Asian SMB IT spend to hit US$95B

Small and midsize businesses in China, Korea and Australia will account for 60 percent of total IT expenditure in the Asia-Pacific region this year, study shows.

2007 could turn out to be a bounty year for IT vendors and service providers as demand for computing hardware grows among small and midsize businesses (SMBs).

According to a study by AMI-Partners released Wednesday, SMBs with fewer than 1,000 employees in the Asia-Pacific region, excluding Japan, (APEJ) are projected to spend more than US$95 billion on IT this year, a 16 percent growth over 2006.

The study identified Australia, China and Korea as the main drivers of IT spending growth among SMBs, accounting for more than 60 percent of total regional spending.

Ruth Garin, a research analyst at AMI-Partners, said in a statement: "Companies will expand their IT portfolio to enhance productivity and leverage and capitalize on the benefits of IT deployment."

All this activity, she added, will offer a huge opportunity for IT vendors, suppliers and service providers eyeing the regional SMB markets.

According to Garin, China's burgeoning manufacturing industry will continue to spark strong demand for IT investments, particularly computing hardware. SMBs in the manufacturing sector are forecast to make up more than 50 percent of SMB spending in the country this year.

"China's growth in this space is unquestionable," said the analyst, referring to the country's booming manufacturing vertical. "As the industry grows and scales at a global level, IT investments are imperative [and] China is incessantly building out a strong demand particularly in the hardware computing space."

Elsewhere, mature markets like Australia and Korea are expected to invest more on IT services like computing support, development and integration, IT management and process management.

This trend, however, is more evident among medium-sized businesses, which have between 100 and 999 employees, said AMI. Australia's medium-sized businesses are forecast to spend 50 percent on IT services, while those in Korea look set to spend 30 percent of their IT budgets on IT services.

AMI's study also predicted a growing demand for computing hardware as the majority of countries in the region continue to spend on building their hardware infrastructure in 2007.

Much of this demand will come from small businesses, which are defined as having between 1 and 99 employees, said AMI. Small businesses are forecast to spend 50 percent on computing hardware like PCs, servers, printers and imaging devices.

In contrast, medium-sized businesses will be more frugal on their hardware expenditure. According to the research group, medium-sized businesses will use 30 percent of their IT spending on computing hardware, and another 25 percent for IT services.

Farihan Bahrin is a freelance IT writer based in Singapore.