Asia-Pacific impacted by global slowdown

MELBOURNE, AUSTRALIA: Asia-Pacific appears not to have avoided the fallout of the current negative global economic conditions, according to Ovum.

In a new report, the independent technology analyst firm states that engagements in the Asia-Pacific market are being slightly delayed, becoming re-scoped and having a greater cost management focus.

Jens Butler, Ovum IT Services analyst and author of the report, said: “The Asia-Pacific market appears to have hit a speed bump, with a year-on-year drop of 25 per cent during the third quarter of 2011 and a sense that the economic concerns that have hit the rest of the world appear to be filtering through to the Asian growth markets.

“These markets are not falling into a recessionary tailspin, but the historical double-digit market growth figures are trending closer to high single digits/low teens, as many markets see the current economic conditions as an opportunity to take a breath.”

According to the report, many vendors are taking the current market situation as an opportunity to invest in infrastructure, partnerships and resources in some of the growth markets such as India, China and Malaysia.

Butler added, “About 64 per cent of contracts signed in the Asia-Pacific services market emanated from the telecommunications sector in the quarter, with the cash-strapped industries taking a more conservative approach to any form of services investment in the near term.”

The report also reveals that megadeals are not back, but control is consolidating. The "components" of contracts are consolidating under a number of core suppliers with 60 per cent of contracts signed in the past three years having a single “prime” vendor for the majority of the services put to market.

He concluded, “Some industries are consolidating their sourcing contracts more than others – with energy, healthcare and retail following the traditional “bundlers” of manufacturing and the public sector.”