S'pore firms' IT spending seen rising 6% next year
Gartner survey bullish on spending outlook in Asia-Pac, reports Amit Roy Choudhury
COMPANIES across the Asia-Pacific region will spend more on IT next year, with IT spending by companies in Singapore expected to rise by about 6 per cent.
This is significant because Singapore-based companies cut their IT spending by an average of 4 per cent this year over last.
According to a survey conducted by research house Gartner Inc, average IT spending by Singapore-based companies is likely to shrink to US$1.14 million this year, from about US$1.19 million in 2002. The companies said they will spend US$1.22 million each on IT next year.
Ian Bertram, vice-president of Gartner Asia-Pacific, said the information and communication technologies (ICT) market in Singapore is expected to go up 5 per cent overall to US$8 billion next year.
However, the hike in spending in Singapore may not necessarily mean a commensurate increase in new jobs, since there will be industry consolidation, another Gartner analyst warned.
Presenting Gartner's major technology forecasts for the coming year yesterday, Mr Bertram said the move by companies to invest in technology with the aim of making their business stronger and more innovative was a global phenomenon.
One immediate contributing factor: 'IT assets, acquired pre-Y2K, will reach the end of their lifecycle and must be refreshed.'
But more than that, 'we now see true recovery in the making,' he commented. 'The combination of business transformation with key technology advances, architectural changes, market forces and best practices will lead to a strong recovery for IT in the near future.'
Outsourcing will accelerate from next year, with more enterprises looking to deliver IT and business processes through service providers. Gartner predicts that by 2005 the number of enterprises that enter into new outsourcing relationships will increase 30 per cent while the number of IT providers that claim outsourcing relationships will increase by 40 per cent.
It won't be smooth sailing for all IT providers, however. According to Gartner, the IT industry worldwide has entered a period of vendor consolidation which will last through 2005.
'This will see as many as 50 per cent of technology suppliers being eliminated from the competitive landscape,' Mr Bertram said. He, however, added Asia in general could be shielded from the period of global accelerated job losses.
Speaking to BizIT about the situation in Singapore, Gartner principal analyst Jacqueline Heng said that since many of the multinational IT companies had their offices here, any consolidation could result in some job losses.
'Some of the consolidation is going to take place next year and this could have some impact on the jobs in the Singapore offices of the IT multinationals,' she said.
Ms Heng said companies in Singapore were more conservative on outsourcing and hence are more selective on what they outsource. However, she added: 'It may appear that a lot of companies in Singapore are not outsourcing but they are. It is just not publicised and it is focused on infrastructure outsourcing rather than business process outsourcing (BPO).'
'Companies in Malaysia are more aggressive at this point of time about opening up to outsourcing. There are more published big-scale outsourcing work there, like for example, in Malaysia Airlines, Bank Bumiputra and Maybank over the last six months,' she said.
According to Gartner, although the long-term outlook for IT is brighter, it will also result in pain for many. 'We are on the cusp of the most fundamental changes to business processes driven by technology advancements since the Internet,' said Mr Bertram. 'However, the resulting huge impact will be both positive and negative.'
On the positive side, there will be massive productivity improvements, significant increases in demand and enormous infusions of true innovation. 'But on the negative side, hundreds of thousands, if not millions, of workers will be displaced, many of them currently holding high-paying, white-collar positions,' he warned.
Gartner also predicted that in the coming year:
In the software industry, Linux and alternatives to Microsoft will continue to make headway, but mainly at the cost of Unix. According to Gartner, by 2008, 60 per cent of large enterprises with 500 or more employees will have migrated 80 per cent of their Unix-based applications to Linux.
IT security organisations will focus on vulnerability shielding, mitigation and practices that improve the overall resiliency of IT resources and business processes.
Standards and regulations, including the Sarbanes-Oxley Act in US, and the increasing adoption of globally recognised accounting standards, will start to have global knock-on effects.
'Compliance is an underestimated issue for many Asian companies, and as they start to play on a global stage, many of the factors and metrics that need to be put in place have not even been considered by local companies,' Mr Bertram said. He added: 'Understanding and managing the compliance issue could signal the success or failure of companies in the coming year.'
TheBusinessTimes
COMPANIES across the Asia-Pacific region will spend more on IT next year, with IT spending by companies in Singapore expected to rise by about 6 per cent.
This is significant because Singapore-based companies cut their IT spending by an average of 4 per cent this year over last.
According to a survey conducted by research house Gartner Inc, average IT spending by Singapore-based companies is likely to shrink to US$1.14 million this year, from about US$1.19 million in 2002. The companies said they will spend US$1.22 million each on IT next year.
Ian Bertram, vice-president of Gartner Asia-Pacific, said the information and communication technologies (ICT) market in Singapore is expected to go up 5 per cent overall to US$8 billion next year.
However, the hike in spending in Singapore may not necessarily mean a commensurate increase in new jobs, since there will be industry consolidation, another Gartner analyst warned.
Presenting Gartner's major technology forecasts for the coming year yesterday, Mr Bertram said the move by companies to invest in technology with the aim of making their business stronger and more innovative was a global phenomenon.
One immediate contributing factor: 'IT assets, acquired pre-Y2K, will reach the end of their lifecycle and must be refreshed.'
But more than that, 'we now see true recovery in the making,' he commented. 'The combination of business transformation with key technology advances, architectural changes, market forces and best practices will lead to a strong recovery for IT in the near future.'
Outsourcing will accelerate from next year, with more enterprises looking to deliver IT and business processes through service providers. Gartner predicts that by 2005 the number of enterprises that enter into new outsourcing relationships will increase 30 per cent while the number of IT providers that claim outsourcing relationships will increase by 40 per cent.
It won't be smooth sailing for all IT providers, however. According to Gartner, the IT industry worldwide has entered a period of vendor consolidation which will last through 2005.
'This will see as many as 50 per cent of technology suppliers being eliminated from the competitive landscape,' Mr Bertram said. He, however, added Asia in general could be shielded from the period of global accelerated job losses.
Speaking to BizIT about the situation in Singapore, Gartner principal analyst Jacqueline Heng said that since many of the multinational IT companies had their offices here, any consolidation could result in some job losses.
'Some of the consolidation is going to take place next year and this could have some impact on the jobs in the Singapore offices of the IT multinationals,' she said.
Ms Heng said companies in Singapore were more conservative on outsourcing and hence are more selective on what they outsource. However, she added: 'It may appear that a lot of companies in Singapore are not outsourcing but they are. It is just not publicised and it is focused on infrastructure outsourcing rather than business process outsourcing (BPO).'
'Companies in Malaysia are more aggressive at this point of time about opening up to outsourcing. There are more published big-scale outsourcing work there, like for example, in Malaysia Airlines, Bank Bumiputra and Maybank over the last six months,' she said.
According to Gartner, although the long-term outlook for IT is brighter, it will also result in pain for many. 'We are on the cusp of the most fundamental changes to business processes driven by technology advancements since the Internet,' said Mr Bertram. 'However, the resulting huge impact will be both positive and negative.'
On the positive side, there will be massive productivity improvements, significant increases in demand and enormous infusions of true innovation. 'But on the negative side, hundreds of thousands, if not millions, of workers will be displaced, many of them currently holding high-paying, white-collar positions,' he warned.
Gartner also predicted that in the coming year:
In the software industry, Linux and alternatives to Microsoft will continue to make headway, but mainly at the cost of Unix. According to Gartner, by 2008, 60 per cent of large enterprises with 500 or more employees will have migrated 80 per cent of their Unix-based applications to Linux.
IT security organisations will focus on vulnerability shielding, mitigation and practices that improve the overall resiliency of IT resources and business processes.
Standards and regulations, including the Sarbanes-Oxley Act in US, and the increasing adoption of globally recognised accounting standards, will start to have global knock-on effects.
'Compliance is an underestimated issue for many Asian companies, and as they start to play on a global stage, many of the factors and metrics that need to be put in place have not even been considered by local companies,' Mr Bertram said. He added: 'Understanding and managing the compliance issue could signal the success or failure of companies in the coming year.'
TheBusinessTimes
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