Press Releases

XMG Top Ten 2009 Predictions for Asia Pacific
Victoria, Canada - January 7, 2009

XMG, a leading global ICT research and advisory firm focused on the Asia Pacific region, announced their 2009 predictions for the Asia Pacific region.  The center-piece heading into 2009 is the global financial crisis sweeping the world.  Although troubled economic times are in store for the global economy in 2009, XMG analysts firmly believe that enterprise use of IT and offshoring are still the catalysts in driving business efficiency and cost savings for the region.   Furthermore, IT industry economics will force alignment with the principle of complexity reduction and economizing IT budgets.  As identified by the survey completed at the end of 2008, good guidance and wise investment tops the list of decision makers for 2009.

1. Top Concerns of Asia Pacific CIOs:  ‘Measuring the efficiency and effectiveness’ and ‘Minimizing the risks of ICT investments’ Tops the List for 2009

   In the order of priority, the top 10 concerns of ICT executives heading into 2009 are:

   1. Measuring the efficiency and effectiveness of ICT investments.
   2. Minimizing the risks of ICT investments. (tied for 1st)
   3. Financial planning for ICT investments.
   4. Establishing a strategic approach to information security that integrate principles, behaviors and adaptive solutions that map business requirements and addresses the expected increase in cyber crime due to the global financial crisis.
   5. Improving ICT decision making.
   6. Strengthening IT risk management through technology portfolio management to reveal vendor’s financial health and long term viability during expected economic slow down.
   7. Developing a robust mobile security strategy and policies for an increasingly mobile workforce.
   8. Instituting corporate governance effectively.
   9. Investing in workforce recruitment and retention programs.
   10. Strengthening and ensuring service levels are market competitive to improve the overall return on value from external service providers.
       
       
2. Asia Pacific will Outspend Other Regions
   The Asia Pacific market is forecasted to grow an estimated 6.3%, the lowest growth estimate seen since the Asian financial crisis of the late 1990s. However, despite the dismal forecast, the Asia Pacific region will outperform well above the global average of 2.4% in 2009. Japan continues to have the bulk share of the Asia Pacific market with a projected growth forecast of 1.4%. A distant second and third of the Asia Pacific share for IT spend continue to be China and India which XMG expects will perform well above the total Asia Pacific growth projection in 2009.
   
   
3. Offshoring to be the Rare Bright Spot for ICT in 2009
   Very few segments of the ICT industry will hold up well in 2009. However, XMG expects offshoring (offshore outsourcing and captive) to continue to be in play in 2009 with an expected 24.2% growth forecast through 2010 dominated by the major offshoring countries in the Asia Pacific region namely India, China, the Philippines, Malaysia and Vietnam. Driving the offshoring footprint will continue to be captive operations (technical support, back-end processing, collections and customer care) and third party service providers (application management, enterprise application configuration, testing, business process outsourcing and customer care).
   
   
4. Workforce Revolution through Workplace Performance Evolution
   Driven by the phenomenal growth of the offshore ICT segments in Asia Pacific and the high levels of attrition across captives, vendors and non-IT organizations, getting the most from the existing workforce and improving talent management practices are among the top priorities in 2009. Well-tuned workforce management practices enable employers to attract, deploy, develop and retain the best talent and thereby increase the productivity and satisfaction of employees. Industry leaders will strengthen the integration of performance and compensation solutions to support performance management and broadly deploy role-based workforce information management tools such as metrics dashboards.
   
   
5. Co-location is Ready for Primetime
   Financial uncertainty brings back to the management spotlight core competency assessment, reducing complexity and being able to achieve ‘more with less’. As growth of private data center costs continue to escalate making up an average of 50 to 75% of the IT budget, XMG forecasts IT co-location to grow by 17% as companies look to optimize technology’s value contribution, increase manageability and utilization, and minimize capital expenditures. Topping the technology list syndicated in the growth of this ICT segment are the infrastructure layers of the technology stack including cloud computing, network optimization, server and storage.
   
   
6. Achieving Economic Resilience through Mergers, Acquisitions and Divestitures
   Unlike the period of the dot-com bust, the current economic downturn reveal several IT companies with the war chest to fund and make acquisitions to dominate select and targeted market segments. After all, the IT industry continues to be the only industry in the planet that is content when the competition is annihilated. In light of the economic downturn in the capital markets, the Asia Pacific region will see a healthy movement of MAD (mergers, acquisitions and divestiture) and spin-off strategies in search of economies of scale, global presence and economic resilience. Greatest numbers of MAD activities will be centered on high tech, data center, financial and BPO acquisitions.
   
   
7. Business Continuity Plan Gaps will Continue to put Asia Pacific Operations at Risk
   With the recent geopolitical events (Mumbai terror attack – November 2008, Bangalore bombing – July 2008) and the geophysical prone characteristics of several Asia Pacific countries and urban centers (the Philippines, China, Indonesia), XMG forecasts an increase in the number of business continuity belt tightening activities since many DRP and BCPs are largely developed in isolation and unrealistically addresses and factor such risks. Even with the heightened interest and focus on business continuity and disaster recovery in the region after the Tsunami devastation, many organizations fail to address complete planning, implementation and execution options. Furthermore, several offshoring service providers and captive operations will require more granular levels of continuity services to provide adequate safety for its large employee base.
   
   
8. Threat and Vulnerability Takes Center Stage as the ‘Above Ground Economy’ Deflates and the ‘Underground Economy’ Inflates
   With the expected increase in economic crimes due to several IT professionals that will be losing their jobs from the financial and insurance industries, cyber crime and the number of malicious software plaguing the internet will increase at unprecedented levels. Threat and vulnerability management integration will accelerate through 2009 with considerable focus on technology problems of intrusion control and improved detection, correlation and prevention capabilities. Demand for management security services such as security monitoring will increase.
   
   
9. Downturn in Semiconductor Market will see Job Losses Across the Region
   XMG economic analysts forecast the semiconductor industry to continue its decline and bottom out 1H2009 with an expected 1.9% growth forecast. Recovery of the semiconductor industry is expected to be sluggish throughout 2H2009 with a rebound not expected until 2010. With over investment and excessive capacity, job losses are expected namely in countries such as Taiwan, China, the Philippines, Korea and Vietnam.
   
   
10. Current State of the Economy is an ‘Opening’ for Open Source
    Open source software will continue to expand in several Asia Pacific enterprises and continue to find its way into corporate developer use and become the underlying foundation of commercial software. With the global economy in a recession, the use of open source software will become a standard part of several enterprises in Asia Pacific (particularly those utilizing Java in its enterprise architecture, SAAS). Open source versions of standard application server software will continue to gain credibility and market share as viable alternatives to traditional vendor offerings (i.e. Microsoft) in enterprise implementations. XMG expects this trend to continue well into 2010 and organizations must establish specific policies to control how open source is utilized.

International Business Wire