New world order for IT emerging — IDC

China and India will be among the top four economies in 2050, says IDC

North America’s share of the IT market is shrinking as China’s share grows, says Philippe de Marcillac, president of the international business unit at research company IDC. He forecasts that the IT market will more and more resemble the telco services market, where North America’s and Europe’s market shares are decreasing while the emerging countries’ market share is growing rapidly.

In 2006, GDP growth in China will reach 9.2% and India’s 8.1%, he says. In contrast, New Zealand’s GDP growth is forecasted to be 2.2%, the US will have a GDP growth of 3.2% and the EU’s GDP will grow only 2.1%.

“The growth in the EU is going down, possibly due to lack of investment,” he says.

Japan is decreasing slightly by 2.3%.

Some of the factors that affect growth in the IT market are availability of talent and the increasing cost of labour, says de Marcillac. China currently has five times as many engineering graduates as the US, he says. The emerging countries also have an advantage in demographics. Twenty-seven percent of the population in emerging countries are between 15 and 29 — the “MySpace generation” as de Marcillac calls it — compared to 18% of the population in mature countries. Thirty percent of the population in the emerging countries are under 15, while the equivalent number in mature countries is 15%.

“China is the fourth largest economy this year,” says de Marcillac. “It is the number one high tech exporter. China has overtaken Germany as the third largest telco services market, worth US$72 billion (NZ $115 billion). China is also the sixth largest IT market, worth US$35 billion.”

China is also a major manufacturing centre, but the US is still the leader.

Among the challenges that China faces are competition from India and other emerging Asian countries, and demographics, says de Marcillac. He says that inflation is definitely coming in China due to the one child per family policy, which will result in a declining working population, but at the same time there are a lot of workers tied up in “useless employments” as an alternative to unemployment.

India is another country with high potential, he says.

“India is a very important part of the offshore market.”

The country’s IT revenue in 2005 was just over US$30 billion. The forecast for 2006 is close to US$40 billion, and the forecast for 2009 is over US$60 billion.

The IT spending in the BRIC-countries — Brazil, Russia, India and China — is expected to rise from US$50 billion in 2004 to US$115 billion in 2009, says de Marcillac.

“These markets will have the same share as Japan in 2009,” he says.

The top economies in 2050 are very likely to be China, followed by the US and India. Far behind come Japan, Brazil, Russia and then the EU, according to de Marcillac.

“But it is also possible that India will be number one,” he says.

Caveats that could hold the emerging markets back include inflation, insolvency, inefficiency, insurrection, inept administration, corruption and lack of infrastructure, he says.

De Marcillac foresees significant changes in IT as we know it today. For example, datacentres will move towards virtualisation and SOA. Trends in the software area are new business models, software for rent and development of open source. Phone, IP and mobility networks will converge, as will clients.

De Marcillac spoke at the recent IDC Directions conference in Auckland.

Join the newsletter!

Error: Please check your email address.

Tags telco marketindiaChinait market

More about EUIDC Australia

Show Comments

Market Place

[]