2010: Software spend up, IT budgets down

Software budgets in the Asia-Pacific region in 2010 will grow 4.4 percent over last year, while overall IT expenditure will dip by 3 percent, new Gartner study shows.
Written by Vivian Yeo, Contributor

Overall IT budgets in the Asia-Pacific region are set to decline by 3.1 percent year-on-year, according to findings from a new Gartner study.

This was despite a projected growth in software budgets across Australia, China, Hong Kong, India, Malaysia and Singapore, the research firm said Tuesday in a statement. Over 320 IT end users from the six markets participated in the global study, which saw a total of 982 respondents.

"In the midst of economic volatility, hardware budget allocation remains the top priority in most countries, but software budgets are a real bright spot and continue to demonstrate a positive outlook, although more cautious when compared with last year's survey," said Gartner research director Yanna Dharmasthira.

India-based respondents were the most optimistic when it came to IT budgets--42 percent indicated that their organizations were planing to increase spending. China was No. 2, with 32 percent of respondents reporting that they expected to do the same. Fifty-two percent of Malaysia-based respondents said they would decrease spending, followed by Singapore with 48 percent of respondents indicating doing so.

According to Gartner, software budgets in the region will experience an average of 4.4 percent year-on-year growth in 2010. The region's software budget growth was the highest across all regions, it added.

In its report, Gartner noted that emerging, as well as mature, economies contributed to the positive regional outlook for software in this year's survey, compared to last year when emerging countries were the main drivers for optimism. Overall, the software spending outlook in 2010 was more positive for Australia, China, India and Singapore while Malaysia and Hong Kong appeared to be more pessimistic in their budget plans.

Proprietary or commercial software was still dominant in the Asia-Pacific region, accounting for 40 percent of the region's software mix, reported Gartner. Internally developed software, at 26 percent, made up the next largest chunk of the software portfolio.

Open source software (OSS) is expected to make up just over one-tenth of the software portfolio in the region, up slightly from 9.8 percent last year. OSS allocation is expected to increase in Australia, Hong Kong, Malaysia and Singapore, while proprietary software is expected to grow in China, India, Malaysia and Singapore.

Software-as-a-service (SaaS) spending will continue to be fragmented in the Asia-Pacific markets surveyed, the Gartner report said. Some 60 percent of the region's software portfolio will be on-premise software, with Australia, China and Singapore reporting higher than the regional average.

Adoption of hosted software and SaaS was highest in Hong Kong at 53.6 percent, followed by India (40.8 percent) and Singapore (35.4 percent). Markets such as China and India are tapping on SaaS for software such as accounting applications, added Gartner.

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