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Analyst Corner
Asia’s Public Sector Continues to Show Strong IT Growth
Regional and state government spending is growing faster than federal spending, creating new IT opportunities and challenges, says Springboard Research. Based on its market analysis, Springboard expects IT spending to be US.5 billion in 2007, with the market growing at a compound annual rate of 6.9% 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%, and 11%, 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% through 2010.
While federal IT spending accounts for 72% 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% 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% a year compared to Japan’s public sector growth of 2.3%); healthcare in Japan (5.5% growth), and healthcare in Australia (9.8% growth vs. 5.2% 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% across the region. Countries like China and India will see close to 20% growth in these areas,” added Liu.
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%, and 11%, 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% through 2010.
While federal IT spending accounts for 72% 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% 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% a year compared to Japan’s public sector growth of 2.3%); healthcare in Japan (5.5% growth), and healthcare in Australia (9.8% growth vs. 5.2% 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% across the region. Countries like China and India will see close to 20% growth in these areas,” added Liu.
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