The Asia Pacific (AP) growth engine did not fire on all cylinders in 2012, leading Forrester to revise its IT purchases growth forecasts for the year. While Australia, South Korea, and several ASEAN tech markets are showing continued solid growth, in other markets like China, India, Japan, Malaysia, and Vietnam, political leaders are struggling in the face of growing economic problems. My colleague Andy Bartels and I, with the help of Forrester’s AP analyst team, have recently published our revised IT purchase growth forecasts for 2013. Here are our key expectations by country:
2012’s slowdown in China will be short-lived. Despite a slowdown in 2012, China continues to attract intense vendor interest because of its size and potential for further growth. The expected government stimulus efforts in the country will offset factors such as weak demand from businesses and governments. The slowdown in 2012 (+9%) is therefore likely to be short-lived, with stronger growth resuming in 2013 (+10%).
India’s IT growth will remain slower than expected through 2014. 2012 (+7%) was a relatively lackluster year for the tech market in India. Worse than expected economic growth, combined with political gridlock on economic reforms, kept the tech market from reaching its full potential in 2012. While we expect the public sector to drive India’s IT spending growth, the impact will be limited through 2014 due to the parliamentary elections scheduled for that year.
HCL is the fifth-largest India-centric IT service provider in terms of revenue (after TCS, Infosys, Cognizant, and Wipro). While it only derived about 15% of its global fiscal 2012 revenues from markets outside of Europe and the US — slightly lower than the four larger Indian firms — HCL has built a strong base in Asia and now boasts more than 300 customers served by more than 8,000 employees. I recently attended HCL’s Asian analyst event in Sydney; below are some key reasons why I believe that you should consider HCL on your shortlist of systems integrators (SIs) and outsourcing providers:
Flexibility. When I asked some of HCL’s Australian, ASEAN, and Indian clients what characterizes HCL’s approach to managing client relationships and delivering projects, most mentioned “flexibility” and “HCL is easy to work with,” particularly during the transition phase in outsourcing contracts.
Co-innovation focus. HCL’s Asia growth strategy is both focused (on a limited number of vertical and horizontals) and pragmatic. Starting small with staff augmentation deals, the company invests in relationships to develop its presence and its expertise with its clients’ challenges — 2% of the revenue generated from clients is reinvested in the engagement as an innovation budget.
Local commitments. HCL has increased its regional presence via local management and delivery capabilities and local partners, including universities like Singapore Management University; IT companies like Lippo Group in Indonesia; and government, such as its work on the Mobility Lab initiative for EDB in Singapore.
We expect more AP organizations to embrace outsourcing services in 2013 to help them leapfrog the traditional IT skills, process, and technology learning curves necessary to support their business objectives. Our recent Forrsights Budget & Priorities survey in AP shows a high interest for outsourcing services in countries like Indonesia, Malaysia, Singapore, and Japan (see figure below). As AP companies try to manage rapidly rising complexity in both their business strategies and their application and infrastructure environments, they are facing a growing disconnect between business expectations and internal IT capabilities. Senior decision-makers have begun taking a fresh look at outsourcing as a way to bridge this gap.