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market will remain the bright spot in global marketplace
Global market intelligence
company IDC has lowered its 2009 information technology spending (IT
spending) forecast for the Asia Pacific Excluding Japan (APEJ) region to 5.8
per cent from its initial 9.5 per cent ‘pre-crisis’ forecast in July 2008.
Compared to the US and the rest of the world, APEJ is still in a good
position. IDC expects IT spending in APEJ to reach US$195.6 billion, down
from an earlier projection of US$201.4 billion.
"Strategic investments in IT will remain critical in achieving further
efficiency and productivity gains and driving longer term growth of
businesses", said Gary Koch, Associate Vice President of IDC’s Asia/Pacific
IT Spending Research. "In a poll of nearly 400 enterprises in APEJ conducted
during the last week of October, 80 per cent of the respondents said that
deploying products, services and solutions in an innovative way to save cost
was the preferred option than buying low-priced equivalents."
This 'post-crisis' poll was conducted across the region to ascertain the
impact the economic downturn had on business and to assess, if and where,
budget reduction may take place. IDC found that 43 per cent of the
respondents had been asked by their HQ to improve profit margin in 2009.
This directive came with the leading assumption that Asia Pacific will fare
better (if not much better) than its US, Europe and Japan counterparts.
Many of the Asian business leaders IDC surveyed had indicated that cost
savings alone will not be sufficient to achieve the higher budgeted profit
level. In this slowing marketplace, in addition to cost management,
businesses will target their competitors' installed base to acquire new
customers for incremental revenue streams. Customer engagement and
enhancement tools that leverage technology will help businesses to respond
effectively to customer needs and improve efficiency/productivity of their
client facing personnel and activities.
While over 50 per cent expected Asia to contract at similar levels to US and
Europe, more than 1/3 expected Asia to fare better. Belt tightening is
expected to drive migration to technologies and solution that will support
utility or consumption-based pricing. To this end, based on the same survey,
some businesses had indicated that the spend on managed and cloud service
would increase in 2009.
In the next 6 to 9 months, opportunities from the FSI vertical industry will
come from institutions undergoing M&A, infrastructure optimisation, and
various tactical initiatives to retain existing customer bases. There will
be great interest in solutions supporting risk management and compliance, as
well as counter-cyclical solution areas such as collections and recovery,
credit scoring, and portfolio and exposure analytics.
Islamic banking is another segment that may continue to do relatively well
with liquidity flowing in from the Middle-East. This will benefit the FSI
sector in Malaysia, Indonesia and Singapore (to a lesser extent). Asian
central banks will infuse local money markets with cash, as well as push
(regulate) banks to release credit to avoid a further liquidity crunch in
Stimulus packages, if executed effectively, will mean aggressive public
spending to stimulate demand and employment. IDC hence expects increased IT
spending from the government, healthcare and education sectors.
IDC sees opportunity from the telco sector to come from 2 broad categories
of players – in the longer term, CAPEX investments from cash rich or
financially supported service providers to gain a competitive edge and, in
the short term, non-CAPEX intensive investments from those who need to
generate top line growth via new service offerings. These offerings will
include SaaS, value-added services and managed services across all markets,
and fixed and wireless in developing markets.
Singapore was the first Asia economy to have gone into a technical
recession, with construction and FSI expected to continue to be sluggish.
The impact on IT spend will be negative from the FSI & MNC sectors. However,
the Singapore government traditionally has a tendency to 'over-compensate'
during times of 'major' slow down in private consumption and business
spending with a budget announcement to be made in January 2009 (brought
forward as a result of the economic crisis). A shrinkage in disposable
income is projected for both 2008 and 2009 putting additional strain on IT
spending outlook. IDC expects the 2009 IT market value to be adjusted down
by US$102 million to reach US$5.9 billion and the market growth reduced from
3.3 per cent to 1.5per cent.
Gary said, "Despite the new realities of IT budgeting that Asia Pacific
organisations face in light of the current economic backdrop, IDC has noted
historically that when a turnaround begins, these organisations
traditionally are quick to ramp up IT expenditure to alleviate pent up