Services market to hit $15b in 2011: IDC

THE Australian technology services market will grow at a compound rate of 4.4 per cent annually to reach A$15 billion by 2011, according to research IDC, though skills shortages will present the sector with ongoing challenges.

The IDC report found the Australia services market in 2007 was worth $12.6 billion.

IDCs IT services research manager Margaret Banaghan said the outlook for the broader Australian economy and for IT services remains “buoyant” and that end user organisations were addressing a range of business issues that would underpin growth in the services sector.

“Executives are turning to IT services firms to assist with issues including Green IT, SOA (Services Oriented Architecture) and web services, selective sourcing including offshoring and mobility services,” Ms Banaghan said.

Meanwhile the report found the outsourcing market in Australia, which is approximately 50 per cent of the total IT services market, was as vibrant and dynamic as ever.

IDC research manager for outsourcing and BPO Aprajita Sharma said there would likely be a decline in so-called “global mega-deals” in the short-term, but that this would “result in increased and heated competition in the IT outsourcing segment, especially on the pricing front as players tread on competitor territory.”

The report said skills shortages in the services industry continued unabated, and that as a result “smaller players are finding themselves in greater demand by government and business clients alike, as they often possess skills in a particular technology that have become scarce.

The report also found that market consolidation activity in 2007 was solid. There was a healthy rate of acquisition activity in the Australia IT services arena over the past year which is expected to continue over the next 12–24 months as players strive for growth and an extension of skills or geographic reach.

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Opel funding may be at risk: IDC

THE $900 million in Federal funding for the Opel consortium to build telecommunications infrastructure in the bush may be at risk of being cut because of Telstra’s plan to switch on its ADSL2+ network, according to research group IDC.

The group says that inflationary pressures, and the Rudd Government’s commitment to trimming Federal budgets, means the Commonwealth might decide against going ahead with the funding plan.

It says that the Telstra decision to switch on ADSL2+ in 900 exchanges nationwide means that rural and regional telecommunications will be substantially improved regardless of the Opel funding plans.

“We believe that the announcement from Telstra to activate their remaining ADSL2+ ready exchanges as a result of Ministerial assurance and the Government’s requirement to cull more than $10 billion dollars of funding are related,” said IDC telecommunications program manager David Cannon.

“As a result the Opel Pty Ltd funding will potentially be a casualty of larger macro economic inflation management processes,” he said.

“The activation of the ADSL2+ exchanges gives regional and rural communities metro-like broadband services and will counterbalance any negative public sentiment should the Opel funding be withdrawn,” said Cannon.

Opel is a joint-venture between Optus and Elders.

But with Optus already saying will not build its 3G network to cover 96 per cent of the population – instead rolling out only to major metropolitan and regional areas – and Vodafone apparently under pressure to reassess its own 3G plans, IDC says a lack of competition in the bush will mean continued higher prices for regional and rural Australia.

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