IDC Malaysia releases forecast updates on the country's IT services markets

07 November, 2005

Kuala Lumpur, November 07, 2005 – IDC Malaysia publishes its latest updates on the country’s IT services industry based on the recent events and changes in the market. This report, entitled “Malaysia IT Services 2005-2009 Forecast Update: 1 st Half 2005 Review” highlights the emerging trends and areas which are either opportunities or threats in the IT services market for the coming years. The forecasts take into account the changes in the economic policy such as the recent budget announcement, depreciation of the Malaysian ringgit against the U.S. dollar, as well as the potential GST implications. Moreover, the report discusses how these recent government and economic changes will affect the overall IT Services spending by both the public and private sectors in the country.

According to the study, the IT services spending in the country is expected to reach US$904.71 million in 2005, and will continue to grow at a compound annual growth rate (CAGR) of 15.59% from 2005 to 2009. In 2005, the consulting and SI market hold the biggest share in the services spending by contributing 40%, followed by support and training with 32.35%, and outsourcing with 27.75%.

Furthermore, the report provides a thorough analysis of the market forces from the view point of the country and region’s economic situations, the technology developments, labor supply, market ecosystems, consumptions, market characteristics as well as the core verticals of the market.

"Within the IT services industry, the best opportunities for growth continue to be found in the outsourcing markets. Each segment tracked in this macromarket will experience growth for the next five years. It is expected that discrete outsourcing services will grow more rapidly than the IS outsourcing market. In 1H05 alone, IDC observes the signing of a few relatively large desktop outsourcing projects in manufacturing, FSI, and utilities industries. The compound annual growth rate (CAGR) of IS outsourcing market has been revised to 22.5% instead of 30.1% in the previous forecast. Signing of large IS outsourcing contracts is relatively slow in 2005 so far due to the nature of contracts that have a high level of uncertainty and risk, longer sales cycles, and greater vendor commitment", says Katherine Chan, Analyst, Services Research, IDC Malaysia.

Moreover, the study reports that the systems integration market will continue to increase at a CAGR of 12.2%, due to its great potential in application and infrastructure spending which are expected to happen in the coming years, driven by both the public and private sectors. Network consulting and integration services market will show a CAGR of 13.2% for the next five years, seeing great potential in the areas such as security consulting and implementation, wireless consulting and implementation, network optimization, operations assessment, convergence services, and also network storage consulting and implementation as part of a business continuity plan. The study reports no change in the forecast spending for the maintenance market, as it continues to show a single digit growth from 2005 to 2009.

"Even though the current IT services market appears to offer few areas for broad optimism, IT services vendors are advised to take a longer-term view of these market opportunities and to be careful not to divert too much from their own scarce resources to the pursuit of segments that shine today," adds Katherine Chan, Analyst, Services Research, IDC Malaysia.

For more information about this research, kindly contact Hazmi Yusof at 603-2169-7522 or hyusof@idc.com, or Stephen Chong at 603-2169-7521 or ckchong@idc.com.

Contact

Chee-Kian Chong
Events & Marketing Executive
Tel: +603-2169-7521
Fax: +603-2163-5098
Email:ckchong@idc.com