The global financial crisis softened business confidence, causing falling demand for premium services.
Melbourne, Australia (PRWEB) June 01, 2014
Outsourcing has become pivotal to the operation of a modern business. As computers and their use in manipulating data become more prevalent and sophisticated, the need to bring in expert help has grown. The outsourcing trend has been the major push behind the Data Processing and Web Hosting Services industry's stable performance over most of the past five years. Outsourcing has grown considerably now that companies are outsourcing internationally (known as offshoring). Although the practice of outsourcing has been a boon to the industry, the prevalence of offshoring has dampened industry revenue. According to IBISWorld industry analyst Nick Flores, “Diversified technology companies such as IBM have increased their focus on improving operational efficiencies, which has increased the attractiveness of outsourcing select functions to low-cost countries.” Industry revenue is expected to grow at annualised 0.5% over the five years through 2013-14. IBISWorld expects industry revenue to expand by 4.6% over 2013-14 to reach $785.1 million, partly due to robust demand from financial services and solid growth in e-commerce.
The slowdown affecting the Australian economy has taken its toll on what was once a major growth industry. A large number of new and existing data projects were shelved, waiting for a more stable, optimistic and qualified growth projection of the greater economy. The global financial crisis softened business confidence, causing falling demand for premium services. This has been exacerbated by greater competition from offshoring operations. However, this pent-up demand has led to growth in the past few years. “Large firms have recognised that massive bundles of data they have in tow is useful, and continued digitisation makes data processing an everyday activity,” says Flores. The industry exhibits a moderate level of market share concentration, and major players include IBM A/NZ Holdings Pty Limited, Hewlett-Packard Australia Pty Ltd, Melbourne IT Ltd and Macquarie Telecom Group Limited.
The highly interconnected world of the 21st century was once a major asset for the industry, but for the very same reasons, it has now become a threat. Work can be performed almost anywhere in the world, providing that the proper capital is available. Nonetheless, demand for industry services is expected to continue to grow. Increased security concerns regarding the sending of data offshore are projected to support the industry in the next five years. Increasing legislation pertaining to data privacy and surveillance across borders is likely to mitigate the prevalence of offshoring, but would nevertheless represent a key challenge for the Data Processing and Web Hosting Services industry in Australia moving forward.
For more information, visit IBISWorld’s Data Processing and Web Hosting Services report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry is mainly engaged in providing electronic data processing or hosting services. These businesses provide specialised hosting activities such as web hosting, streaming services or application hosting, providing application service provisioning, or providing general timesharing mainframe facilities to customers. This industry excludes processing payroll services and financial transactions such as credit card transactions.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
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Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.