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Growing appetite for IT renewal

As the market stabilizes, organizations see need to stay technologically relevant by increasing investment in data centers and renewing equipment, says an IT consultant.
Written by Tyler Thia, Contributor on

With economic activity peaking here in Asia, enterprises are feeling the year-end cheer, and that extends to greater enthusiasm for upgrading and maintenance such as IT infrastructure renewal.

In an e-mail interview with ZDNet Asia, P.R. Krishnan, global head of IT infrastructure service for Tata Consultancy Services (TCS), said the macro environment is moving toward stabilization and the outlook for IT infrastructure services is "looking optimistic", with budgets on an upward trend compared with the past 12 months.

"The market is maturing in Asia-Pacific and growing at a 9.3 percent cumulative annual growth rate. We are seeing a growing number of applications, development and maintenance, as well as IT infrastructure service deals being inked in the region...especially in India, Japan and Australia."

In other parts of the region, smaller and midsize deals are being signed in the infrastructure space, according to Krishnan. "The trend [in this region] is shifting from cost-focused and efficiency information technology outsourcing (ITO) to business and IT enhancements...customers are focusing their investments in the adoption of new delivery models like alternative cloud standardized services, [as well as] technology as a service."

The currency volatility in recent weeks also gave reasons for certain countries to increase spending on infrastructure, as Krishnan said it "will definitely have an impact" on TCS clients.

"We anticipate that markets such as Taiwan and China will benefit positively in their IT infrastructure spending, while markets such as Malaysia and Australia will see a slower growth in IT infrastructure spending."

However, telecom service providers like Celcom Axiata said the company's interest is in bettering customers' communication experience, so that its renewal process is constant and regular regardless of any volatility. Head of IT infrastructure, Muhammed Dawud Saifullah, said: "From a telco standpoint, we are technology inclined...so whenever we think a technology component can [improve the] customer experience, we will go ahead to implement [the investment] despite the economic downturn or when the US dollar is low."

As a general guideline, IT equipment typically lasts between three and four years in an organization, following which companies will evaluate and replace the old with the new.

Krishnan explained that trends are pointing toward the upgrading of data centers, desktops and network services, with more than half of TCS' clients practising that.

"We also observed that a lot of companies cut down on IT equipment spending last year because of the recession and we foresee that the IT equipment will be up for renewal this year, thus prompting companies to budget for new IT equipment," he added.

But with today's green policies, "old" equipment are not disposed of. Instead, staff or the less fortunate get to benefit from each renewal process, through PC and laptop sale auctions, recycling and donations to the needy.

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