Indian IT spend to surpass Asean's in 2011

Contrary to what many believe, ICT spending in Southeast Asia currently exceeds that of India, but the situation could turn around in three years' time, says analyst.

India's domestic IT spend could overtake that of the six major economies in Southeast Asia in 2011, according to research analyst IDC.

Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam together registered US$25.1 billion in IT spending last year, 43 percent higher than India's US$17.5 billion, IDC's managing director Selinna Chin noted in a release earlier this week. Chin oversees the markets of Indonesia, Malaysia, the Philippines and Thailand.

The Asean region's IT spend, noted Chin, reflects its investment worth.

She said: "It has been a widely held notion that India has greater IT investment potential. But, a closer look at IDC data shows that the Asean domestic IT consumption is collectively bigger, which means that Asean could be a better bet in terms of attractiveness for global IT players."

In terms of growth, the Indian economy shows great promise--an increasing number of global companies are investing in India for IT exports, while domestic IT players are expanding overseas. According to IDC, India's domestic IT market will grow at 20 percent in 2009, compared to 6 percent in Asean.

In 2011, the Indian IT market will overtake Asean in terms of spend, predicted IDC.

For Southeast Asia to remain competitive and attractive to IT investors beyond 2011, local governments and businesses should step up their IT adoption, said Chin.

Impact of U.S. recession
The Asean region's market potential, on the other hand, could be impacted by a slowdown in the U.S. economy, Chin pointed out. Should the United States enter into a technical recession--defined as consecutive quarters of negative GDP growth--IT markets in the region will be substantially affected.

"The Asean region's IT market growth rhythm could slow to a mere 2 percent in 2008, which is equivalent to a potential loss of market opportunity worth US$680 million [this year], and US$1 billion in 2009," said Chin.

Countries that are expected to be more adversely affected in the region are Vietnam, Malaysia and the Philippines, as they are more dependent on exports to the United States.