Forrester analysts Andrew Bartels and Frederic Giron with Matthew Guarini, Robert Valdovinos, and Ian McPherson predict that the Asia Pacific technology market will grow 6.1 percent in 2018 and 5.2 percent in 2019.
“In most cases, CIOs in the Asia Pacific region will be able to expand their tech budgets at a faster rate as we move into 2018. Tech budgets in the region will continue to shift toward software and services and away from hardware and telecom,” Forrester analysts said.
The slowdown in tech market in Asia Pacific in 2019 will be due to slowing economic growth in China, India, and Japan.
China will spend $235 billion on tech goods and services in 2018.
Japan will spend $222 billion towards tech spending.
India’s tech market will be growing by 8 percent.
China’s tech spending will grow by 6 percent.
# Asia Pacific represents a third of the global economy, but a quarter of the tech market
# Asia Pacific has largest share of computer market, but smallest share of outsourcing
# Software and services spending will increase at 6 percent to 8 percent
# Hardware spending will stage a revival after several years of weak growth
# Telecom and hardware maintenance spending will see more modest growth
The report noted that the 6.1 percent growth in tech spending in Asia Pacific in 2018 in local currency will be a bit better than the global tech market growth rate of 4.9 percent in constant currencies.
Asia Pacific will represent 38 percent of global spending on computer hardware in 2018 and 32 percent of global spending on communications equipment. It will be 17 percent of global software purchases, 13 percent of global tech consulting and systems integration services, and 11 percent of global tech outsourcing services.
India’s tech market is the third largest. India’s tech spending is less than one-third the size of either Japan’s or China’s. The tech markets in South Korea and Australia will be similar in size. The tech markets in Hong Kong, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, and Thailand will all be in the range of $11 billion to $16 billion, with Vietnam’s tech market about half that size.
China’s tech market spending will grow at 6 percent in yuan renminbi and 9 percent in dollars in 2018.
The complexity of emerging technologies, such as the internet of things (IoT), AI, and blockchain, will push China firms to leverage enhanced capabilities via consulting and outsourcing services.
Alibaba, Baidu, and Tencent will become de-facto standard setters to build digital value propositions in verticals like banking, insurance, healthcare, or transportation.
Japan is expected to spend $222 billion on technology in 2018.
The large but saturated domestic market drives technology providers like NEC and Fujitsu to pursue new revenue streams and deliver operational excellence to their clients through robotics and automation, and both have recently launched their AI platforms.
Digital transformation initiatives are still few and far between in Japan and tend to focus on cost reduction.
India’s tech spending will accelerate in 2018 powered by cloud growth. India’s total tech purchases will increase by 8 percent in 2018 and 7 percent in 2019 in rupees and 12 percent in 2018 and 10 percent in 2019 in USD.
Australian tech market will see accelerated growth in Australian dollars — from 3 percent in 2017 to 4 percent in 2018 and 3 percent in 2019. Australian firms like RACQ or Macquarie understand the role of software as a differentiator and a way to better understand and serve their customers.