Local ICT vendors in the emerging economies of the Asia Pacific (excluding Japan) or APEJ have grown in scale and sophistication over the last few years. However, established international brands are still sought after by the public sector with their imprints in complex public sector projects in developed countries, says IDC. In fact, IDC believes that for MNCs to sell successfully to government agencies, the formula would be to partner with local ICT vendors that are established and have strong presence in these markets.
In the IDC study “Local Technology Partner Profiles for the Public Sector in Emerging Asia Pacific Economies, the research firm profiles the public sector developments of four emerging countries in APEJ -- Indonesia, the Philippines, Thailand, and Vietnam -- and up-and-coming local ICT companies in these economies.
The World Bank predicts that developing countries will lead the global recovery as they are expected to expand almost twice as fast as high-income countries. IDC projects that the total public sector ICT spending of the four developing countries discussed in this study will grow at a compound annual growth rate (CAGR) of 6.7% over the 2009-2013 forecast period, reaching US$24.6 billion by 2013. Hardware spending will account for the largest percentage of the total ICT public sector spending (46.7%). However, software and services spending are expected to post CAGRs of 8.3% and 9% respectively between 2009 and 2013 in all the four countries discussed in this study, reflecting the increasing technological maturity of these economies.
"Forging robust partnerships with local vendors will generate win-win situations for foreign technology companies as they can avoid exerting circuitous efforts when reaching out to pertinent customers. In addition, it will also ease the process of cultural immersion for the MNCs. Local vendors, on the other hand, will benefit from strong technological support and transfer. In essence, local ICT vendors hold the key to connecting the dots to success for foreign technology companies wanting to break into the public sector of developing Southeast Asia countries,” says Janet Chiew, research manager at IDC Government Insights Asia Pacific.
She adds, "The growth of domestic ICT powerhouses in these countries with experience in large-scale, national-level projects will provide an attractive platform for multinational corporations (MNCs) to extend their footprint and cultivate the Southeast Asia market."