India fastest growing IT market in Asia

SINGAPORE: Asia’s public sector IT spending to be $51.5 billion in 2007, with the market growing at a compound annual rate of 6.9 percent from 2006 through 2010, according to Springboard Research study on public sector IT spending in Asia (including Japan).

Study reveals that growth was steady in the region. The study also revealed that Japan, while growing much slower than the rest of Asia, is still by far the largest market in the region, accounting for 45 percent of public sector IT spending. China and Australia are the next largest markets, accounting for 20 per cent, and 11 per cent, respectively, of public sector technology spending.

India is the fastest growing market in the region, and the market is forecast to grow at a compound annual growth rate of 19.5 percent through 2010. While federal IT spending accounts for 72 per cent of all expenditures, Springboard is seeing increased growth in spending at the next level, comprised of state, regional, provincial and local governments.

“This segment of the market is growing at close to 10 percent a year across the region and state-level spending is growing twice as fast as federal spending in more mature markets like Japan, Australia, Korea, New Zealand, and Taiwan,” said Jonathan Silber, research manager for Springboard Research.

“This is an opportunity, but it also represents more real estate that vendors need to cover as there are a lot more organizations at this level. Also, local government spending has tended to grow slower than state and regional spending; but in India, Indonesia, and the Philippines, we have seen strong local spending growth that is as fast or faster than federal and state spending,” Silber added.

Key sub-verticals within the public sector include education (public and private), which will account for 22 per cent of spending in 2007.

Other key sub-verticals are healthcare (public and private) and defense/security, with healthcare being the fastest growth sub-vertical across the region.

“We are seeing strong growth in technology spending in healthcare across the board. In most countries, it is the fastest growing sub-vertical as countries invest heavily in infrastructure and to support aging populations in places like Australia, Japan, and Korea,” Silber explained.