The global information technology (IT) services market is forecast to cross $US707 billion by 2007, recording a compound annual growth rate (CAGR) of 5.7 per cent, according to research firm Gartner.
The primary drivers for growth will be spending by governments, manufacturing, communications, and financial services, Gartner announced in Mumbai at its Gartner Summit India 2003.
The highest growth in spending on IT services will be witnessed by the Asia-Pacific (APAC) region at 9.5 per cent CAGR from 2003 to 2007, followed by Eastern Europe, Middle East and Africa, Japan, Latin America, North America, and finally Western Europe, according to Gartner. Within APAC, the Indian and Chinese markets will experience maximum growth.
The growth in the global IT services market is likely to provide opportunities for IT services companies in India, whose revenues come primarily from outsourcing from the US and Europe.
Gartner described offshore outsourcing as the world’s fastest growing IT industry segment. From 2002 through 2007 offshore IT services are expected to grow by 29 per cent CAGR, while offshore business process outsourcing (BPO) is forecast to grow 68 per cent CAGR.
But the market for IT services is getting competitive, even for leading outsourcing locations like India, according to Gartner.
“Application development and maintenance has long been the stronghold of Indian IT service providers, but increasingly, due to low entry barriers, providers from other developing countries are actively pursuing such offshore provisions,” chief of research of Gartner’s Global IT Management Sector, Craig Baty, said.
In a recently concluded user study by Gartner on Total Cost of Engagement (TCE) Offshore v/s Nearshore, three models were evaluated on parameters such as direct cost, indirect cost, productivity losses cost and risk/convenience cost. The results indicated that for a US-based customer, cost could be significantly lower when processes were outsourced to a near-shore destination like Mexico rather than to an offshore destination like India, under certain circumstances.