ISG Provider Lens™ Next-Gen ADM Services - Application Quality Assurance - APAC 2024

Digital transformation, cloud adoption, AI and automation drive ADM, but talent shortages and regulatory challenges pose hurdles

The application development and maintenance (ADM) market in Asia Pacific (APAC) is experiencing robust growth, fueled by an expanding digital economy and heightened adoption of advanced technologies. As per the ISG Index, ADM bundled with infrastructure services grew by 57 percent globally in Q2 2024, largely due to rising demand in emerging APAC markets. This dynamic landscape is characterised by key drivers, evolving trends, and a competitive environment that presents both opportunities and challenges.

The ADM market in APAC is largely driven by digital transformation initiatives, such as upgrading legacy systems, migrating to cloud, and integrating advanced technologies like AI and ML. Emerging technologies like blockchain, IoT and 5G are also creating new opportunities for development and maintenance services, fueled by the region’s rapid economic growth and urbanisation, which increase the demand for scalable and robust software solutions. Cloud
computing is a major trend, with businesses increasingly adopting cloud platforms for scalability and cost-efficiency. The rise of AI and automation is streamlining ADM processes, enhancing efficiency and accuracy. At the same time, cybersecurity remains a critical focus, emphasising the need for robust security measures in applications. Agile methodologies and DevOps practices are gaining traction as they support faster development cycles and improve application quality.

Despite a positive outlook, the market faces challenges, such as a shortage of specialised talent in data science and cybersecurity and the complexities of regulatory compliance across diverse APAC countries. Integrating new applications with existing systems also presents challenges, requiring specialised skills. The ADM landscape in APAC features a blend of local and global players; local IT service providers offer cost-effective, region-specific solutions, while global giants bring advanced technologies and best practices. Recent trends show a rise in mergers and acquisitions aimed at expanding service offerings and geographic reach. Compared to the US and Europe, APAC benefits from cost advantages, a vast talent pool with a strong focus on STEM education, and rapid digital adoption, supported by government initiatives.

Recent developments in the ADM landscape highlight accelerated cloud adoption, the rise of low-code/no-code platforms, and the integration of AI and ML. Key priorities include hyperautomation and cybersecurity, alongside a
notable increase in data-driven decision-making and edge computing, spurred by IoT growth. The shift to remote work has fueled the adoption of Agile methodologies and collaboration tools, while sustainability and green IT  practices are gaining importance. Overall, the ADM market in APAC is dynamic and evolving, propelled by technological advancements and digital adoption. Despite challenges such as talent shortages and regulatory  complexities, the market shows strong growth prospects and abundant opportunities for innovation.

The key trends in each quadrant are as follows:

Agile Application Development Outsourcing: To keep pace with the rapid evolution of the APAC application development landscape, service providers are adapting to the increasing demand for digital transformation and
advanced technologies. They are deploying next-gen applications powered by AI and ML to enhance operational efficiency, customer engagement and overall performance. Providers are increasingly focussing on cloud-native development, delivering scalable solutions on major cloud platforms to ensure flexibility and cost-efficiency. Agile and DevOps practices are being adopted to accelerate development, enable continuous integration and foster innovation. In response to rising cybersecurity threats, providers are prioritising robust security measures and compliance, while also investing in talent development in AI and cloud computing to drive regional growth.

Application Managed Services: In APAC, application managed services (AMS) providers are emphasising customisation, flexibility and scalability to meet the evolving needs of enterprises. They are integrating advanced
technologies like AI and automation to enhance efficiency and support modernisation efforts. Providers are using AI-driven platforms and hyperautomation to streamline processes and deliver significant business outcomes.  AMS offerings include user support, cloud operations and services focussed on resilience, cost reduction and agility. Providers focus on rapid onboarding and strong engineering, supported by global expertise and advanced analytics.
They offer localised services tailored to cultural and regulatory requirements, while also leveraging global networks and partnerships to deliver end-to-end solutions that align with business objectives.

Application Quality Assurance: As APAC enterprtises undergo digital transformation, they need robust QA/testing functions to ensure seamless cloud migration, Agile development and superior digital experiences. Service providers are meeting these needs with cloud-based quality engineering, Agile testing, advanced automation and AI-driven solutions. They focus on a customer-centric approach and a broad service portfolio to deliver maximum value. Providers differentiate themselves by investing in proprietary frameworks, talent development and innovative  solutions. They leverage APAC-specific strengths, such as established delivery centres and expertise in continuous testing and performance engineering. Additionally, they offer specialised services in regulatory compliance, AI quality
assurance and industry-specific solutions. Advanced offerings, including continuous automation, AI-powered testing and robotic test automation, enhance efficiency, accelerate time to market, and significantly improve test coverage, execution speed and overall quality.

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