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Enterprise IT Spending in Asia-Pacific to Grow in 2011

Tuesday, May 3rd, 2011

2010 proved to be better than expected as global economies slowly rose from the onslaughts of the recent global financial crisis.

This trend holds true even for the global IT industry, which registered an 8% year-to-year growth and with enterprise spending reaching levels of up to $1.5 trillion worldwide - the fastest growth rate registered since 2007.

In a report from Gartner’s senior vice president and global head of research Peter Sondergaard, this global scenario applies to the Asia-Pacific Enterprise IT spending arena, which rebounded from a 1.3% decline in 2009 and is expected to increase by 7.6% in 2011, with forecasts valued at $312.3 billion. Sondergaard presented this latest outlook at the Gartner Symposium/ITxpo in Sydney which was attended by more than 1,500 global IT leaders.

IT spending trends in the Asia-Pacific

Just like other global economies, Asia-Pacific enterprises experienced severe budget freezes in 2009 in the wake of the global economic downturn. Things went better in 2010 as new life was brought back to IT spending to satisfy earlier sidetracked demands as well as the need to replace old hardware. Australia, which suffered a 5.3% decline in enterprise IT spending in 2009, enjoyed a strong year in 2010 and is slowly recovering at a modest 2% growth.

China and India, which experienced tremendous growth in the manufacturing and supply chain sectors despite the negative impact brought about by the global economic slowdown, are still showing signs of not letting up in the growth trend which they enjoyed in 2010 and which is expected to be carried over to 2011. Similar trends are being experienced in the rest of the AsiaPacific as well as Australia.

Enterprise IT spending focus in 2011 and beyond

In the global scenario, enterprise IT spending by financial service companies and institutions is forecasted to undergo a 3.7% growth rate in 2011 over the previous year, with values reaching more than $363.8 billion. Asia-Pacific enterprises, which currently account for more than 26.4% of global enterprise spending, were seen to register the fastest growth rate among financial services institutions, at 6.2% CAGR.

However, according to Gartner’s growth forecasts for the 2011-2014 period, the fastest growth rate in the Asia-Pacific region is expected to come from the software sector, forecasted at 11.3%. Other IT segments are also forecasted to register an increase in growth rates, with hardware leading the pack at 10.1%, followed by IT services at 9.3% and telecommunications at 7.6%.

According to Gartner’s report, enterprise IT spending by emerging economies, particularly on hardware, is slowly outpacing spending rates by more developed economies in the west. Even while the region represents only a small amount of the global IT market at 7%, analysts foresee that hardware spending in the region will eventually surpass that of the west by the year 2012.

Vertical industries will also be a key factor in enterprise IT spending growth in the Asia-Pacific region. Among vertical industries, the healthcare sector shows the highest potential for growth up until 2014, spurred by the influx of government stimulus funds in various Asia-Pacific economies. Aside from healthcare, utilities and education are other vertical industries that are expected to register the strongest growth rates in the Asia-Pacific.


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