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China's IT services market will move ahead with structural changes this year as growth momentum slows, according to a recent report by CCID Consulting Co Ltd.

"Slower growth indicates the industry's upgrade," said Jian Cang, an analyst with CCID, a leading Chinese IT research institute. China's IT services market reached 59.5 billion yuan in 2006, a 17.8 percent increase from the year before, but the rate of growth was slower than in 2005, according to the report.

The Hong Kong-listed IT consulting firm expects the growth rate to be even slower in 2007.

The industry's key drag is the lower growth in the system integration services sector, which accounts for 30 percent of China's IT services.

The report said the business process outsourcing market became the fastest growing IT sector, fueled by rapid development of human resource outsourcing.

The institute forecasted 25 percent growth of IT outsourcing development, and 20 percent growth of the IT education and training market, fueled by increased demand of game and software outsourcing training.

In the vertical market, large businesses remain the biggest market for IT services, while the government market is growing at a fastest rate, the report said.

The IT service market for small and medium-sized businesses (SMBs) is growing relatively slower, but the report said SMBs will place an increased demand on IT services in the years ahead.

"IT service providers will transfer their focus from the saturated large enterprises market to explore the SMB market," said Jian.

In horizontal markets, telecommunication and financial services are listed as the top two sectors in terms of market size.

IBM is still the largest market player in IT services, the report said, while AsiaInfo Holdings Inc, a telecom software solutions provider, gained market share after two acquisitions last year.

(China Daily 05/09/2007 page14)

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