Big opportunity for Southeast Asia IT industry

Despite its late start in the global economic race, Southeast Asia is now considered to have one of the world’s fastest growth rates, with an average GDP of more than 6% over the past decade.

The World Bank forecasts that after the economic recession, countries such as the Philippines, Myanmar, Cambodia and Laos will begin to recover their GDP momentum, and can expect growth rates of more than 7% in 2015.

Source: World Bank

Southeast Asia is quickly catching up with worldwide advances in information technology (IT), and enjoys strong growth and development in that sector. According to a forecast by Gartner, the total value of IT services in Singapore, Thailand, Malaysia and Indonesia between now and 2017 will be $74 billion. Big data and cloud computing are driving progress in banking, healthcare, telecommunications and distribution.

Forecasted data on the IT services market

Source: Gartner

Southeast Asia has also become an attractive destination for outsourcing. According to an early-2014 Gartner survey, 3 out of 5 new offshore outsourcing locations in the Asia-Pacific region come from the southeast, and this includes the Philippines, Vietnam and Malaysia. Meanwhile, the Tholons 2014 Top 100 Outsourcing Destinations Report found 14 Southeast Asian cities on the list, seven of them in the Philippines.

In addition, at the TELMIN 10 meeting of telecoms and IT ministers, the master plan for ASEAN’s ICT development orientation was approved. Information communications technology was considered an important tool for the region’s economic growth, as well as a bridge to connect ASEAN countries with development trends happening in the rest of the world.

This has helped to create demand for similar regional conferences, such as TELMIN and ASOCIO, and showed ministers’ commitment to creating an active IT environment. Thanks to that, regional enterprises will also have a chance to participate in building IT systems for the region, and even produce their own software solutions.

Investors see Southeast Asia as full of IT investment potential, just as China was at the end of the last decade. Technological enterprises in this region now see a big development opportunity, the first of which is to meet IT demand. However, to take advantages of these opportunities, companies will need to catch up quickly on the scale, capacity and human resources required by the latest technological trends.

Many large IT companies are anxious to contribute to ASEAN’s rapid development. FPT, for example, one of Vietnam’s leading corporations, has been funding research into up-to-date social, mobile, analytics and cloud (SMAC) solutions for socio-economic sectors such as banking, telecommunications and healthcare. In 2013, the company made a profit of $119 million.

CSE Global Ltd, a Singapore-based IT firm with 1,300 employees working in 17 countries, provides systems integration solutions in sectors as diverse as automation, telecommunications and the environment. In 2013, its revenue was SGD 416 million.

Diversification and specialization is the future of technology in Southeast Asia. Besides outsourcing, IT companies will channel their resources and initiative into sectors such as solutions development, system integration and SMAC. We can expect this to be an essential step to improving the region’s status on the world stage. – Rappler.com

 

This article was published in collaboration with the World Economic Forum (WEF). Truong Gia Binh is the Chairman of FPT Corporation and a Foundation Member of the WEF.

The Philippines is hosting the World Economic Forum on East Asia from May 21 to 23, 2014 at the Makati Shangri-La Hotel. For updates about the forum, visit Rappler's microsite.

Modern map of South East Asia image from Shutterstock