IDC Expects the IT Outsourcing Market in APEJ to Cross the US$10 billion mark in 2006

June 22, 2006

Singapore and Hong Kong, June 22, 2006 – In its latest forecast of the IT Outsourcing marketplace for the Asia/Pacific excluding Japan (APEJ) market, IDC predicts that the amount spent on outsourcing WITHIN the region will exceed US$10billion this year. In-depth findings are published in the recent updated IDC report, Asia /Pacific (Excluding Japan) IT Outsourcing 2006-2010 Forecast and Analysis (Doc# AP221705N ).

IDC forecast that the market will grow from US$9.58 billion in 2005, to US$16.06 billion in 2010. This represents a compound annual growth rate (CAGR) of 10.9% over the forecast period.

"With popular reference of outsourcing in the region revolving around the US outsourcing to India , the significance of the regional markets for IT outsourcing are often neglected. In the past 10 years, we've already seen significant spend by the mature Australian and New Zealand Markets, but increasingly, companies within ASEAN, India and China, are becoming more open to the idea of letting the experts take care of their IT ecosystem,” says Eugene Wee, Senior Analyst, Asia/Pacific Services Research, IDC Asia/Pacific.

IDC's key insights for the IT Outsourcing market in the region include the following:

• The shift towards discrete outsourcing has largely been fueled by the realization of diseconomies from large enterprise-wide outsourcing deals and the compelling propositions from a new breed of niche outsourcing players. One thing to note is that this does not spell the demise of enterprise-wide outsourcing deals. In percentage terms, enterprise-wide outsourcing may appear to be lagging; the reality in many cases is that the absolute numbers are as significant as, if not more so than, the sum of discrete outsourcing engagements.

• India and the PRC will continue to be the high-growth markets in the next five years. With CAGR of 19% and 31% respectively over 2005-2010, these markets are not expected to have fully matured by 2010. This strong buildup is primarily driven by the large infrastructure growth over the past several years. The management of this infrastructure is now evolving to become a natural add-on, especially in the PRC where users have historically been lagging in outsourcing.

• Australia and New Zealand are clearly the most mature outsourcing markets in the region. Their behavior today often dictates how other countries in the region will behave in several years after they increase in maturity.

• The Singaporean & Hong Kong markets will seem saturated with the limited room for expansion. However, there are opportunities in contract renewals and extensions to migrate from support contracts to managed or outsourcing contracts. Large upcoming government contracts for example hint at large annuity contracts; this is more likely to constitute a redirection in spending from Capital expenditure to Operational expenditure rather than being a totally new opportunity.

Asia/Pacific (Excluding Japan) IT Outsourcing End-user Spend, 2006

Source: IDC 2006

Notes to Editor

Countries covered in the IDC APEJ Services Research Programs are Australia, New Zealand, China, India, Korea, Singapore, Hong Kong, Malaysia, Taiwan, Thailand, Philippines, Indonesia and in the rest of Asia Pacific.

For more information about purchasing the research, please contact Selina Ang at +65-6228-7717 or sang@idc.com. For press enquiries, please contact Eileen Tan at +65-228-7775 or etan@idc.com.

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