IDC Examines the Impact of a Slowing Economy on the Consulting and Systems Integration Market in Asia/Pacific (excluding Japan)

Singapore & Hong Kong, May 29, 2008 – IDC expects that the slowing of US economy and local currency appreciation against the US dollar will impact the C&SI growth rate in the Asia/Pacific excluding Japan (APEJ) region; lowering it from the earlier estimated 11.2% to 10.2% for the 2008-2009 period. IDC estimates that the Consulting and Systems Integration (C&SI) market in APEJ will grow from US$15 billion in 2008 to US$22.58 billion in 2012 at a compound annual growth rate (CAGR) of 11% from 2008-2012. Further details are published in the recently updated study, Asia/Pacific (Excluding Japan) Consulting and System Integration Market Analysis and Forecast (2008-12): Emerging challenges of Aligning IT with Business (Doc # AP221104Q),

According to Mayur Sahni, Senior Market Analyst of IDC's Asia/Pacific IT Services Opportunities Research, "The key challenge for IT service providers is addressing the evolving buying behavior of CIOs as they question the business value of IT spending in a challenging economic environment. In order to be successful, IT services players need to build vertical-specific and business-consulting capabilities into their offerings to gain a favorable perception in the market.”

Evidently, budgets are tighter and IT vendors need to address the margin pressures in the C&SI space either through off-shoring or partnering with firms that have such capabilities. In addition, service providers should consider "productizing" their offerings to garner a large market share in developing and emerging markets. Favorites with CIOs' will be resource optimization strategies through SOA, virtualization, and consolidation.

Emerging concepts and technologies such as SOA are slowly moving from the drawing board onto live projects and both vendor and end-user communities are evaluating business metrics associated with these initiatives. "First-mover adopters of emerging technologies will lead their industry peers in the long term because they will be better positioned to govern IT investments and deliver competitive advantage to their businesses," Sahni adds.

CIOs are increasingly looking to deliver strategic alignment of IT with business objectives to their internal customers and looking for IT service providers to share the risk and rewards of projects being undertaken. To address this IT service providers will either partner, acquire or build expertise in-house to build expertise around IT C&SI services. IDC believes those that are able to acquire this in-house will have a stronger competitive advantage in the long term.

Australia, Korea, India, and People's Republic of China (PRC) are going to be the key markets in terms of market size and growth for C&SI services in APEJ. IDC predicts that, by 2012, the size of the C&SI market in India and Korea will exceed that of Australia while PRC will become the largest country market in terms of C&SI services spend in the APEJ region by 2010.