China's IT Services Market Set for Strong Growth

China's IT services market will witness strong growth after recovering from a slight slowdown in the wake of the global economic downturn. The total domestic IT services spending in 2011 is expected to grow by 12% over 2010, finds the latest report “PRC IT Services Report: 2010” from Springboard Research. The Chinese market for 2011 is expected to reach US$11.5 billion, representing 22% of the overall APEJ (Asia Pacific excluding Japan) IT services market.

 

Springboard Research finds that discrete IT services constituted 90% of mainland China’s IT services market in 2010 and are set to continue growing on the back of new IT project rollouts. Systems integration, infrastructure deployment and support services will continue to have the largest portion of the discrete IT services market in the coming years.

 

The domestic IT outsourcing market is expected to remain in the early adoption stage over the next five years, although it is growing at a faster pace than that of the discrete services segment.

 

Going forward, Springboard Research expects the IT services market in China to continue its rapid growth, which will be driven by:

 

1. Government support: The Chinese government’s stimulus initiatives for the 12th 5-year plan will focus on expanding domestic demand which as a consequence will also stimulate IT expenditures from government entities and state-owned enterprises.

 

2. Private cloud computing: New delivery models like private cloud computing are expected to fuel  IT services growth in 2011. “The emerging trend of adopting virtualization/private cloud deployment will bring more opportunities to system integration service providers in China,” noted Gene Cao, Senior Analyst, IT Services, Springboard Research.

 

3. Business continuity and disaster recovery (BCDR): Limited internal BCDR capabilities and expensive rental costs for data centers result in growing opportunities for BCDR service providers. The majority of the investment in BCDR services is expected to come from banking, financial services, and government organizations in China.

 

“Multinational service providers are now focusing on expanding their geographic coverage to tier 2 and 3 cities in China. Springboard Research expects the competition will intensify dramatically over the next few years in this rapidly expanding and maturing market,” notes Fred Giron, VP - IT Services, Springboard Research.

 

 

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