Asian Manufacturing IT Spending to Rise, Despite Economic Headwinds

China will lead the way, but India will overtake Korea this year to move into the second position, says study.

Though Asia's inflation will cause economic slowdown with a number of destabilizing factors that continue to plague business sentiments across the globe, automation in the manufacturing sector brings some good news.
Asian countries' governments have increasingly realized that inflation, driven by surging food and oil prices, will not go away quickly, and governments have started to take actions. The focus is on impending economic slowdown due to global factors—but information and communications technology investments in the Asia/Pacific manufacturing sector are on the rise.

Information Technology (IT) spending in the manufacturing sector in Asia-Pacific is projected to touch $33 billion by 2012 at a compounded annual growth rate (CAGR) of 9.5 per cent, with China taking the largest share, even as India elbows out Korea to move into the second spot.

New number two

India is expected to surpass Korea in terms of actual manufacturing IT spending in 2008 to take the second spot behind China. Further, the longer term growth rate for manufacturing IT spending in India is significantly higher than that of Korea. By 2012, estimates indicate that the total manufacturing IT spending in India will be about $7.4 billion, still maintaining the second spot behind China, says the IDC report “Asia/Pacific (Excluding Japan) Manufacturing IT Spending 2008-2012 Forecast.”

Manufacturing IT spending for the Asia Pacific excluding Japan (APEJ) region will maintain a steady growth through 2012, with high-tech, automotive, and consumer packaged goods (CPG) manufacturers continuing to lead the pack, says the report.

Debashis Tarafdar, senior research manager of Asia-Pacific Manufacturing Insights said, "The market forecast and analysis presented in this report reflect the gradual maturity of the APEJ manufacturing IT landscape. As manufacturers face increasing competition, uncertain business climate and various inflationary pressures, the focus will shift from mere automation to innovation and customer-centricity. IT investments emerge to add more value to businesses to support sustainable growth, rather than being just a cost center."

In India, the total IT spending is estimated to reach $35 billion by 2011, with small and medium businesses (SMBs) accounting for $8 billion to $9 billion. Of the total estimated IT spend of $35 billion, the spend on IT services will be of the order of $8.1 billion by 2011, according to IT market research organization Springboard Research.

About the author
Uday Lal Pai, udaylalpai@gmail.com, is a freelance journalist based in India.

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