The IT services market in Asia Pacific (excluding Japan) will grow from $37.5 billion in 2007 to $55.9 billion in 2011, representing a compounded annual growth rate (CAGR) of 10.5 per cent from 2006 to 2011, according to the 'Asia Pacific IT Services Market and Forecast, 2006-2011' report by Springboard Research.

According to the report, the Indian IT services market, with a CAGR of 18.6 per cent, will remain the fastest growing in the region, although as a region Greater China will offer the largest market opportunity in dollar terms at the end of the forecast period.

''The Asia Pacific IT Services market is arguably the global leader in terms of growth, supplemented with a mix of mature and emerging markets,'' says Phil Hassey, vice president – services research at Springboard Research. ''The markets of interest are not just the top four – China, India, Australia and Korea – but the emerging ones like Indonesia and Vietnam, which will register significant growth going forward.''

The report uses Springboard's Market Attractiveness Index to rank countries and individual IT services markets on the basis of growth opportunities. According to the index, the top 10 countries in the region are:

1. People's Republic of China 
2.  India
3. Australia 
4.  Korea 
5.  Indonesia
6. Vietnam
7. Malaysia
8. Rest of ASEAN
9. Singapore
10. Philippines

Says Hassey, ''For India and China, local capabilities, offerings and presence is just the start of a list of essential requirements for success. On the other hand, existing relationships, marquee clients and strong partnerships can provide capabilities for expansion in markets such as Hong Kong and New Zealand with relatively limited opportunities.''

According to the report, application hosting, with a CAGR of 19.5 per cent between 2007 and 2011, will register the fastest growth during the forecast period, although enterprise application integration at $7.8 billion will continue to be the largest component of the market by 2011.

While enterprise IT outsourcing is the largest market in 2007, the reluctance of firms in the People's Republic of China to use the enterprise IT outsourcing model will reduce its relative size and weighting in the market by 2011.

As part of the report's overall assessment of the Asia-Pacific (excluding Japan) IT services market, Springboard Research has several key outcomes and predictions for the industry in 2008. The report predicts that challenges in accessing and retaining IT skills will accelerate the shift to external services providers, as enterprises will struggle to retain in-house key individuals and skill sets. Also, China will not challenge India as the home of offshore service delivery especially for English language requirements – as skill levels, quality, culture and governance are all more suited to India being a hub of global delivery against the China.