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Emerging markets a major IT force

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IT spending continues to rise in the emerging regions of Asia/Pacific, Latin America, the Middle East & Africa, and Eastern Europe at a pace far outstripping that of the industrialised world. 

According to Gartner, these emerging regions will generate IT spending of $1,1-trillion in 2008, and will grow to $1,3-trillion in 2011, becoming a major force of IT growth worldwide.
The compound annual growth rate (CAGR) for IT spending in emerging regions for 2006 through 2011 will be 8,5% versus 4,3% for mature markets. Gartner predicts that IT will become more of a catalyst for gross domestic product (GDP) increases in the years to come via more-efficient private organisations and competitiveness among countries.
"Current GDP growth is impacting IT spending because it offers larger financial resources promoting, in many cases, more-balanced development within nations with significant consumer middle-class growth, stronger business base expansion and larger demand for IT products and services beyond Tier 1 cities,” says Luis Anavitarte, research vice-president at Gartner.
“This growing ecosystem of economics and IT also provides credibility for countries to international lenders, boosting financial resources and investments that are so critical for IT expansion.”
Brazil, Russia, India and China (BRIC) will reinforce their role as the driving forces for other emerging IT countries. BRIC will represent about 39% of all emerging markets’ GDP in 2011.
Gartner projects that IT spending for Asia/Pacific will reach $590-billion in 2011, up from $447-billion in 2007. This region continues along its strong IT adoption path, with China leading and India rapidly moving forward. China is substantially driving growth in other emerging IT markets such as Latin America and Africa, via imports and direct and portfolio investments. This creates increased opportunities for IT providers given the needs of local companies immersed in the supply chain with China.
Latin America IT spending is forecast to reach $279-billion in 2011, up from $210-billion in 2007. Latin America is the second-largest emerging region in IT spending, with rapidly maturing IT segments, such as telecommunications. IT expansion is rapidly moving beyond Tier 1 cities in many Latin American countries, with consumer and professional market segments in high demand of IT products and services.
The forecast for 2011 IT spending in Africa and the Middle East is $259-billion, up from $182-billion in 2007. Africa and the Middle East are strongly advancing in all IT areas and are narrowing the gap in IT spending with Latin America. The large size of the region, with its relatively lower IT penetration and its engagement in major telecommunication deployments, is making a strong IT trend. This region shows a forecast CAGR from 2006 through 2011 of 77%, which is the strongest of all the emerging regions.
IT spending for Eastern Europe is forecast to reach $155,billion in 2011, up from $125-billion in 2007. Eastern Europe's growth and dollar transactions are lower than in other emerging regions, as the region is the lowest in population among the four emerging regions. Russia is the largest IT economy in this region, but shows the lowest real GDP among the largest emerging countries, partially because of existing infrastructure. It faces challenges in modernizing business practices, expanding its small business base and diversifying to beyond oil, gas and minerals, which present large IT opportunities for IT providers.
“As IT spending in these emerging markets continues to grow, new opportunities for technology providers will arise. Technology providers need to be aware of the trends and realign their resources and strategies on a regional basis. Providers must do this based on IT growth potential, customer requirements in these regions and their understanding of the scenario and how it evolves,” says Anavitarte.
“Providers must also closely monitor economic developments. Despite many emerging countries being in a better fiscal situation with larger international reserves than in the past, a US and China economic slowdown could be IT deterrents as emerging markets are highly dependent on these economies.”