Asian IT to emerge from financial crisis stronger

Asian IT to emerge from financial crisis stronger

Summary: Economic crunch will drive wealth, power and innovation transfer from West to East as multinationals see Asia as critical growth market, says Springboard Research.

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TOPICS: IT Employment
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IT spending in the Asia-Pacific region will grow at a slower rate in 2009 than in 2008, but Asian economies would fare better during the current economic crisis than those in the West, according to Springboard Research.

The research company expects growth in IT spending in the Asia-Pacific (excluding Japan) region to be 7.1 percent in 2009, a decrease from 10.2 percent in 2008.

Springboard's Asia-Pacific IT Market Predictions 2009 released Thursday, noted that even though all countries in the region will be affected by the economic crunch, the degree of fallout will vary.

India and China will continue to grow, albeit at lower rates, the analyst said. The two countries' relative strength in IT spending will help power the region's growth and increase their dominance in the Asia-Pacific IT market.

Mature IT markets in export-oriented economies such as Taiwan will be most affected. Similarly, those heavily dependent on the financial services industry including Hong Kong and Singapore are at risk of a significant IT spending slowdown in 2009, Springboard predicted.

Thailand will also experience comparatively slower growth as it deals with both the economic crisis and its ongoing political troubles that have increased business uncertainty in the country.

According to Springboard, Indonesia and Vietnam will face relatively lower risk of a spending cutback, as the combination of limited existing IT investments and solid domestic demand in these countries will ensure ongoing IT expenditure.

"Even with slower growth, Asia will continue to emerge as a critical region for IT vendors and we will continue to see a substantial shift in investment moving to Asia and other global emerging markets," Dane Anderson, Springboard's CEO and executive vice president of research, said in a media statement Thursday.

"While the crisis will affect Asia, it will also further cement the region as crucial to any global company's growth strategy moving forward," he noted.

The report added that over the next two to three years, the economic crisis will help drive the ongoing transfer of wealth, power and innovation from the West to the East.

Multinational vendors will continue to view Asia as a critical growth market for IT, Springboard said. It expects many more U.S.-based companies to transfer more resources--budgets and people--into the region and set up special teams at their corporate offices to focus only on emerging markets.

"Many of the larger IT vendors are already doing this and these initiatives will continue to expand, with other mid-tier vendors also adopting this strategy," the research firm said in the report. These investments will help continue the education and awareness of IT within the region, which will help spur on more IT spending, especially in the small and midsize market space.

Springboard added: "We therefore believe that an increase in Asian IT spending will be an early indicator that the crisis is abating. At the end of this crisis, we will see Asia emerge as a much bigger part of many companies' global strategies--both from IT vendors investing more in the region as well as other vertical industries funneling more investments into Asia; thus creating the opportunity for more IT spending related to these investments."

Topic: IT Employment

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