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Asia's Living Large IT Outsourcing Market

Posted by: Brian Bremner on June 28, 2006

It is scarcely a news flash that big U.S. and European multinationals are shifting IT management and back-office operations to India. Less appreciated, though, is that Asian companies (yes, that includes Indian and Chinese ones) are also turning to outsiders to run their call centers, payroll systems and so on. Take IT-related outsourcing. That market in Asia, excluding Japan, is expected to top $10 billion in 2006 and could reach $16 billion by 2010, figures research firm IDC. Eugene Wee, a senior analyst with IDC in Singapore, tells me that companies in India, China, and elsewhere in Asia are growing so fast that they “don’t have the ability to scale-out and manage” their IT systems.

I have a story here about the catch-up game Electronic Data Systems is playing with IBM to set up low-cost, offshore capabilities in India and China. Part of the move is certainly driven by the needs of EDS’s big multinational clients in the US and Europe. But EDS, as well as IBM and Indian outsourcing heavyweights like Wipro and Infosys, see huge growth possibilities in helping out regional companies in markets as economically diverse as post-industrial Japan to developing China. In other words, outsourcing isn’t just a rich world trend—or job-destroying scourge for the U.S. and Europe as commonly portrayed. It is rather a new reality in the global economy, and smarter companies regardless of size see the value in it.

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