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Nov 2017 - Market Presentation - Doc # AP43200517

1H17 Country Report on IT Services — Malaysia

Author: Alon Anthony Rejano
Market Analyst
On-line Presentation

Abstract

This IDC Presentation provides a detailed analysis of the market and competitive landscape in IT services in Malaysia from January to June 2017 (1H17). It covers the market size movements and growth trends in each of the macromarkets (i.e., project-oriented, outsourcing, and support and training services) as well as the key industries, such as finance, manufacturing and resources, public sector, distribution and services, and infrastructure. The report also provides a market and vendor analysis of 3rd Platform technologies as the key market drivers. The competitive analysis section includes key strategies and activities of large global and local IT services providers in the market.

The data and insights within this presentation are a part of the "Asia/Pacific Semiannual Services Tracker" research, which covers 14 foundation markets across 14 Asia/Pacific countries.

In 1H17, the Malaysian economy showed mixed signs of growth. Because of the country's macroeconomic fundamentals, businesses have become cautious in their IT services spending, which resulted in small and fragmented professional and outsourcing services contracts. In addition, this is a cycle in which several management and organizational changes have taken place among technology providers (e.g., Hewlett Packard Enterprise [HPE] and DXC Technology) because of spin-offs and mergers. IDC believes that this may positively affect these companies, but it will take time for them to achieve high revenue. Vendors are recommended to focus on their strengths and offer industry-specific technologies to enter new markets.

Today's innovation in the Malaysian market is very much defined by its position as a hub for Association of Southeast Asian Nations (ASEAN) super-regional industries. In the past cycle, more local organizations have developed an appetite for digital technologies. Exposure to a greater diversity of clients and competition has put pressure on such enterprises to differentiate, optimize, and transform. Massive amounts of capital have been diverted to address a broad spectrum of incremental IT changes and have contributed to Malaysian industries (e.g., telcos and banking, financial services, and insurance [BFSI]), creating some of the more compelling best practices for, most notably, digitalized originations/onboarding, core system refresh, retail banking product development, DevOps, and alternative business models.

The growth of internet users in the country stresses the importance of digitalization, which acts as a pillar for successful business transformation. Digital transformation requires enterprises to reassess their datacenter needs. Because of this, more organizations have been leveraging datacenter outsourcing services on the back of their DX initiatives. The applications from digital transformation require new datacenters, IT infrastructure, and cloud-based and network-dense architectures to support it. However, enterprises are challenged by rising space and infrastructure costs, and the lack of relevant IT staff is forcing enterprises to reassess their datacenter needs. Having said that, the outsourcing market has been mainly driven by IT outsourcing and hosting infrastructure services.

Coverage