China spends up big in IT communication markets

Worldwide vertical market IT spending is projected to be flat this year totalling US$2.7 trillion which is a 0.5 percent increase from 2008, according to Gartner. The Asia Pacific, however is forecasted to grow 2.9 percent, well ahead of the worldwide rate. The communications industry in the Asia Pacific will have the biggest slice of the pie as India and China continue to spend on 3G and next-generation telecommunication infrastructure.

Derry Finkeldey, principal research analyst at Gartner, said she saw the communications industry as the real bright spot in the region. She cited the total investment in the region to total around US$58 billion.

"China is still quite strong," said Finkeldey. "Last year the government in China released new 3G licences which means there will be spending to build out 3G networks. It's going to be quite significant," she said.

She added: "There's going to be considerable investment in building out those 3G networks in the next three years or so and a lot of it is associated with IT services. Software and hardware obviously need to be purchased to make it all run, particularly around things such as billing systems and customer management systems."

Globally, utilities, healthcare and government are forecasted to be the strongest-growing segments this year. "Internal spending, hardware and system integration in the financial sector were particularly hard hit in 2008 and will continue suffering through 2009," said John-David Lovelock, research vice president for Gartner. "In contrast, healthcare grew 8.3 percent worldwide in 2008, and utilities grew 7.7 percent."

The healthcare industry is expected to post the second-highest increase this year globally, with 2.2 percent growth, following utilities.Countries in which healthcare is primarily publicly funded will be sheltered from the worst of the economic turmoil, and governments tend to keep healthcare funding at least stable during the worst economic conditions, according to Gartner.

China again will drive the growth for the Asia Pacific's healthcare IT spending, says Finkeldey. She said it's also an area where the government is injecting an enormous amount of money.

"They're just pouring money into it," said Finkeldey. "I think 2000 new hospitals are being built in the next few years and they already have something like 117,000. They're looking at building out another 2000 hospitals in every region so at least one national standard hospital is available. Health information systems are a hot area."

The forecast released last month is probably looking to be revised downward in the next round of forecasting due to the volatility of the global markets, said Finkeldey.

"From the second half of 2008 there's been a lot of revising as we get more information. Towards the end of last year Asia was still fairly upbeat but there's been some quite dramatic changes in economic performance in Asia, particularly in the manufacturing sector across the board that has downstream flows on everything.

"The various teams are revising their previous forecasts. There will still be growth in Asia Pacific so we do see growth, but it will be revised slightly downwards."