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IT Spending in China Set for Rebound in 2010: Springboard

Tuesday, March 30, 2010    From:  Global Services

Optimism is up in China as the Lunar Year of the Tiger is expected to bring economic rebound that will stimulate increased IT spending.

According to a new report of Springboard Research titled "China Key IT Trends 2010," the IT industry in China is expected to follow the recovery of the Chinese economy. Springboard described China's IT industry as "resilient and steadily recovering" with IT spending this year expected to grow 11.6 per cent year-on-year.

Previously postponed projects are expected to continue this year though Springboard also noted that companies are aware of the risks involved.

"The economic crisis drastically matured IT consumption in China. Although the enterprises are open to emerging technologies such as virtualisation and cloud computing to cut costs and improve efficiencies, they are still very cautious with launching new IT projects," said Bryan Wang, country manager, Greater China, at Springboard.

2010 growth 

Springboard expressed confidence in its forecast for the IT market in China for 2010 as its forecast for last year of 11 per cent was on target with the actual growth of 11.3 per cent.

The research firm's outlook is based on interviews with 100 CIOs, IT and business managers from various industries in China.

The Top 10 IT trends expected for enterprises this year are:

1.    Corporate IT spending will moderately rebound, fuelled by new and refreshed project investment. IT spending is expected to increase by a modest five per cent, said Springboard. Seventy-five per cent of the 86 respondents in the survey said their corporate IT budgets will increase this year.

2.    Cost-cutting and efficiency improvement for infrastructure maintenance will remain the top IT challenges for enterprises. Survey respondents said their top chief concern this year would be cutting down on the cost of maintaining IT systems while improving efficiencies.

3.    The importance of information security gains traction in the corporate IT environment. Information security is another major concern among respondents with 34 per cent of respondents saying they plan to implement security solutions.

4.    Virtualisation will continue gaining momentum, and is expected to play a more critical role as 41 per cent of respondents said "data centre integration and virtualisation" are the key technologies that will impact their business this year.

5.    "Cloud computing" was the IT buzzword last year and it is expected to gain momentum "dramatically" this year with the government as the key driver behind public cloud and software-as-a-service (SaaS) projects.

6.    The China enterprise resource planning (ERP) market will undergo accelerated consolidation this year after the slowdown last year. International vendors are expected to go after the small and medium-sized businesses while local vendors are eyeing the profitable high-end business.

7.    A wave of innovative new payment technologies, such as cashless payment and mobile payment, will emerge as indicated by the rise of 3G users last year.

8.    Government efforts to converge three-way networks (broadcasting, telecom, and Internet) offer potential for IPTV and other innovative applications, but with slow movement.

9.    Microblogging, the new social networking buzzword in China, will lead the growth of social networking, fuelled by the popularisation of mobile Internet; and

10.    After the slowdown in 2009, software outsourcing will recover, particularly in the second half of the year with annual growth rate expected to hit over 25 per cent, up from 14 per cent in 2009.

Springboard said these forthcoming trends indicate that IT users are becoming mature in their IT spending. It also noted that China is moving from being a manufacturing base into an IT service centre.

"China is catching up with India in offshore outsourcing. With strong government support and a large IT talent pool, we believe China's role as a regional outsourcing centre will grow," the report concluded.

Source: MIS Asia

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