Service Providers Go Head-to-head on Managed Services

Frost: The extensive network infrastructure deployed across Asia Pacific by a handful of service providers operating in the region has left very little differentiation between these operators in terms of network coverage. This has resulted in heightened competition, forcing service providers to develop better customer relationships as well as a deeper understanding of customers' business and strategic needs.

As a mean to differentiate themselves and develop a competitive advantage, an increasing number of service providers are moving up the value chain by offering managed services, including managed applications and IT services.

Asia Pacific continues to see the commoditization of traditional data services and this has led to steeper competition in the enterprise service market. China and India have become key battlegrounds for market supremacy and many service providers are venturing into managed services in order to distinguish themselves from competitors.

Global service providers are likely to continue their dominance in the multinational corporation (MNC) segment, while regional service providers will focus predominantly on Asia Pacific deals.

Along with the strong growth opportunities in Asia Pacific however, there has been a significant increase in the level of direct competition between global and regional service providers. global service providers continue to enhance their capabilities in the region, and companies such as AT&T have displayed their prowess in securing large Asia Pacific deals. In line with this trend, Frost & Sullivan expects more intense competition between global and regional service providers in the future.

The global service providers have an inherent advantage in the WAN services sector as many global MNCs are headquartered in their home markets. These corporations tend to ‘pull’ the global service providers along as they venture into foreign markets. In contrast, regional service providers are not able to benefit from this ‘pull’ factor, as large and truly global Asian MNCs (other than those from Japan) are fewer in comparison.

Service Providers' Enterprise Strategies in Asia Pacific Publ 20060605