27 Jun 2018
IDC: Growing Preference for Cloud Services to Affect the IT Outsourcing Market in the Philippines
MANILA, June 28th, 2018 — According to the latest IDC Asia / Pacific, excluding Japan (APeJ) Semiannual Services Tracker, total outsourcing services revenues in the Philippines exceeded US$300 million for the full-year 2017, with 8.2% year-over-year growth (in constant currency). IDC’s key findings showed that the IT outsourcing market is experiencing a fundamental shift caused by cloud services, which are the key to the growth of outsourcing, hosting, and managed services.
The local IT outsourcing market witnessed a 3.5% decline from 2016 due to the radical change and cannibalization of cloud-based models of outsourcing involving infrastructure as a service (IaaS) and software as a service (SaaS), a changing cost structure, and fundamental shifts in the competitor environment. However, IDC believes that the IT outsourcing landscape in the country is evolving as players utilize different strategies — from cloud-centric to hybrid IT approach — to become the leader in this market.
“Currently, the traditional outsourcing service providers have been pressured because of the increased shift to cloud providers. More traditional services providers are expected to include new delivery structures to accommodate end users that require services such as cloud, automation, and security solutions,” said Alon Anthony Rejano, Senior Market Analyst for Services, IDC Philippines.
“Although this shift is seen as a positive sign for the overall IT outsourcing market, we believe that it will also impact traditional outsourcers negatively. From a market perspective, cloud continues to grow in the country but the overall market value remains muted due to the lack of scale for ICT deployment and availability of advanced skills in application migration in the Philippines,” Rejano added.
Managed services, including managed network, servers, security, and connected services, are gaining traction and local enterprises will soon realize the lack of maturity in service management will make their IT operational environment to become more complex, expensive, and difficult to operate. Therefore, local enterprises should leverage on cloud technologies to achieve their business objectives.
Cloud is forcing a change in the market profile because of its massive scalability, low cost, and increased agility. Cloud managed services are getting more pronounced than traditional managed services because of such factors like reduced capex and accelerated time to market.
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. To learn more about IDC, please visit www.idc.com. Follow IDC on Twitter at @IDC