Asia Pacific manufacturing IT spending to reach $34 b in 2014 says IDC

Although hardware spending will continue to take up the lion’s share of the overall Asia/Pacific (excluding Japan) or APEJ manufacturing IT spending budget, software and IT services are expected to register double digaxit growth over the next five years, indicating the increasing maturity of the APEJ manufacturing IT landscape.

Overall, IT spending among APEJ manufacturers is projected to grow at a compound annual growth rate (CAGR) of 11.3% between 2010 and 2014.

Looking back at 2009, the world was emerging from the worst recession since World War II. The impact on manufacturers in the APEJ region was acute with companies experiencing tremendous pressures on profitability as they see orders collapse and unsold inventory increase.

As we move into 2010, due in part to massive government stimuli across the globe, a depression was avoided, and we have seen a cautious optimism return to the world, including the manufacturing sector. However, there are still risks to the world economy with issues in the European economy, asset bubbles in Asia and a largely jobless recovery in the U.S. The manufacturing environment is becoming ever more challenging; customers are giving manufacturers shorter lead times but at the same time, they are making increasing demands on manufacturers for more variation at lower prices.

In Singapore, the manufacturing IT market will grow at a moderate pace of 4.7% CAGR over the next five years, with high-tech equipment, chemical, and industrial machinery sectors occupying the top three positions for 2011 share of manufacturing IT spend. Consumer products and aerospace/defense sectors will be the other two sectors likely to have relatively large IT initiatives as customers continue to demand higher service levels and shorter lead-times.

Debashis Tarafdar, Associate Research Director at IDC Manufacturing Insights Asia/Pacific says, “Increased globalization and competitive market pressures have pushed APEJ manufacturers to become more reliable, responsive and responsible. Asian manufacturers today are investing in technology to improve productivity, efficiency and top-line growth and using it as an enabler to help their businesses make better decisions and reduce risk. The focus in 2009 was on cost reduction but productivity, growth and expansion will dominate the operational initiatives of manufacturers in the region in the next 12-18 months.”