Strategic Shift of IT Infrastructure from an In-House Model to an Outsourced Model

According to the latest market study released by Technavio, the information technology outsourcing (ITO) market in APAC is expected to grow at a CAGR of close to 6% during the forecast period.

This research report titled ‘IT Outsourcing Market in APAC 2016-2020’ provides an in-depth analysis of the market in terms of revenue and emerging market trends. This market research report also includes up to date analysis and forecasts for various market segments and all geographical regions.

ITO in APAC: what drives the market?

A key trend observed in the market is the strategic shift of IT infrastructure from an in-house model to an outsourced model. This may include a combination of private cloud, public cloud, colocation, and managed hosting.

“With changing business demand, companies are increasingly outsourcing application development services to ITO service providers to gain a competitive advantage in the marketplace. Organizations in APAC are increasingly outsourcing their application development services as the present market conditions demand speed and agility to deliver services. In line with this trend, we expect cloud-based delivery model to gain prominence in the coming years,” says Amit Sharma, a lead analyst at Technavio, specializing in research on ITO and BPO services.

Based on end-user, the report categorizes the IT outsourcing market in APAC into the following segments:

  • Government
  • BFSI
  • Telecom
  • Others

IT outsourcing market in APAC by government sector

Governments in APAC are introducing more “citizen-focused” solutions — a step to stay closer to taxpayers and voters that directly influence their finances. This step is in line with the growing need to increase the productivity of their public services. Also, e-government resources are pro-actively working to improve public sector efficiencies and rationalize governance systems, which would support sustainable development. Solutions such as e-governance and e-payment are gaining popularity with governments prioritizing customer services.

Increasing spending on e-governance initiatives by governments in APAC countries such as China and India is driving the segment’s growth. The Indian government is investing significantly in ‘Digital India’ initiative to make government services available on mobile devices. “The broadband expansion and smart cities planning are also in the pipeline as a part of Indian government’s ICT initiatives. ITO will help states achieve operational efficiency and meet citizen demands with low costs,” adds Amit.

IT outsourcing market in APAC by BFSI sector

Organizations in the capital market are the major contributors to the ITO market in APAC. The current fluctuating market scenarios have forced the industry in adopting innovative technologies to enhance front-office, middle-office, and back-office functions.

Customers in the banking sector are becoming more tech-savvy each day. Banks have digitized important transaction processes such as electronic fund transfer, interbank settlement, and securities trading. They are working on digitizing most of the front-office activities such as retail and home banking and also looking for innovative solutions to meet changing customer demands. Outsourcing service providers are creating and designing quick and user-friendly applications and platforms to increase the number of customer touchpoints that make banking experience convenient and hassle-free.

The rise in the number of digital customers, need to improve business efficiency, increasing regulatory compliance costs, and growing competition from non-banking organizations in areas such as payments are some of the key factors fueling the segment’s growth.

IT outsourcing market in APAC by telecom sector

Telecom has played a vital role in contributing to the digitization of other sectors such as healthcare, retail, and financial services. The telecom sector has accelerated the process of going digital by highlighting the advantages of improved communication and connectivity.

Increasing need to develop omni-channel customer experience and optimize infrastructure has led to the growth of the segment. Also, the telecom sector is capital-intensive and involves high infrastructure costs. All these factors drive the growth of ITO market in this sector.

Some of the telecom and ITO vendor partnerships prevailing in the market include Vodafone with IBM; and Bharti Airtel with IBM, TCS, and Tech-Mahindra.

IT outsourcing market in APAC by others

The others segment includes education, energy and utilities, healthcare and life sciences, logistics, manufacturing, media and entertainment, retail, and transportation sectors. Increased need to drive operational efficiency at low costs to stay ahead in the competition is driving the segment’s growth.

The energy and utility sector is also quickly catching up with the pace. Privatization, M&A, intense competition, and deregulation have changed the way energy and utility companies do business. Growing focus on renewal energy, less reliance on nuclear power, and the need to manage energy consumption have encouraged energy and utility companies to change, innovate, and ensure better business efficiency. Increased focus on smart grid technology projects and infrastructure upgrades has surged the demand for ITO in this segment. NTT DATA helps energy and utility companies to optimize their IT solutions and business processes and address challenges related to commercial, operational, and energy management.

Source: businesswire.com-Strategic Shift of IT Infrastructure from an In-House Model to an Outsourced Model 

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