According to Forrester, a research and advisory company, tech spending in the Asia Pacific (APAC) region will remain robust expecting a growth of 5.8% in 2023, despite the softening of the macroeconomic environment.
In its latest report Asia Pacific Tech Market Forecast, 2022 To 2027, Forrester said tech spend will reach $732 billion in 2023 a growth of $47 billion. Software will be the key driver in this growth as organizations continue to modernize their ICT infrastructure as the next step of their digital transformation during the COVID-19 pandemic.
“As 2023 progresses, the Asia Pacific technology market is a cauldron of opportunities set against an equally challenging backdrop, a tussle between the old and the new,” Leslie Joseph, principal analyst at Forrester, writes in a post.
The report says that 74% of growth will come from software and services as cloud adoption in the region increases. Software spending will continue to rise at a compound annual growth rate of 10.3% through 2027.
Software and cybersecurity
Amid the lingering global economic challenges, Forrester said APAC tech spend will continue to grow by 6.8% to 7.3% per year from 2024 to 2027.
In 2023, Forrester projects that tech spend in Southeast Asia will grow by 7.9% or around $47 billion, with expected growth in the five major Southeast Asian economies (Indonesia, the Philippines, Thailand, Vietnam, and Malaysia). Indonesia, Vietnam, and the Philippines will have the highest growth rates of 9.3%, 9.3%, and 8.1%, respectively.
“Asia Pacific currently accounts for 75% of global GDP growth,” Joseph said. “While we anticipate APAC tech spend growth to increase even further, it’s crucial that countries and businesses invest in the right technologies to continue to benefit from growing digital and cloud infrastructure.”
As organizations move their operations to the cloud, the need for software, whether new or upgrades, will make it the digital backbone of APAC’s technological transformation. The software industry is expected to post a CAGR of 10.3% by 2027, which would make it the largest tech category in the region.
“This growth is significant because, as our study shows, there is a direct correlation between domestic software spend and levels of national innovation,” Leslie explained.
Other notable areas, among others, that would propel growth in APAC are artificial intelligence (AI) and cybersecurity.
The hype generated by the introduction of ChatGPT sent waves into the digital world, even if AI has been around for a long time with use cases coming from industrial robotics to chatbots.
“Asian AI maturity varies widely, with countries such as Singapore and China already far ahead of the rest of the region in research into, as well as in application of, AI. The race has only begun, however,” Leslie said.
In terms of cybersecurity, organizations will increase their spend on security solutions given that APAC is the highest-attacked region globally, Forrester said.
“Alongside, operational resilience is emerging as a top priority for businesses, with a significant 72% of professionals considering it their organization’s primary focus,” Leslie said.