Sydney, Australia, 28 May 2012. Australian businesses have had quite a bumpy ride over the past two years, a time when they operated on the thresholds of extreme uncertainties driven by Europe's unfolding economic saga, the slowdown in the US and of course, the ripple effect this had on China, Australia's largest trading partner.

IDC's research reveals that the "growth" agenda will be the top of the mind focus for business leaders in 2012. In order, to achieve "growth" objectives organisations need agility (achieved through automation, continual business processes improvements and enterprise wide IT transformation) to respond quickly to the fast paced changes in the external environment and embrace the emerging new digital economy. On the other hand, customer centricity, customer retention and customer growth are factors that will continue to drive services organisations in the face of heated competition.

In IDC's ANZ CIO Survey, April 2012 (N=365), the findings revealed that the top 3 business concerns for 2012-13 are finding new customers or customer segments, escalating costs of operation (or expansion) and expanding into new markets. Corresponding to this "growth" agenda, the top ICT priorities identified by CIO's for 2012 were lower overall cost structure, improve or simplify IT infrastructure (including consolidation) and build a more secure IT environment. 35.6% of respondents indicated that there will be an increase in the organisation’s total IT expenditure for IT services (including outsourcing) on a year-by-year basis for the FY 2012. However, 43% of the respondents expected a return on IT investment in less than a year and 23% between 1 to 2 years. Line of Business Leaders (LOB) are also becoming more actively involved and influential to drive internal IT to adopt new technology.

The Australia IT outsourcing services market (ITO) was estimated to be AUD$ 7.3 billion in 2011, constituting more than half of the total IT services market and forecasted to grow to AUD$ 9.5 billion by 2016 at a CAGR of 5.4% for the period 2012-2016. The key drivers for the infrastructure services outsourcing (ISO) market, the largest by revenue size, were predominantly long term cost savings, consolidation and simplification of IT infrastructure, and access to new technical skills/competencies. There was also an increased prevalence of business-led conversations rather than the traditional “your mess for less” type of agreements. A flurry of cloud-related activity in 2011 has seen traditional hosting providers broaden their product lines with standalone cloud/IaaS offering portfolios and hybrid solutions triggering growth in the hosting infrastructure services whilst market demand for migrating from legacy network environments to next generation platforms (e.g. IP/MPLS), vendor consolidation and overall complexity continued to drive growth for managed network services. Solutions for desktop virtualisation is maturing and moving beyond just managing PCs to addressing many different facets of end-user computing including mobile devices.

"The move from capex to opex and greater expectations for return on IT investments will drive IT outsourcing engagements. However, though lowering costs is an important driver, customers are increasingly looking to outsourcing as a means of transforming their technology environments involving new technologies (e.g. virtualisation, SOA and mobility) and new service delivery models (e.g. private and public clouds)", says Raj Mudaliar, senior market analyst, IT Services Research Group, IDC Australia.

"While the rumblings of change from a traditional to a cloud/cloud-based model of delivery have been around for some time, there appears to be a groundswell of events placing increasing pressure on traditional outsourcers to take a fresh look at their business models and reinvent themselves to be future ready".

Australia IT Outsourcing Services 2012-2016, Forecast and Analysis, May 2012 presents a detailed analysis and forecast of the ITO services market with discussion of key market trends, drivers, new industry developments and forward looking insights for business planning and product/services portfolio development.

http://www.idc.com/getdoc.jsp?containerId=AU2577406U

TO SUMMARISE THE PRESS RELEASE

• The Australia IT outsourcing services market (ITO) was forecasted to grow from AUD$ 7.3 billion in 2011 to AUD$ 9.5 billion by 2016 at a CAGR of 5.4% for the period 2012-2016.
• IDC's ANZ CIO Survey, April 2012 (N=365), findings revealed that the top 3 business concerns for 2012-13 are finding new customers or customer segments, escalating costs of operation (or expansion) and expanding into new markets. Corresponding to this "growth" agenda, the top ICT priorities identified by CIO's for 2012 were lower overall cost structure, improve or simplify IT infrastructure (including consolidation) and building a more secure IT environment.
• The move from capex to opex and greater expectations for return on IT investments will drive IT outsourcing engagements. However, though lowering costs is an important driver, customers are increasingly looking to outsourcing as a means of transforming their technology environments involving new technologies (e.g. virtualisation, SOA and mobility) and new service delivery models (e.g. private and public clouds).

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