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IDC: Asia set to get its IT groove back

The region's sagging information technology sector is expected to bounce back by the second half of the year, according to one market research firm.

SINGAPORE--Asia-Pacific's sagging information technology sector is expected to bounce back by the second half of the year, according to one market research firm.

The region, excluding Japan, is set to achieve annual revenue growth of almost 10 percent, to $72 billion, said IDC Asia-Pacific's managing director, Piyush Singh.

Credit for the upturn will go to increased spending on IT services, packaged software and data-communications equipment. Since adoption of these technologies is still in the early stage, particularly in China, the potential for growth is tremendous, Singh said here Friday at the research firm's yearly conference, entitled "Directions 2002: IT Leadership for the Rebound."

According to Singh, IT services revenue in the Asia-Pacific is projected to rise 17.5 percent, to $19 billion this year, while packaged software sales will increase 18 percent, to $9.4 billion. The data-communications equipment market is forecast to be worth $7.2 billion by year's end, up 15.6 percent from 2001.

China will single-handedly contribute almost half the region's revenue, with expected IT-related investments worth $30 billion, a $3 billion increase from last year.

In 2001, the overall IT sector in the region declined by 6 percent after the dot-com crash in April 2000 and the onset of global recession shortly thereafter.

Although unrealistic expectations for the Internet led to the slump, IDC expects that a refocus on the Web as a means of cutting costs will help fuel the rebound.

"Our notion in the first stage (of the development of the Internet) was just plain wrong," said Dane Anderson, IDC Asia-Pacific's vice president for Internet and computing systems. "This is not necessarily new commerce, but a reshuffling of the existing business to a more efficient channel."

Although Internet commerce presents a fresh opportunity for revenue, Anderson warned that a return on investment is not guaranteed. On the other hand, should companies use the Web for collaboration with business partners and customers, they will have a good chance of enhancing their bottom line.

Citing a survey of 568 companies in the Asia-Pacific conducted last September, Anderson noted that over 40 percent of the respondents said they would invest in the area of enterprise relationship management this year. Other key online investment areas will include procurement, education, customer relationship management, supply chain management and human resource management.

Irene Tham reported from Singapore.