Managed and hosted services on the rise; telcos make a play for outsourcing

16 Jul 2008

With global service providers having significantly ramped-up investments in Asia-Pacific, and regional telcos continuously diversifying their offerings, managed and hosted services are poised to constitute a sizeable percentage of operators' portfolio in the next few years.

New analysis from Frost & Sullivan, Strategic Analysis of Managed and Hosted Services Market Opportunities in Asia Pacific, finds that the market - covering 13 Asia-Pacific countries ex-Japan - was worth US$6.47 billion in 2007, and estimates this to grow at a CAGR (compound annual growth rate) of 16.6% (2007-2010) to reach a market size of $10.25 billion by end of 2010.

The increasing maturity in such services has improved cost visibility and granularity, making managed and hosted offerings a more compelling proposition to both large enterprises and SMBs (small and medium businesses). As the market reaches a new dimension of increased price pressures, decreased service differentiation, and a relatively weaker credit outlook, the need to demonstrate cost optimization and adopt a business value-driven sales approach grows.

'Asia-Pac continues to grow both as a global demand and supply center. In tandem, the emergence of Asian MNCs (multinational corporations) from India, China and South Korea continues to shape the demand for enhanced connectivity and related services,' said Frost & Sullivan industry manager Jay Tan.

'Driven by this rapid development and the corresponding need for a more sophisticated ICT infrastructure, yet growing pressure to do more with a limited IT budget, companies are increasingly looking at outsourcing the non-core functions to support their critical business processes,' he added.

Some of the more mature markets in terms of technology adoption and managed services uptake are Australia , New Zealand , South Korea , Singapore , Hong Kong, and increasingly, India. Elsewhere in the region, managed and hosted services have yet to take off in a big way, although countries such as Malaysia , Indonesia and Thailand offer good growth potential due to government-driven initiatives.

While the concept of outsourcing is not new to most businesses, more than 60% of companies in the region are still predominantly managing their IT operations with an insourcing model. This is especially true of companies in developing and more conservative markets such as China, Indonesia and the Philippines.

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