Boom time for outsourced apps management

Global demand for outsourced application management services soared in 2004 and the sector is poised to enjoy even more aggressive growth this year, industry experts have predicted.

According to a recently published IDC study, approximately $17.9bn was spent worldwide on application management services last year.

The continuing demand for such services will help the market to an overall compound annual growth rate of 9.2 per cent, and will reach $27.2bn by 2009.

IDC's research found that offshore labour outsourcing and high-end transformational services will be the most critical offerings for successful application management services vendors.

"The worldwide application management services market is healthy and growing rapidly," said Barry Mason, senior analyst for application outsourcing and offshore services at IDC.

"Customers are seeking vendors with global sourcing capabilities and diverse offerings that span everything from basic application maintenance services to transformational services such as legacy modernisation, service oriented architectures and portfolio rationalisation.

"This critical combination of low-cost operational capabilities and high-value services offerings are crucial elements for vendors to help their customers create truly dynamic IT organisations, and will drive further growth in the market."

The US application management services market continues to grow and leads in regional spending.

Approximately $8.5bn was spent by US customers on discrete application management services in 2004, and this amount is expected to increase to $11.8bn by 2009.

Growth rates in the Asia/Pacific region will continue to increase throughout the forecast period, while both the Americas and EMEA will experience declining growth rates beyond 2007 as those markets mature.

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