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SINGAPORE: The IT sector is expected to undergo consolidation as a growing number of international IT firms acquire smaller players in Southeast Asia.
According to Gartner Advisory, this is to meet the rising demand for secure and robust IT solutions in the growing financial and insurance industries.
A growing number of financial institutions and insurance firms are outsourcing their IT services.
Observers say the IT sector in Southeast Asia is maturing, with more firms looking at comprehensive solutions.
Software and applications are especially in demand - to provide end-to-end operations from filing claims to issuing cheques.
Research firm Gartner says this has led to greater interest and enquiries from major IT corporations to buy smaller companies.
Research director and analyst at Gartner Advisory, Singapore, Guriq Sedha says: "The first thing is the assurance of the quality of the service, building the capability, stabilising it. As it matures to some levels, there may be opportunity for the out-sourcing service provider to take that on, and offer cost-savings or other competitive advantage that institutions have been looking for."
Earlier this month, Singapore lender DBS was hit by a computer glitch, and in the aftermath, analysts say, banks and insurance companies are looking for IT partners with better backup plans.
Japanese IT services and solutions giant NTT Data Group recently acquired insurance software provider, FirstApex.
It was drawn by the Singapore firm's technical knowledge and familiarity with insurance businesses in the region.
President and CEO of NTT Data Asia Pacific, Ryoji Fukaya says: "Insurance demand is increasing in this region. For example, our customers building more factories, and we see boom of the automotive industry. I went to Indonesia last week and the number of motorcycles is increasing."
NTT Data Group currently makes some US$29 million in annual revenue from Southeast Asia.
It plans to triple that in two to three years.
- CNA/jm
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