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Singapore Information Technology Report Q1 2012
Business Monitor International, February 2012, Pages: 61
Singapore's IT market is projected to record 6% growth in 2012, with slower growth compared with 2011. BMI expects the total size of the domestic IT market to increase from US$6.4bn in 2012 to US$9.6bn in 2016, with drivers including a new government ICT masterplan and cloud computing deployments fuelled by Singapore's Next Generation Nationwide Broadband Network roll-out.
In 2012, a slowing economy is expected to mean moderate growth in IT spending. PC sales stagnated in annualised terms in H111 due to price-cutting. While the sustainability of the global economic recovery is less certain over the next two years, cloud computing and government spending will help to sustain Singapore's IT market in the long term.
With the Intelligent Nation 2015 (iN2015) plan placing IT at the heart of the government's strategy to improve competitiveness, complex government tenders will drive considerable spending in years to come in areas such as education, e-government, transport and healthcare.
Healthcare IT is a major focus for IT vendors in the Singaporean market. Singapore's Ministry of Health is overseeing the creation of a National Health Electronic Register (NHER), which aims to have all healthcare institutions, public and private, linked to the same information system. The NHER is a key component of the government's healthcare plan. An initial launch for the new system was expected in April 2011, after the first phase of the project was launched in November 2010.
In 2011, the Singaporean government continued to implement its eGovernment Masterplan, which has an emphasis on participation, through the utilisation of social networking tools and greater sharing of data. The greater use of data analytics is likely to be one aspect of this programme. The government is also designing a new ICT infrastructure for government, which uses cloud computing and energy efficient technologies.
Company News Cloud computing is on the rise in Singapore, boosted by the city-state's excellent telecoms infrastructure. In 2011, SingTel is expected to roll out a wider range of cloud computing products aimed at small and medium-sized enterprises (SMEs), including solutions for human resources and logistics management. The company has forecast a cloud services CAGR of around 70% over the next three years. In May 2011 SingTel, in partnership with Canon, launched a cloud-based printing service.
During H111 major players British Telecom Global Services (BTGS) and Tata Communications launched cloud services in the city. British Telecom's Next Generation Contact Centre (NGCC) is a portfolio of cloud-based services for call centres. Meanwhile, Indian giant Tata Communications has made Singapore a regional hub for its cloud services, InstaCompute.
Meanwhile, Microsoft was promoting the Office 365 module of its BPOS (Business Productivity Online Suite) which was recently launched in Singapore. Among early adopters of the online software in Singapore was Kah Motor, the Singapore and Malaysia distributor for Honda cars. Microsoft believes that the cloud offering will not cannibalise its existing software business.
Computer Sales Singaporean spending on IT hardware is projected at US$2.8bn in 2012 with mid-single-digit growth continuing from 2011. In H111, vendors reported stagnant growth compared with the same period of 2010. One factor behind the flatlining was inventory clearing, with retailers cutting prices to clear stock, but there were also base effects, compared with strong growth in H110.
According to data from the IDA, 74% of Singaporean households now have a PC, and, following demand growth of close to 20% over 2001-2005, this level of saturation would be expected to act as a constraint. However, consumers have appeared willing to spend on upgrading their notebook computers, and there is a trend for households to own more than one unit. Given the massive growth in broadband penetration expected in future, the increasing number of products and services available on the internet will be a major driver of demand for computer hardware.
Software Spending on software is projected at US$936mn in 2012, up from US$865mn in 2011. Software accounted for about 14% of the domestic IT market in 2011. As the market focal point evolves from hardware to services and solutions, the share of IT spending accounted for by software should rise to nearly 17% by 2016, with enterprises seeking greater leverage from their investments.
Over the forecast period, enterprise resource planning (ERP), customer relationship management (CRM) and other e-business applications will find increasing popularity with the SME market as companies look to enhance productivity through the automation of essential functions. Given the focus of many businesses on controlling costs, the pay-on-demand software-as-a-service (SaaS) model has grown in popularity and spread beyond the initial core application area of CRM.
IT Services In 2012, the IT services sector is projected to be worth US$2.6bn. IT services' CAGR is expected to be 12% over 2012-2016. One significant demand driver will be organisations looking for help to utilise efficiencies from cloud computing, with evidence that demand for cloud computing was not restricted to large organisations but has spread to the Singaporean SME sector.
There should be opportunities in key IT spending verticals such as telecoms, government, healthcare and logistics. Regulatory compliance will continue to require spending by banks and investment by foreign banks is spurring new technology investments by local players. Expanding technology adoption in the logistics industry and public transport will be a source of IT services projects.
E-Readiness The National Broadband Network (NBN) is at the core of the government's iN2015 initiative. The contract for the first phase of the project, which will link businesses, schools, hospitals and homes, involves 45% of the network being rolled out within three years and the entire network by 2012. The IDA said that within two years, 60% of homes and offices should have access to the network.
The second phase of the project will have an emphasis on pervasiveness and the provision of wireless access at affordable rates. The project is expected to lead to 68% broadband penetration by 2012. The NBN will be capable of offering high speeds of 1Gbps or more and aims to provide affordable broadband for 95% of all homes and businesses by 2012.
Key Issues For Investors
- Further government-enforced reductions in labour costs and mandatory corporate contributions to pensions.
- Cuts to corporate and income taxes if the government sticks to its budgetary commitment to lower business costs.
- Competitiveness is at risk of being eroded by cheap labour in China.
Business Monitor International's Singapore Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Singapore's information technology industry.
Singapore IT Sector SWOT
Singapore Telecom’s SWOT
Singapore Political SWOT
Singapore Economic SWOT
Singapore Business Environment SWOT
Business Environment Ratings
Regional IT Business Environment Ratings
Asia IT Markets Overview
IT Growth And Drivers
Sectors And Verticals
Singapore Market Overview
Table: Singapore's IT Sector – Historical Data & Forecasts (US$mn Unless Otherwise Stated)
Industry Forecast Internet
Table: Internet – Historical Data & Forecasts, 2009-2016
Table: Singapore – Economic Activity
Singapore Computer Systems
Country Snapshot: Singapore Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2000-2030
Section 2: Education And Healthcare
Table: Education, 2000-2004
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
How We Generate Our Industry Forecasts
- IBM Singapore
- Hewlett-Packard Singapore
- Chartered Semiconductors
- Singapore Computer Systems
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