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Climbing e-Economy, Driving Global IT Investments

Climbing e-Economy, Driving Global IT Investments

Climbing e-Economy, Driving Global IT Investments

According to global research company Zinnov, rise of E+ economies from Asia are set to drive global IT investments ~India, China, Malaysia, Indonesia and Philippines to account for 35% of the total global IT spend by 2020~

Keeping in mind the ongoing increase in the e-economy driven activities, Zinnov, a market expansion and globalization advisory firm said in its report that the rise of e-economies from Asia are set to drive global IT investments.

This has been revealed in its latest study on emerging economies titled, ‘E+ Economies & Winning Strategies’. The report encapsulates the spending patterns and IT investments of emerging+ economies namely India, China, Malaysia, Indonesia & Philippines which constitute 40% of the total world population.

As per the study, growing economic powers with sizable consumptions will lead the next wave of technology investments. Expanding base of globally competitive large and mid-size enterprises, strong base of growing domestic micro & small companies, and growth of enabling IT infrastructure are among the key factors for the exponential growth of IT spending in E+ economies.

Enterprise led opportunities in E+ economy’s is 3 to 4 times of the U.S market, according to the released report. The total number of Forbes 2000 enterprises from E+ economies, are set to grow by 300% by 2020; while the number of U.S enterprises in the list could face a decline. China boasts a strong economy with 95,000 large & mid size enterprises followed by India with 55,000, while U.S stands at 41,000 enterprises only.

The report further states that the strong internet and mobile infrastructure is enabling IT investment growth in E+ countries. As per the findings, E+ economies will have a potential internet user base of 2,256 million by 2020. China with 42% penetration has a current internet user base of 564 million while developed economy of U.S stands at 244 million with 78% penetration. India stands second after China with a 157 million internet user base but with a low penetration of 11% which shows a tremendous growth opportunity.

Smartphone users in E+ economies, is also growing at a strong pace and it is likely to reach 1,795 million by 2020. China leads the E+ with 330 million smart phone users followed by 52 million in Indonesia. India stands third with 44 million smart phone users. As per the report, increasing data consumption and smart phone penetration is creating newer opportunities in the telecom space.

Speaking about the findings, Praveen Bhadada, Director-Market Expansion, Zinnov, said, “While the basic IT infrastructure is fast growing in E+ economies, mobile internet is increasingly becoming key as compared to desktop internet in these countries. Mobile internet VAS revenues are expected to be over $22 Billion by 2016 and presents great opportunity for technology companies”

Further commenting on the Winning Strategies for Emerging Markets, Mr. Praveen Bhadada added, “Technology companies should target large government projects for the next wave of technology investments in E+ economies. While leveraging influencer models can further drive IT adoption in the key sectors, it is important to re-define distribution to suit the local needs of the customers. Creating an ecosystem for market development and focus on region specific deep consumer insights & localization are must have’s to win these markets.”

Trends in various sectors

As per the study, the key verticals which will boost the growth of IT investments in E+ economies namely India, China, Malaysia, Indonesia & Philippines are Telecom, Healthcare, Energy, Retail, Education and Banking; these sectors constitute more than 60% of emerging+ markets’ GDP. Key IT trends such as Big Data, Cloud and Mobility are gaining strategic importance in these sectors which is likely to further strengthen the IT growth in E+ economies.

Energy

E+ economies are aggressively investing in Oil & Gas exploration. 75% of oil and gas demand in India and China is to be fulfilled by imports while 75% of the countries’ reserves remain unexplored. The power consumption in E+ economies is likely to double by 2020, hence is driving the need of aggressive technology investments.

Unorganized Retail Sector

Unorganized retail sector in E+ countries is forcing many global FMCG companies to develop large distribution networks. The share of unorganized retail market is as high as 92% in India as compared to 80% in China and 78% in Indonesia. The high growth in e-commerce is resulting into increased local competition from these markets.

Education

100 million primary and secondary education student drop-outs in 2012 in E+ economies is among the top drivers of transformation in education spending. India has a shortage of 200k schools and the average spending per graduate in India & Indonesia is still approximately 10% of the U.S average. In reaction, the education spending in E+ economies stands at $180 billion; second highest after defense and presents great potential for technology investments.

Healthcare

E+ economies are increasingly gaining traction to become global hubs for healthcare industry. Pharmaceutical & medical equipment market in E+ is set to reach $300 billion by 2020. 70% of the top 20 pharmaceutical companies have set up/expanded R&D centers in E+ since 2006. This is resulting into aggressive focus from global technology companies to address the market opportunities

Banking

Banking assets in E+ economies is likely to double to $40.6 trillion. A huge opportunity lies within the E+ economies with 1.4 billion unbanked population, low penetration and 1/3rd of bank branches per 10,000 people compared to developed markets. Mobile & internet banking along with m-commerce are rapidly growing in E+ economies

Telecom

The E+ economies are witnessing an exponential increase in smart phone usage and data consumption which is creating a fast paced growth and new opportunities in the telecom space. The E+ economies set to have a 400 million strong mobile workforce with more than 70% of employees bringing their own devices to work by 2020

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About Kalpana Singhal

Kalpana Singhal is Co-Founder & Editor in Chief at Techplus Media. She is an Innovative & challenger Entrepreneur who started her journey from corporate communication in early 2001 with I.T. Industry followed by Lead - Editorial at BeautyIndia.in in 2008 . You can follow her on twitter, Google+ and Facebook.

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