Analyst firms clash over APAC IT services dominance

Australia holds rein over neighbours

Analyst firms have clashed over which country will dominate the Asia Pacific IT services market by 2011.

The debate comes as analysts gear up to release financial market forecasts for the region and follows a report by Springboard Research which claimed China will hold the bulk of APAC IT service contract spend within three years.

Frost and Sullivan industry director Andrew Milroy said analysts overstate the development of less mature markets like China and India, and said Australia will still have the highest spend by third-party IT services companies in the next few years.

"Australia will still have the biggest IT services market in 2011, this much is certain," Milroy said.

"The Indian labour market won't be suddenly drying up. IT services wages are about half what is paid in Australia and this won't rise higher than three quarters by 2011.

"Australia has the biggest and most expensive IT outsourcing deals in APAC whereas those in China and India are comparatively cheaper."

Australia will maintain its dominance over the region, excluding Japan, because it holds the most expensive and complex IT contracts such as Business Process Outsourcing (BPO), systems integration and Software-as-a-Service (SaaS) deals, according to Milroy.

Companies such as Satyam, IBM and Accenture have contributed to Australia's success by divvying up services such as call centres across the world to achieve a global presence.

He said wages in China will be "neck and neck" with Australia, but maintained the local market will still draw more cash.

Springboard Research claimed Greater China will offer the largest market opportunity in dollar terms by 2011.

The Asia Pacific IT services market excluding Japan will grow from $41 billion in 2007 to $61.2 billion by 2011, according to the company's research, representing a compound annual growth rate (CAGR) of 10.5 percent over five years.

The report claims India's IT services market will grow at a CAGR of 18.6 per cent, the fastest growing market in the region.

Frost and Sullivan has yet to release its financial report for the region.

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