23 Aug 2016

**SINGAPORE, August 24^th ** , 2016 – IDC reports in its latest services research, “IDC Market Analysis Perspective (MAP)” , that the IT services market in Asia Pacific excluding Japan (APeJ) declined by 2.1% year-on-year in 2015. This negative growth was largely driven by local currency fluctuations against the U.S dollar and business depreciation in global oil prices. The major market slump in China, which is a key trading partner for Australia, Hong Kong, and Taiwan impacted the results as well.

“Over the past two years, competition in the IT services market space has stiffened, with the top 10 service providers struggling to maintain their market share. Service Providers (SPs) such as Fujitsu, Oracle, Cisco, and NCS have gained substantial share over CSC and are benefiting from the fragmentation of IT outsourcing under the impact of cloud services,” says Sherrel Roche, Business and IT Services Senior Market Analyst, IDC Asia Pacific.

“The top 10 IT service providers in the region are continuing to experience a decline in margins and are increasingly facing threats from service providers such as Wipro, Digital China, and Huawei, which are steadily climbing up the market ranking,” adds Roche.

Furthermore, enterprises in the region are gradually investing in 3^rd Platform-related services (i.e. example Cloud, Mobility, Big Data and Analytics, and Social Business) to enhance customer experience and achieve strategic business objectives. This changing end user landscape is compelling SPs to continuously invest in service delivery transformation and management including business consulting, automation, modernization, and enhanced self-service capabilities. IDC APEJ 2016 services end user survey results indicated that enterprises in the region planned to invest 17.2% of their overall services spend on 3rd Platform-related services in 2017. This is up by 1.9% in comparison to 2015.

“As enterprises in the region increasingly focus on efficiency of service delivery and invest in automation, SPs will need to rethink their role in service delivery,” Roche adds.

IDC recommends that SPs aiming to provide end-to-end service delivery capabilities have to decide what their capability limits are. SPs need to either have their own highly developed automated service delivery capability or have a strong partner that can provide the service delivery platform to them. Alternatively, SPs can also strengthen their capabilities either organically or through acquisition and successful integration. For example, IBM has shifted its focus on cloud, analytics, cognitive, mobile, and other 3rd Platform solutions which is reflected through its acquisitions in relation to digital marketing, Software-as-a-Service (SaaS) verticals, and business intelligence verticals.

This IDC Market Analysis Perspective (MAP) summarizes the crucial buyer-side and supply-side trends driving the shifts in services market in the APEJ region. The MAP also includes market forecast, service providers landscape, and provides a brief assessment on key competitors in the region. The report also discusses end user services spend, service delivery and management demands as well as guidance to SPs based on the changing market trends.

For more information about the research or to purchase this data, please contact Sherrel Roche at sherrelroche@idc.com. For media inquiries, please contact Tessa Rago trago@idc.com or Alvin Afuang aafuang@idc.com.