Greater China's IT services market is projected to grow 8.1% next year in US dollar terms to $28.54 billion, according to IDC Asia/Pacific.
While this will be a decrease compared to the 9.4% growth expected for this year and the double-digit growth of previous quarters, Greater China is still one of the fastest growing IT services markets in the Asia-Pacific excluding Japan (APeJ) region.
During 2015 foreign players continued to struggle in the Chinese market due to regulatory policies, while local vendors witnessed a tapering in growth due to shrinking domestic demand associated with the slowdown in China's economy.
The total APeJ IT services market is on track to grow 6.5% in US dollar terms in 2016, with digital transformation and smart city initiatives driving demand for IT services even amid ongoing economic uncertainty.
“Demand is primarily being driven by digital transformation initiatives across verticals, particularly banking, retail and public sectors,” IDC Asia/Pacific senior research manager for services Vidhika Sehgal said.
“Enterprises are increasingly leveraging third platform technologies to build a cohesive digital agenda that focuses on achieving business outcomes. Smart City initiatives in countries such as China, India and Singapore have also fueled the demand for cloud, analytics, mobility and security solutions.”
The region's IT services market is being driven by growth in IT consulting, systems integration and hosting infrastructure services, mainly motivated by an increased migration to the cloud. But this migration is also adversely impacting growth in traditional outsourcing services.