Business Global Scene

Asia’s public sector continues to shows strong IT growth

Regional and state government spending is growing faster than federal spending, creating new IT opportunities and challenges.

Springboard Research, a leading innovator in the IT Market Research industry, today announced the latest data from its study of public sector IT spending in Asia (including Japan). Study results show that growth was steady in the region.

Based on its market analysis, Springboard expects IT spending to be US$51.5 billion in 2007, with the market growing at a compound annual rate of 6.9 per cent from 2006 through 2010.

Springboard’s analysis also showed that Japan, while growing much slower than the rest of Asia, is still by far the largest market in the region, accounting for 45% 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 per cent 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% 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.

Other notable sub-vertical growth stories from larger, more mature markets include social services in Japan (growing at 7 per cent a year compared to Japan’s public sector growth of 2.3 per cent) healthcare in Japan (5.5 per cent growth), and healthcare in Australia (9.8 per cent growth vs. 5.2 per cent overall growth).

“In regards to technology opportunities, the majority of revenue will still come from hardware as infrastructure is built up and expands, but the area of higher growth will definitely be software,” said Jingwei Liu, Market Analyst for Springboard Research.

“This specifically will be enterprise applications and industry-specific solutions, which will grow at about 11 per cent across the region. Countries like China and India will see close to 20 per cent growth in these areas,” added Liu.

UN Climate Change Envoy to speak in Bangkok

Special Envoy on Climate change, Han Seung-soo, will give a briefing on recent developments in UN climate change activities on 19 November, in Bangkok.

Han, a former president of the UN General Assembly, is traveling to the region two weeks ahead of the Bali Climate Change Conference, which the UN hopes will set the stage for future climate change action on all fronts.

The briefing will be given at the Fourth Committee on Managing Globalization, which will be held by the Economic and Social Commission for Asia and the Pacific (ESCAP) at the United Nations Conference Centre, from November 19 to 21.

The meeting is expected to attract over 100 participants from across the Asia-Pacific region among other things, examine a regional cooperation strategy for climate change.

Hans briefing comes at a critical time, with the latest report from the Intergovernmental Panel on Climate Change (IPCC) set be adopted just two days before, and the Bali Conference two weeks away.

The report, which took several years to compile and includes input from thousands of scientists from 130 countries, is expected to convey the strong warnings regarding the urgent need for action on climate change.

The Bali Conference, which will run from December 3 to 14, is expected to launch negotiations on future climate change activities and on the creation of a plan for deeper cuts in CO2 emissions beyond 2012 when the Kyoto Protocol agreement expires.