Infotech spending by small and medium businesses (1-999 employees) is on track to reach a whopping US$95 billion this year across the Asia-Pacific region outside of Japan, with three key countries—China, South Korea and Australia—leading the pack. That represents an annual growth rate of 16% over 2006, according to the latest study by New York-based Access Market International (AMI) Partners, Inc.


The study found that the combined spending of these three countries alone—China, South Korea and Australia—will be the main drivers of IT spending growth among SMBs in the region. The trio will account for more than 60% of the total IT spend in Asia-Pacific in 2007.

“China’s burgeoning manufacturing industry will continue to provide a strong demand for IT investments,” says Ms. Ruth Garin, Singapore-based Research Analyst at AMI-Partners. “More than 50% of SMB spending in China will come from the manufacturing vertical this year. With the strong demand from within and the export or contract manufacturing, China’s growth in this space is unquestionable. As the industry grows and scales at a global level, IT investments are imperative. As such, China is incessantly building out a strong demand particularly in the hardware computing space.“

South Korea and Australia are expected to spend more on IT services along with hardware computing. As the market matures, IT requirements also change and vary. This is more evident among the medium businesses (100-999 employees) that are slowly shifting gears toward a more service-led spending. Australia’s MBs are expected to spend about 50% on IT services, while South Korea is set to see almost 30% of its IT spending on IT services, which include computing support, development and integration, IT management and process management.

Meanwhile, within the Asia-Pacific region, the majority of countries will continue to spend on building their hardware infrastructure. Heavy investments are still expected in PCs, servers, and printing and imaging devices. Among medium businesses, more than 30% of IT spending will be on computing hardware, while IT services will account for about 25%. Small businesses (1-99 employees) will give a boost to hardware computer vendors, with almost 50% of their expenditure being focused on hardware computing products. Internet spending will account for the next 20% of IT spend among small businesses.

Overall, Asia-Pacific presents a healthy IT spending prognosis in 2007,” Ms. Garin says. “Companies will expand their IT portfolio to enhance productivity and leverage and capitalize on the benefits of IT deployment. All this activity will offer a huge opportunity for IT vendors, suppliers, and service providers that aim at having a strong foothold in SMB markets in the region.”