IDC: SaaS in Asia to hit US$298 million

The SaaS market in Asia Pacific is estimated to grow 18 percent year-on-year to US$298 million in 2009, said IDC Wednesday.

According to the research house, the growth rate is six times higher than the overall packaged software market growth of 3 percent in 2009.

June 18, 2009 - The SaaS market in Asia Pacific is estimated to grow 18 percent year-on-year to US$298 million in 2009, said IDC Wednesday.

According to the research house, the growth rate is six times higher than the overall packaged software market growth of 3 percent in 2009.

"Companies in the region are more keen with the SaaS subscription model as they cope with the increasing IT budget constraints,” said Sheila Lam, senior market analyst of IDC’s Asia/Pacific Enterprise Applications Research. "Enterprises are considering to shift the hardware and software maintenance expenses towards SaaS, which appears to be a cost-efficient alternative by merging the license, hosting and management fees into a single subscription fee."

With a low upfront investment cost, SaaS is also a good testing ground for enterprises to try out new applications before making heavy investment and enterprise-wide implementation, said IDC. In the emerging markets, companies are also likely to embrace SaaS with open arms, because they have less prior IT investment and legacy issues, the firm added.

In terms of market size, Australia is expected to contribute 45 percent to the overall SaaS market, followed by the PRC, where the country contributed 29 percent to the market, said IDC.

The active local vendors in China are driving awareness and adoption of SaaS, accelerating growth over the next 5 years in the market at a CAGR of 25 percent, the research firm noted. India will be another fast-growing market that is expected to grow at a CAGR of 42 percent within the next 5 years, said IDC.

As a result of aggressive marketing initiatives over the past few years, CRM applications are expected to lead in the APeJ SaaS market in 2009, capturing 31 percent of the overall SaaS market in the region, said IDC, adding that more companies are finding the subscription of human capital management and financial applications via SaaS is a very feasible and attractive proposition.

Pervasively available software such as collaborative and security software is also expected to increase in significance as far as SaaS delivery model is concerned, said IDC.