News Release

New Survey Unveiled by Cisco Shows Growing Opportunities for Telecom Service Providers in Asia

Asian Enterprises Reveal Strong Intention to Adopt and Out- Task IP Services Over Next 24 Months, AC Nielsen Survey Shows
Dec 04, 2002

HONG KONG, December 4, 2002 - Enterprises in Asia Pacific have revealed strong intentions to adopt and out-task Internet Protocol (IP) services over the next 24 months. According to a new survey by AC Nielsen, the out-tasking trend represents a growing opportunity for service providers.

The survey, entitled "Enterprise Service Provider Connect" commissioned by Cisco in Asia Pacific, interviewed 276 IT decision makers from enterprises and governments across the region. Sixty percent of those surveyed have plans to adopt managed IP solutions such as workforce optimization and customer care.

"The survey results show a growing demand for Internet business solutions among Asia Pacific organizations. Companies need to improve business processes, and increase productivity and revenue," said Andrew Murray, vice president, service provider operations of Cisco Systems Asia Pacific. "Service Providers can take advantage of this trend and reap additional rewards. Focusing on value-added managed IP services is a good way to meet corporate customers' needs, bring additional margin, and reduce customer churn."

According to the survey, up to 50 percent of enterprises plan to adopt Internet business solutions. These include IP-Virtual Private Networks (IP-VPNs) and IP Telephony. Key drivers are the desire for increased functionality (55 percent of enterprises surveyed), improved time-to-market (53 percent) and cost-savings (46 percent).

The survey also highlights growing opportunities for managed IP services in the region. It expects between 20 to 35 percent of all IP investments will be out-tasked. Worldwide, the managed service market is estimated to grow from US$40 billion in 2002 to between US$100 and US$120 billion in 2006. Of this, about 20 percent will be in Asia Pacific.

"The substantial interest shown in adopting managed IP services offers great opportunities for services providers," said Murray. "Those demonstrating infrastructure leadership and service innovation stand to capture a significant and growing market."

The high level of interest in out-tasking suggests that many of the traditional barriers to out-tasking are being addressed. Out-tasking is expected to occur in the less-critical areas first and expand to core processes within organizations.

Service providers are viewed as potential providers for managing enterprise networks. About 30 percent of enterprises surveyed prefer to use telecom service providers as opposed to IT service providers.

"To compete for enterprise networking services, telecom service providers should not only use their traditional competitive advantage in core network but also provide additional value-added services and support internet business solutions. They can develop their own capability or partner with IT providers to provide Layer 4-7 services," explained Lea King, managing director of Internet Business Solutions Group, Service Provider, Cisco Asia Pacific.

"For service providers, the key competitive requirement will be to differentiate themselves from other industry players," Lea said.

Based on the survey results, Cisco will help service providers capture the managed service opportunities. It will continue to work with services providers to create differentiated services by offering innovative IP technologies and solutions.

Conducted in May to July 2002, the survey is part of a global study covering Europe, the United States and Asia Pacific. The companies surveyed are in multiple industries including manufacturing, retail, finance, government and utilities, as well as transportation and logistic and media. The participating companies are located in Australia, China, Hong Kong, India, Japan, Korea, Malaysia, Singapore and Taiwan.