The Hindu Business Line : IDC sees 9.5% growth in manufacturing IT spends

‘IT investments emerge to add more value to businesses to support sustainable growth, rather than being just a cost centre. The focus will shift to innovation’.

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New Delhi, July 2

IT spends in 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.

“India is expected to surpass Korea both in terms of actual manufacturing IT spending in 2008 to take the second spot behind China, as well as the longer term growth rate which is significantly higher than that of Korea. By 2012, our estimates indicate that the total manufacturing IT spending in India will be about $7.4 billion, still maintaining the second spot behind China,” IDC said.

Destabilising factors

The year 2007 had been fraught with destabilising factors such as the financial market crisis, a weak US dollar, rising cost of oil, concerns over a global economic slowdown, inflationary pressures from food and commodity prices, and increase in labour costs in key APEJ economies.

“However, increased globalisation and competitive market pressures will push APEJ (Asia Pacific excluding Japan) manufacturers to become more agile and resilient to market changes, and invest in IT to foster innovation, collaboration, and sustainability,” Mr Debashis Tarafdar, Senior Research Manager of Asia/Pacific Manufacturing Insights in IDC said.

Steady growth

According to IDC, APEJ manufacturing IT spend would maintain a steady growth through 2012, with high-tech, automotive, and consumer packaged goods manufacturers leading the pack.

Similar to 2007, hardware spending would continue to take up the lion’s share of the overall APEJ manufacturing IT budget, though IT services is expected to register the strongest growth over the next five years, indicating the increasing maturity of the APEJ manufacturing IT landscape.

“The market forecast and analysis reflects the gradual maturity of 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 centre,” IDC added.

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