Businesses refocus on core goals

Chee Sing Chan
23 Jan 2008

Service providers have leaped into the fray with an ever-growing range of managed services to help businesses refocus on their core competencies.

At Verizon Business, the trend has been clear with many customers looking to avoid large wholesale outsourcing engagements and instead breaking it down into specific tasks and sourcing experts in each field to support them, noted Andrew Dobbins, regional VP sales and services Asia-Pacific at Verizon Business. 'It's much more selective today and much less focused on outsourcing to a single large vendor,' said Dobbins. 'The networks, systems are too complex today to manage and monitor in-house so there's a clear move away from do-it-yourself.'

Dobbins also noted that, 'customers are now clearly understanding that their job is to help grow the business. Some of their current duties do not help them deliver that, so it's time to hand it off.'

Cost still key

According to IDC, the Asia Pacific enterprise ICT outsourcing and managed services market totaled $23.3 billion in 2006 and is expected to reach $36.2 billion in 2012, with a compound annual growth rate (CAGR) of 9.2%. Value added managed services (VAMS) is expected to grow from $6.4 billion to $12.6 billion during the same period, with a CAGR of 13.9%.

'The outsourcing and managed services industry has successfully re-invented itself over the past couple of years to meet the increased demands from enterprises and technologies that have entered the market place,' said Adrian Dominic Ho, research manager for IDC's Asia/Pacific managed services and enterprise networks.

According to IDC's annual IT services and managed services end user survey, enterprises continue to cite cost savings pressures as one of the primary reason to engage in managed services.

'Our surveys have shown that squeezing out more cost savings continue to be an obsession of many enterprises,' said Ho. 'Enterprises are recognizing that a managed services engagement not only leads to cost savings, but also gives them access to technology that enables them to transform their IT infrastructure that can drive productivity and increase their business competitiveness.'

BT's president for Asia Pacific Allen Ma believes much of this growth is being driven by increased globalization and the move by multinationals to expand into developing markets, and also the move to tap resources and skills from wherever they are in good supply. 'Companies are expanding and require connectivity, particularly in India and China,' said Ma, 'but key is the need to reach the best and cheapest supply of skills and resources.'

He also noted there is a clear trend for customers asking carriers to take control of the network and ensure it is optimized for the company's business processes and applications. 'Customers want more than just bandwidth today, they want carriers to ensure uptime, resilience and guarantee application availability and performance,' said Ma.

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