While IDC is forecasting significant growth in outsourcing throughout the region, swelling from US$4.7 billion to US$14 billion in 2006, it said that most would occur in northern Asia. As a result, Australia and New Zealand's combined majority share of the region's IT outsourcing market is expected to fall from 52 percent to 30 percent.
Meanwhile China and Korea have been earmarked as significant growth areas, the Chinese domestic IT outsourcing market expected to account for 26 percent of the value of the entire region's by 2006.
Rolf Jester, chief analyst IT services, Gartner Asia Pacific, agreed that Asia would be strong growth centre for IT outsourcing services.
"Although in the past Asia has generally been behind the rest of the world in adoption of outsourcing, this is changing so rapidly that we are going to see growth rates two to three times what they are in northern America for quite some time to come," said Jester.
According to Jester, that adoption of outsourced IT management services through Asia is due to the downturn in the economy as businesses seek to minimise their commitment to capital expenditure.
"People are saying 'I may not want to invest in new capital' but they may wish to turn capital into expense," he said. "It's a way of doing things in a less risky fashion; paying a variable cost rather than a fixed up-front cost."
Similarly, he added that businesses have fewer labour commitments, preferring to use the services of an external IT service than taking on internal staff.
In conjunction with the forecast, IDC senior analyst Phil Hassey gave advice to companies looking to take advantage of growth in the region.
Hassey said that application outsourcing was likely to be the key area that businesses would be interested in throughout the region. He warned, however, that IT outsourcing companies prospecting for new business in Asia that don't have an understanding of the region's business culture are likely to fail.
