IT outsourcing spend grows

Spending on IT services in the Asia/Pacific region grew 12.4 percent between 2003 and 2004, according to research firm Gartner.

The figure exceeded Gartner's forecast of 11.4 percent and was well above the worldwide market growth of eight percent, the company said in a statement.

“Asia/Pacific continues to grow solidly as companies shift towards the use of external IT services,” said Rolf Jester, vice president at Gartner.

IT management and process management were a driving force behind the growth in IT services over the period, with a growth rate of 14 percent and 16.7 percent respectively.

The government sector experienced the highest growth in spending during the period, increasing 33 percent.

Finance was the second largest growth sector with 22 percent. Gartner said this was due to banks being more focused on their core business and becoming more receptive to IT management and process management services.

“Services were in the past under-represented in companies’ IT expenditure in this region, but adoption of various outsourcing models is now strong," Jester said.

Total IT services spend in the region reached US$ 31.3 million. Gartner said US figures were important as many vendors were judged by their parent companies based on reports in US currency.

Currency changes had a major effect on some countries' markets. Spending in Australia grew 2.1 percent in Australian dollars; however, that translated to 15.7 percent in US currency. Similarly in New Zealand spending grew 18.8 percent in US dollars, but only 4 percent in New Zealand dollars.

IBM was the top performing services vendor in the region over the period and increased its lead over its nearest competitor HP. EDS, Samsung SDS and CSC rounded out the top five vendors.

Eight of the top 20 IT services vendors in 2004 are based in Asia/Pacific, up from six in 2003.

Combined revenue of the top 20 Asia/Pacific vendors increased slightly from 2003 to 2004 as the market continued to gradually consolidate. Gartner expects this trend to continue in 2005.