A/NZ loses regional focus amid outsourcing growth

Strong growth in the IT outsourcing market is likely to continue, particularly in the Asia-Pacific region, according to market research firm IDC.

But the market focus will shift away from Australia and New Zealand, as growth in the larger markets begins to take effect.

The market share of the greater China region is set to grow from 15 to 20 per cent, while the A/NZ share will fall from 52 per cent in 2001 to make up just over 30 per cent in the region.

The analyst predicts China and Korea will drive growth in the region in an overall market that will grow from $US4.7 billion in 2001 to almost $14 billion by 2006.

The IDC study looked at information systems (IS) outsourcing, applications outsourcing and network and desktop outsourcing.

According to Phil Hassey, IDC senior analyst for IS outsourcing Asia-Pacific, service providers need to understand what offerings they are going to provide, and whether they offer them independently or through strategic alliances.

"It is critical for service providers to fully understand that each country is different, and universal offerings that do not consider individual countries' business environment and culture will not succeed," Hassey said.

Within the wider marketplace, applications outsourcing is set to become the top performer, with a compound annual growth rate of 51 per cent, according to IDC.

The issues for outsourcing beyond 2002 include acceptance of the business practice, a focus on core business strategies, fully reliable infrastructure, globalisation, increased complexity of the applications environment, and scalability, the analyst said.

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