Invest in Asia despite US slowdown

The slowdown in the US economy gives vendors based there the perfect opportunity to invest in the IT industry's fastest-growing market -- Asia-Pacific, according to Craig Baty, Gartner's group vice president for Japan.

          The slowdown in the US economy gives vendors based there the perfect opportunity to invest in the IT industry's fastest-growing market -- Asia-Pacific, according to Craig Baty, Gartner's group vice president for Japan.

          "To cut head counts now in Asia is absolutely crazy, when it is the US where all the problems are," he said at the Gartner Summit in Singapore last week. "Companies can do more with investment in Asia now than with the same amount of investment in the US Investment in Asia is the right thing now."

          US companies should not think they can expand and contract their Asian investments at will, according to Baty.

          "Asia is a culture which remembers commitment," he says. "If companies pull out now, it will take them longer to rebuild."

          Asian economies, and the IT industry here, have only been hit selectively by the US slowdown, Baty says.

          "Hardware is down, semiconductors are down, but telecommunications and services are up," he says. "The economies here are basically strong in most cases, and demand growth for IT is still strong."

          All countries in Asia have differing profiles when it comes to their IT maturity, long-term growth prospects and investment risk factors. Overall, China and India stand out from the pack in the Asia-Pacific region, excluding Japan, according to Baty.

          "Telecommunications infrastructure investments are growing at a dramatic pace," he says. "China puts in more phone lines every three months than exist in the whole of Australia."

          India, with its English-language skills and large population, is only being held back by weak infrastructure, according to Baty.

          "India is the market to watch as the main competitor to ASEAN (Association of Southeast Asian Nations)," he says. "The center of the regional IT market is moving to India from Singapore right now."

          Singapore, which is home to ASEAN's most developed IT industry, faces several challenges, according to Baty.

          "It doesn't have large long-term growth prospects," he says. "It has a small, affluent population, and is reaching near-saturation of IT. If it was not for strong active government support for IT, the Singapore market would be showing a downturn."

          Other markets are similarly struggling, according to Baty.

          "Thailand is a basket case -- it has no coherent strategy," he says. "And where did (Malaysia's) Multimedia Supercorridor go? What's come out of that? Not much."

          Australia has a mature IT industry and is a safe location for IT investment, but the country often holds itself back, according to Baty.

          "There are six states plus a territory, who do not always work together for the good of the country," Baty says.

          Baty doubts whether Japan, easily Asia's biggest IT market, can achieve its stated goal of becoming the world's foremost IT nation within the next few years.

          "Japan's government has made these unbelievable statements about becoming the world's number one IT nation within five years," he says. "The Japan market is still dominated by the vendors, who have a stranglehold. Until CIOs in Japan rise up and revolt, there won't be a revolution there."

          Asia has between 10 and 15 years to increase its level of investment in IT to near that of the US, Baty says, after which time it will be increasingly threatened by the rise of Latin America, and eventually the Middle East and Africa, as IT markets for investment.

Join the newsletter!

Error: Please check your email address.

More about ASEANAssociation of Southeast Asian NationsGartner

Show Comments

Market Place

[]