Gartner Inc's latest research forecasts that Asia Pacific's enterprise software market revenue will reach US$ 22.1 billion in 2010. This is a growth of 10.2% over Asia Pacific (APAC) enterprise software spends in 2009, with India showing a significant growth of 10.1% in 2009, and expected to grow to 11.8% in 2010.
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Despite the worldwide impact of slowdown, APAC promises a positive outlook, according to Gartner. According to the five year forecast period from 2008-2013, the APAC region has managed to achieve a compound annual growth rate (CAGR) of 10.8%, the highest in the world. For the next five years, China, India and Vietnam will continue to register the highest CAGRs (14.6%, 12.4% and 10.7% respectively) when it comes to enterprise software spends. On this front, the volatile economy's impact can be clearly seen, as mature markets lag behind with Australia and Singapore having CAGRs of 9.5% and 9.4% respectively.
According to Gartner, India along with China continue to benefit from a large domestic customer base and government stimulus packages, as well as relatively low market penetration. "Asia Pacific will have a more positive outlook compared with other regions such as Europe and North America. As a result, major vendors will continue to target higher-growth markets in the region," informs Yanna Dharmasthira, research director at Gartner. China will continue to lead software demand in the region, with a 12.2% growth rate in 2009 and 14.5% growth in 2010.
India is the fourth-largest market in the APAC region, with an expected growth of 10.1% in 2009 and 11.8% growth in 2010. While the Indian economy has also been impacted by the economic downturn, India has the advantage of being less dependent on exports than China. India's largely untapped market, combined with a strong pool of IT skills, is expected to uphold local software demand.
"Asia Pacific will continue to have significant positive potential for future IT investment because of its relatively low penetration and is supported by a large base of domestic uses. With the economic slowdown, end-user organizations will prioritize IT as a way to cut costs and enhance their organizational efficiency and competitiveness, which is critical in the current environment," says Dharmasthira.
Infrastructure software represents 64.4% of enterprise software spending in Asia Pacific in 2010. The bulk of infrastructure software spending is made up of operating systems, database and security software segments. Data integration tools and virtualization software will have the fastest CAGRs in the next five years. Although application software spending will have a slower growth rate than infrastructure software spending, during the next five years it is projected to grow at a solid 9.9%. Enterprise resource planning and office suites will remain the largest segments throughout the forecast period, while Web conferencing and project and portfolio management (PPM) will have the fastest CAGRs.