Regional IT spending to pass $100b by 2004

Regional IT spending to pass $100b by 2004

SINGAPORE (AFP): Information technology (IT) spending in the Asia-Pacific region except Japan is set to double in five years to over US$100 billion in 2004, IT research firm International Data Corp. (IDC) said Wednesday.

The growth of spending in the region is estimated at 15.5 percent annually from 1999 to 2004, when it will stand at $106.6 billion, said Dennis Philbin, IDC's managing director for Japan and Asia Pacific.

IT investments over the next five years will be focused mainly on services, rather than on hardware and software, and the biggest spender will be China.

"What will be driving them is creating efficient, customer- centric IT systems," Philbin said at a forum in Singapore.

The speed at which the Internet is pervading all facets of business is a key factor in increased IT spending in the region, he said.

The so-called "Internet economy," consisting of electronic commerce and spending on infrastructure, is set to grow to $123 billion in 2004 from $10 billion in 1999, said Piyush Singh, vice-president for consulting at IDC Asia-Pacific.

The global Internet economy is forecast to grow 59 percent each year from 1999 to 2003, when it will hit an estimated $3.2 trillion.

Companies in the region need to anticipate the eventual IT trends, such as broadband Internet's ubiquitous presence by 2009, Singh said.

Growth in IT spending will be fastest in Southeast Asia and India at 21 percent, followed by Greater China at 19.6 percent, South Korea at 9.6 percent, and Australia and New Zealand at 9.1 percent, IDC said in its latest survey.

On a country basis, the biggest IT spender by 2004 will be China at around $33 billion, up 24 percent from 1999, followed by Australia at $22 billion and South Korea at $13 billion, it said.

The laggards in IT spending by 2004 will be Indonesia and the Philippines at less than $3 billion each and Vietnam at around $1 billion.

At present, most of the region's IT spending is on hardware, accounting for 63 percent of $51.8 billion spent last year by companies, said Philbin.

Priorities are now shifting to integrating services to help companies get their products to customers faster and develop a competitive advantage, he said, citing a survey of chief executives and chief IT officers in the region.

Of the officials surveyed, nearly 60 percent expected IT spending to make them more efficient in less than a year, while more than 30 percent expected results within 18 months, Philbin said.

The difficulties to be faced include a skills shortage, a mentality of needing more hardware, integrating new and existing IT processes and the speed at which the Internet is driving all facets of business, he said.

Amid the volatility on Nasdaq and in technology stocks around the world, Philbin was cautious over the slew of initial public offerings of new technology companies.

"It is important to step back and ask where's the value of this company. It lies in how the customers' needs are addressed, and that isn't measured by Nasdaq," he said.