Boston, MA -- (ReleaseWire) -- 06/02/2014 -- the Indonesian IT market is forecast to be a regional outperformer over the medium term with IT market growth benefitting from strong economic growth, a low PC penetration rate and an emerging middle class. Retail hardware, enterprise software and cloud computing are expected to be key drivers of medium-term growth. The retail market will be the major driver of growth, with PC penetration estimated at below 10% in 2012, meaning there is significant growth potential from first-time buyers and upgrades/ personal devices. However, there is short-to-medium term downside in Indonesia as vendors face depreciation of the rupiah, which has raised the cost of dollar denominated hardware and software imports, or required vendors to absorb the costs. In the immediate future, IT spending is forecast to increase to IDR71.7trn in 2014, up 12.3% from 2013, with the IT market accounting for 0.7% of GDP.
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Headline Expenditure Projections
Computer Hardware Sales: IDR50.5trn in 2014 to IDR77.7trn in 2018, at a compound annual growth rate (CAGR) of 11.3% in local currency terms. Availability of low-cost tablets will maintain positive growth and we expect stronger medium-term growth as the economic environment becomes more supportive.
Software sales: IDR8.9trn in 2014 to IDR16.0trn in 2018, at a CAGR of 15.9% in local currency terms. Enterprise software deployments will drive spending, with modernisation in the manufacturing, mining and tourism verticals offering the greatest opportunities to vendors.
IT Services Sales: IDR12.3trn in 2014 to IDR20.8trn in 2018, at a CAGR of 14.0% in local currency terms. Cloud service adoption remains low in 2014, which could be worth more than IDR15.5trn by 2018.
Key Trends & Developments
Cloud computing adoption remains limited in Indonesia, with Fujitsu Indonesia Country Head of Infrastructure Services and Solution (ISS) Dewi Mulia Karnadi, citing network infrastructure quality and cyber security as bottlenecks to wider deployment in December 2013. In 2013 it was reported that Indonesia was responsible for 38% of the world's malicious internet traffic, surpassing China as the leading root of online attacks. This has grown from only 0.7% of recorded attacks 12 months previously, according to the US-based Akamai Technologies. The reasons behind the growth are under debate, but the implications of a dramatic increase in online attacks have worried officials. Cyber security is notoriously weak in Indonesia with network-heavy industries, such as oil and gas, most susceptible to data phishing attempts. There is however scope for rapid growth in cloud deployments as the network quality and cyber security climate strengthens.
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