Study: Asia-Pacific IT outsourcing to top $10 billion

IDC says year's high figure, which excludes Japan, indicates that companies in region are contracting out more tech work.

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A new market study forecasts Asia-Pacific outsourcing spending to cross the $10 billion mark this year, suggesting that companies in the region are open to contracting out more IT work.

Excluding Japan, research firm IDC estimated that $10.5 billion will be spent on IT outsourcing within the region in 2006, topping $16 billion in 2010. This represents a compound annual growth rate of 10.9 percent over the forecast period.

"In the past 10 years, we've already seen significant (spending) by the mature Australian and New Zealand markets," Eugene Wee, a senior analyst for IDC's Asia-Pacific services research, said in a statement. "But increasingly, companies within (Southeast Asia), India and China, are becoming more open to the idea of letting the experts take care of their IT ecosystem."

India and mainland China will continue to be high-growth markets in the next five years, driven primarily by large IT infrastructure growth in past years. These markets are not expected to have fully matured by 2010, IDC said.

According to the report, Singapore and Hong Kong--despite some market saturation--continue to offer opportunities in contract renewals and extensions, where companies look to migrate from support contracts to managed or outsourcing contracts.

A recent survey conducted by ZDNet Asia also revealed a growing interest among Singapore's small and midsize businesses to contract out selected IT functions. Areas that are most likely to be outsourced include application development and maintenance, as well as Web site development and hosting, the survey revealed.

Isabelle Chan of ZDNet Asia reported from Singapore.