“The 3rd Platform Transition Slows IT Outsourcing Services Growth” says IDC Australia

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The FINANCIAL — According to IDC’s latest semi annual IT Services tracker the Australian IT services market in 2015 is expected to grow at 2.2% slightly down from the earlier projection of 2.8% in 1H2014.

As a result, the IT services market in Australia is now expected to grow from A$ 17.4 billion in 2014 to A$ 19.6 billion in 2019 at a five year CAGR of 2.4%. Given the uncertain economic conditions, organizations continue to be cautious with their IT spend.

IDC’s 2014 APeJ IT Services End-User Research, (January 2015, n=1307) reveals that IT resources consolidation is the key theme for IT services spending in Australia. This reflects the trend of higher levels of standardisation, automation and infrastructure and application rationalisation with a goal of removing costs out as much as possible from maintenance and support in order to fund new technology investments. These new investments will mostly be directed to implementation of innovate solutions based on third platform technologies (e.g. Big Data/analytics, mobility and social technologies) that will align business strategy with IT investments.

“It’s easy for organisations to get caught up in the race to implement emerging technologies. However organizations  must be cautious and carefully analyse how these technologies fit into their existing enterprise IT portfolio. In this context, establishing a clear business case is crucial to gain success from investments in third platform technologies” says Prabhitha Dcruz, market analyst for IT services research at  IDC.

The IT Outsourcing market which constitutes 50% of the total IT services market continued its declining growth due to accelerated uptake of opex-based cloud IaaS and SaaS  solutions. The infrastructure outsourcing services market segment for the first time actually has registered a negative CAGR for the 5 year forecast period 2015-2019.   As work load from traditional IT outsourcing gradually transitions to the cloud, large multi-year, multi-million outsourcing deals are becoming few and far between and there is a downward price pressure in existing contracts as customers opt for a flexible and hybrid IT consumption model.

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Implementation of  third platform technologies will require an extensive refresh of existing IT enterprise IT architectures. As demand for traditional services decrease the spending shifts to IT services that are imperative to deploy emerging technologies. To know how individual foundation markets will evolve during the forecast period please refer to IDC’s semi-annual IT services tracker.

 

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