IDC: China, India to drive IT spending till 2010

Together, the countries are expected to make up 63 percent of the Asia-Pacific region's incremental spending in 2006.
Written by Jeanne Lim, Contributor on

SINGAPORE--Buoyed by increased demand in China and India, IT spending in the Asia-Pacific region, excluding Japan, will grow by 52 percent to reach US$162.5 billion by 2010, says IDC.

According to a report released by the research company Wednesday, organizations in the Asia-Pacific region outspent Japanese companies on IT for the first time last year, to the tune of US$107.2 billion. In comparison, IT spend in Japan totaled US$106 billion in 2005.

This year, IDC expects IT spending in the Asia-Pacific region to grow at 8.9 percent to hit US$116.7 billion. China alone, will account for 41 percent of all 2006 incremental growths, with India making up 24 percent.

During a Web conference held for journalists, Gary Koch, IDC Asia-Pacific's associate vice president of vertical research, said: "Over the next five years, [IT markets in] China and India will continue to grow in importance."

IDC expects increased demand for wireless devices, Internet Protocol-based communications and IT infrastructure consolidation to drive spending in the region over the next five years.

By the end of 2010, hardware expenditure in Greater China is expected to be comparable to that of Japan's, at 32 percent of the overall hardware expenditure in Asia, inclusive of the Japanese market.

This growth is driven mainly by strong "first-time" buyer demand in China, Koch explained. He added that it would be a significant development considering that just 10 years ago, China's hardware expenditure was just a quarter of what Japan spent in this market segment.

He also highlighted the disparity in the level of maturity of the IT markets in the Asia-Pacific region.

In 2006, the majority of IT spending in countries like Indonesia, Vietnam, China, Taiwan, the Philippines, Thailand, and Malaysia will be due to first-time buyers, he said.

Growing consumer consumption of IT in those markets will result in IT spend to be more PC-centric, he noted.

In contrast, IT spending in countries like India, Korea, Singapore, Australia, Japan, and New Zealand will focus on software and services due to the high level of complexity of legacy systems in this countries, said Koch.

He also pointed out that the increased demand for IT services will create an outsourcing opportunity in these more mature markets.

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