IT spending in the Philippines is expected to sustain a healthy growth of 10.4 percent compound annual growth rate (CAGR) between 2006 and 2010, propelled by robust hardware expenditure, according to a new study from research company IDC.
The study, which analyzed end-user IT spending and market opportunities across 17 vertical segments in the Philippines, estimated that the industry grew by 20 percent in 2005 over 2004 to reach US$1.4 billion.
IDC stated that although the economy did not grow as fast as it did in 2004, positive business sentiment brought about renewed commitments from the end-user community to focus on key IT investments.
These IT investments allowed companies to achieve business efficiency, as well as provided addressable opportunities for IT vendors and service providers, said IDC.
The study also predicted that the hardware segment would account for 67 percent of the IT market by the end of 2006, owing to the fact that a large proportion of the population has yet to adopt, or fully implement IT. PCs, networking hardware, printers, and smart handheld devices are expected to top market demand.
IT services is expected to account for 22 percent of the total market, while the software segment will garner 11 percent. Spending on these two segments will be driven by the rapidly growing IT infrastructure requirements for information and data security, as well as increasingly complex IT management processes, said IDC
The study also added that demand from the communications and media, banking, and discrete manufacturing verticals will still heavily shape the IT spending landscape in the country.
Jubert Daniel Alberto, senior analyst at IDC Philippines, explained: "Capturing requirements from specific verticals and user size segment will greatly depend on vendors' [efforts] in improving products, customer service, partnering strategies and thorough understanding of end-user wants, needs and peculiarities."
The overall Asia-Pacific region, excluding Japan, is also expected to see positive growth in IT spending, which is projected to increase 8.9 percent this year to hit US$116.7 billion with market leaders China and India accounting for 41 percent and 24 percent, respectively, of incremental growths.