This IDC study compiles the preliminary forecast of segments of the Japan IT outsourcing market based on analysis of the market overview and trends. The study examines the market performance in 2004 and forecast the market size between 2005 and 2009. The study also presents IDC's recommendations to service vendors.

Japan IT outsourcing market in 2004 marked a year-on-year increase of 6.1% to reach 1,668.3 billion yen. IDC forecasts that the market will reach 2,450.7 billion yen in 2009 with a CAGR of 8.0% between 2004 and 2009. The market, so far, achieved high growth as a new business, but it has entered the period of stable growth.

"The IT outsourcing market will continue to grow, backed by the companies' strategies focused on cost reduction and core competence. However, service vendors are facing many challenges such as diversification of service contents and improvement of profitability now that the market is in the stage of stable growth. It is important for service vendors to utilize resources with improved organizational ability, and to provide visible and flexible services," observes Satoshi Matsumoto, senior market analyst, Japan IT Services, IDC Japan.