drivers, as well as an overview of how different service providers are performing by vertical industry, country, and market segment. This product provides a critical benchmark for end users as part of their selection process of service providers to work across the various segments of the services market. It also provides vendors with a solid understanding of their competitive environment and is an essential tool for business planning.
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