Asia seen as huge IT services market
Jay:
Here is a possible gold mine for IT service companies,would you you believe it ASIA.I don't know this will be relevant to i2 but what the heck it might be.
(source:SCMP)
ELLA LEE
The market for information technology (IT) services remains immature in the Asia-Pacific region, where the entire IT industry is driven by demand for products, especially hardware, technology consultancy International Data Corp (IDC) says.
IDC said US$9.7 billion would be spent on IT services this year in Asia, excluding Japan. That accounted for about 21 per cent of the IT market.
Nevertheless, that will be revenue growth of 5.15 per cent, compared with last year - a big contrast to the 5.5 per cent downturn in the regional IT industry.
Asians were still unaccustomed to paying for services which were intangible and hard to quantify, IDC services research analyst Howard Hsu said. It also was a "cultural barrier".
Asian businesses were more "conservative" about outsourcing business processes such as customer service, marketing or even accounting jobs, because it involved the company's private and confidential information.
Companies also were uncertain about service quality and did not want to lose control of their affairs, he said.
IDC sees system integration (SI) - the process of combining different platforms, technologies or business solutions, and projects such as design, implementation and training - as an area of opportunity for IT services vendors in Asia.
In seven leading Asian markets - the mainland, Hong Kong, Taiwan, South Korea, India, Malaysia and Singapore - SI revenue last year was $424 million, IDC said.
This was expected to grow at an average compound annual rate of 24 per cent between 1997 and 2002. Growth rates in the mainland, India and Taiwan would be even higher - 26 to 49 per cent per year - due to government encouragement and the adoption of the Internet, Mr Hsu said.
Business re-engineering, including reforms resulting from mergers, and adoption of IT to improve efficiency and enhance competitiveness, also is driving SI business.
Other services areas, such as network consulting and integration, and information services outsourcing, are in demand.
Mr Hsu said Hong Kong and Singapore were mature SI markets where growth would be inhibited by their small geographic size and the economic slowdown.
For Korea and Malaysia, where the currencies had depreciated extensively, Mr Hsu said SI markets would rebound next year as the economic situation stabilised.
The regional economic downturn is blamed for limiting the increase in the market size of the seven mentioned Asian countries this year to 9 per cent for $464 million.
Some Asian SI markets are dominated by domestic service providers such as Nantian Electronic Information in the mainland and CMC in India.
In Hong Kong, Malaysia and Singapore, global players such as Compaq, EDS, Hewlett-Packard (HP), IBM and Unisys co-existed with local services, Mr Hsu said.
IBM, Andersen Consulting, EDS and Computer Sciences Corp (CSC) were the globally dominant firms in IT servicing, IDC worldwide services research vice-president Michael Melenovsky said.
But "the image of EDS is not that strong, and CSC, a conglomerate of many small companies, is even less well known," he said.
He sees HP as a new entrant in the services market with strong potential. It recently had reorganised itself to focus more on business solutions and servicing.
Mr Melenovsky said Digital, now part of Compaq, was not as strong a brand as HP, IBM or Andersen Consulting, but was an experienced and aggressive service supplier which had been able to take advantage of its worldwide resources.
He positioned Unisys as one of the leading servicing firms, although it had struggled with its image as it shifted from a product supplier to a solutions and service-oriented company in the past 18 months.
Whether a service provider could market its brand image successfully and "productise" its services offerings - making them more tangible - was a crucial factor for success, Mr Melenovsky said.
Service providers must reorganise staff to provide quicker and better business solutions.
They also must be cleverer at using resources worldwide. For example, a project done for one client could be brought over and customised to fit another, rather than building from scratch each time.
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