APAC IT spends to rebounce

MUMBAI, INDIA: Asia Pacific's enterprise software market revenue is forecast to reach $ 22.1 billion in 2010, posting 10.2 per cent growth, according to Gartner, Inc. This represents an upturn from the expected 6.6 per cent growth in 2009, which is a notable slow down compared to 2008 growth of 13.8 per cent.  Within the region, the volatile economy is impacting the application software segment more than the infrastructure software segment.

Despite the recent slowdown in growth, Asia Pacific still has a positive outlook over the five-year forecast period from 2008 through to 2013, achieving a compound annual growth rate (CAGR) of 10.8 per cent, the highest of any region worldwide. For the next five years, China, India and Vietnam will continue to register the highest CAGRs (14.6 per cent, 12.4 per cent and 10.7 per cent respectively). Mature markets Australia and Singapore will also have attractive CAGRs, of 9.5 per cent and 9.4 per cent respectively.

China and India continue to benefit from a large domestic customer base and government stimulus packages, as well as relatively low market penetration.  Australia and Singapore’s revenue is supported by a consistent maintenance revenue stream and a strong vendor channel and service infrastructure, as well as positive expectations for end-user software budget increases in 2010.

“Asia Pacific will have a more positive outlook compared with other regions such as Europe and North America and as a result, major vendors will continue to target higher-growth markets in the region,” said Yanna Dharmasthira, research director at Gartner.  “However business customers continue to have strong bargaining power in the region. Some Asia Pacific markets have been traditionally more price-sensitive, a situation that is even more pronounced in the downturn. We expect to see more intense vendor competition in Asia Pacific, from multinational vendors as well as prominent local country vendors.”

China will continue to lead software demand in the region, with a 12.2 per cent growth rate in 2009 and 14.5 per cent growth in 2010. Although China's high dependency on exports is significantly impacting its economic growth in 2009, the government's stimulus package cushions the negativity.

Australia is the next-largest market with a 5.4 per cent growth rate in 2009 and 8.2 per cent growth in 2010. Although some mature countries are experiencing a notable recession, Australia's economic growth in 2009 will experience only slight negative growth before picking up in 2010. Australia also has the advantage of a well-established IT infrastructure and a well-developed sales and service infrastructure.

India is the fourth-largest market in the region with expected growth of 10.1 per cent in 2009 and 11.8 per cent growth in 2010. While its economy is also impacted by the economic downturn, India has the advantage of being less dependent on exports than China. India's largely untapped market, combined with a strong pool of IT skills, is expected to uphold local software demand.