TECH SUPPLIER Jun 2019 - Market Presentation - Doc # AP44705119

2H18 Country Report on IT Services – Philippines

By: Rolando Chua

On-line Presentation

Abstract

In 2H18, optimism in new government projects and sustained private spending continued to drive growth in the IT services market. The recent successful appointment of the third telco player also came in time for the stricter mandated push for digital interconnectivity and use of transformative technologies within the government. Alongside these, a marked increase in digital project prioritizations in larger enterprises has spurred demand for integration and consulting services, especially in the areas of data and network security. Microenterprises and small and medium-sized businesses (MSMEs) also remain potential sources of organic business growth, especially as exploratory and use case projects around mobility, ecommerce, automation, security, and analytics are conducted on the back of digital transformation (DX) initiatives.

Key regional and local services players continue to target BFSI, manufacturing, logistics, retail, and wholesale enterprises, as these industries deliver continuous incremental growth and potential opportunities in adopting cloud-based industry-specific technology and risk-mitigating solutions. IDC believes that to offset the slower adoption rate for MSMEs, technology vendors will continue to focus efforts on industry technology trailblazers in order to develop and showcase vertical expertise and build localized solution suites and platforms. In the context of the fast-growing number of new technology players and service providers in direct competition for the gradually growing services market, evolving service delivery models will give way to more outcome-based, multidimensional partnerships that increase the accountability of service providers in ensuring success and optimize business value over time.

Managed cloud services have been one of key areas of interest in 2H18 as major cloud service providers underscore both rising local demand and develop industry-centric capabilities. IDC identifies five large industry groups that are expected to spend significantly more on cloud services than others, namely, retail and wholesale, healthcare, finance, government, and manufacturing. These high-growth industries are poised to drive more opportunities for both technology vendors and professional services firms over the next three to five years. PLDT Group's recent investment in Multisys Technologies Corporation also reflects and supports the growing shift toward an industry-focused and expertise-intensive service delivery model, which IDC believes will further add complexity to the current landscape and directly challenge the competitiveness of traditional service providers against regional and major local IT service vendors.

Heightened interest and investment in security-related solutions, such as blockchain-based platforms, biometric security, and disaster recovery, also permeate midterm transformative strategies. In the context of improving connectivity and better infrastructure in the government's pipeline, IDC believes that the importance of possessing advanced security strategies will gradually occupy better footing in business and IT allocations in the next few years.


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