Asia Pacific hedge against downturn for IT services firms

Peter Dinham
Wednesday, 29 April 2009 10:40

Business IT - Technology

The Asia Pacific region is proving to be an effective hedge for IT services firms against the economic turbulence sweeping the world.

So much so that, in the face of economic turmoil in markets like the US and Europe, an increasing number of IT services vendors are ramping up business development activities and expanding their alliance networks in the region.

According to a new study by Technology Business Research (TBR) the economic turmoil in the US and continental Europe means that IT services vendors have found that the most “fruitful opportunities” are currently emerging markets in the Asia Pacific region, along with the Middle East and other rapidly growing economies.

TBR says the economic turmoil intensified in the fourth quarter of last year leading to an, increase in client demand for services that enhance savings, and “steering IT services vendors to emerging markets and compelling them to trim their own expense structures.”

However, TBR’s director of PSBQ, Eugene Zakharov, says generally, most professional services firms experienced a further deceleration in growth in 4Q 2008, and the growth of the IT services market fell into negative territory, dropping from 1.5% in the third quarter last year to -0.2% in the fourth.

Zakharov predicts a further drop to -1.4% in IT services growth when the figures for the first quarter this year are released 1Q09 and, he anticipates that overall 2009 will be a tough year for IT Services vendors, with market growth being flat at best, compared with 2008.

Not surprisingly, the economic downturn also means there’s also been a shift in client demand, with TBR reporting that clients are now looking to services that deliver a quick return on investment (ROI) and cost savings.
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