TECH SUPPLIER Nov 2018 - Market Presentation - Doc # AP44428318
1H18 Country Report on IT Services — Malaysia
By: Sherrel Roche
This IDC Presentation provides a detailed analysis of the market and competitive landscape in IT services in Malaysia from January to June 2018 (1H18). It covers the market size movements and growth trends in each of the macromarkets (i.e., project-oriented services, managed services, and support 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 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.
Malaysia's full-year 2018 gross domestic product (GDP) forecast has been adjusted lower by Bank Negara Malaysia to an estimated 5.0% from a previous forecast of 5.5% to 6.0%. The GDP growth rates were revised due to the cancellation of several major infrastructure projects and lower export growth. While the previous government administration was willing to obtain sizeable loans for its ambitious megaprojects, the new current administration is more risk averse and is aiming to reduce government debt by reducing government expenditure.
The unprecedented change of government in Malaysia will create uncertainty in the local economy, which will negatively impact the IT services market in the short term, as it will lead to organizations in the country to become increasingly cautious in their investments for the next 12 months. On the other hand, the overall economy of Malaysia will gradually recover and benefit from increased accountability from new governance in the long term, after one to two years of volatility in the local economy.
According to IDC Asia/Pacific's 2018 Business and IT Services End-User Survey, 10% of Malaysian organizations surveyed had indicated that running digital business at scale is one of their key business priorities. This suggests that organizations are recognizing the need to scale up the adoption of emerging technologies, solutions, and services to improve their digital capabilities, which is now critical to their business strategy.
IT consulting, systems integration, and outsourcing services will experience continued growth because of organizations' increasing IT budget spending on their digital transformation initiatives around cloud, analytics, Internet of Things, automation, and security. Majority of this growth was driven by the BFSI, public sector, infrastructure, and manufacturing verticals.
The adoption of a "cloud-first" strategy is gaining traction, as Malaysian enterprises are increasingly substituting traditional outsourcing for hybrid cloud services. In the long run, Malaysian enterprises will partner with service providers to manage their cloud environments, whether for cloud-centric needs or across cloud and noncloud/legacy technologies, such as integration of legacy environments to ensure seamless delivery of services.
IBM, Oracle Corporation, Tata Consultancy Services Limited, Huawei Technologies Co., Ltd., Cisco Systems, Inc., Telekom Malaysia Berhad, HEITECH PADU BERHAD, NTT, Accenture plc, Hewlett Packard Enterprise, Hitachi, Ltd., DXC Technology Co.
Application development services, Application management, Hosted application management, Hosting infrastructure services, IT consulting services, IT education and training, IT maintenance and support, Network and desktop outsourcing services, Systems integration services