How IT outsourcing is changing in Southeast Asia

There’s more competition from local providers and from the cloud, at a time when the pandemic has made resiliency and digital transformation even more important.

outsourcing ts
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For a long time, IT powerhouses China and India have been dominant players in the IT outsourcing market. However, in recent years, Southeast Asian countries such as Malaysia, Indonesia, and Vietnam have also been making their mark in this field.

According to IDC’s estimates, the broader managed services market for Southeast Asia is valued at US$5.2 billion in 2020. Based on results from IDC’s services tracker for the first half of 2021, this represents a growth of 5.3% in 2020, down from 7.9% in 2019. The managed services markets includes application management, network and endpoint management, hosted application management, hosting infrastructure services, and IT outsourcing.

The changes in the IT outsourcer options

IT outsourcing is a game of scale. IT outsourcing contracts are long-term in nature and the scale of contracts imply traditionally higher entry barriers compared to other IT services markets. This has helped the incumbents (typically global IT services firms) consolidate their hold in the market and grow their business, especially those with multiple locations in Southeast Asian.

But IDC notes the dynamics of the IT outsourcing provider ecosystem are changing in four ways:

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