The market for IT services in Asia-Pacific, excluding Japan, last year grew a slight 2 per cent year on year in value terms, according to a report released today by International Data Corp (IDC).
The region's total services market, which includes businesses such as consulting, planning, training, operations and support, reached $US9.6 billion last year, a 2 per cent increase over 1997, IDC said.
The market research company blamed the scant growth on weak currencies in Asia and tighter budgets among both public and private sector IT users. IT projects in the region were delayed or cancelled, IDC said.
Still, some corporate users in the region are cutting costs by signing up global IT service providers. In the latter part of 1998, IBM won projects in both Japan and South Korea from companies outsourcing the operation of their IT systems to the US computer vendor. Despite the slow growth in 1998, IDC said the services market in the region will hit $US16.6 billion by 2002. Two contributors to that growth will be business restructuring and companies fighting the year 2000 problem, according to the market researcher.
Australia will continue to drive the region's IT services growth for the next few years due to high demand for outsourcing there, IDC said. China, meanwhile, will account for 10 per cent of the region's spending on services, up from 4 per cent last year, according to IDC.
However, IDC said that services remain overpriced for some Asian users. The fact that end users are "unwilling to pay a premium for IT services" remains a "major hurdle" for service companies selling to the region.