IT Outsourcing - South Korea

South Korea

Revenue in the IT Outsourcing market is projected to reach €11.84bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 8.52%, resulting in a market volume of €17.82bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach €395.90 in 2024.
In global comparison, most revenue will be generated in the United States (€183.00bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Mercado

Región

Comparación de regiones

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Analyst Opinion

South Korea, a country known for its technological advancements, has been experiencing a steady growth in its IT outsourcing market.

Customer preferences: South Korean companies are increasingly outsourcing their IT services to reduce costs and improve efficiency. The country's highly skilled workforce and advanced technology infrastructure make it an attractive destination for outsourcing. Additionally, many South Korean companies prefer to work with local IT outsourcing providers to ensure better communication and cultural understanding.

Trends in the market: One of the major trends in the South Korean IT outsourcing market is the increasing demand for cloud-based services. This trend is driven by the need for scalable and flexible IT solutions that can adapt to changing business needs. Another trend is the growing popularity of artificial intelligence (AI) and machine learning (ML) technologies, which are being used to automate various business processes and improve decision-making.

Local special circumstances: South Korea has a unique business culture that places a strong emphasis on personal relationships and trust. This can sometimes make it difficult for foreign companies to enter the market and compete with local players. Additionally, the country has a highly regulated business environment, which can create challenges for companies looking to outsource their IT services.

Underlying macroeconomic factors: South Korea's economy has been growing steadily over the past few years, driven by strong exports and a thriving technology sector. The government has also been actively promoting the country as a destination for foreign investment, which has helped to attract new businesses and stimulate growth. These macroeconomic factors have created a favorable environment for the IT outsourcing market to thrive in South Korea.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.