Local companies’ spending on IT is predicted to grow almost threefold in 2019 from spending in 2013 thanks to the growing domestic economy and better telecommunications infrastructure, according to a report.
“We predict that enterprises’ IT spending will reach US$3.8 billion in 2019,” said Ajay Sunder, vice president for ICT practice in the Asia Pacific region at research firm Frost & Sullivan.
Last year, IT spending among domestic companies stood at around $1.6 billion, he added. The increase in IT spending would be driven by better economic conditions and the growing number of people who connect to each other digitally, Ajay said.
Indonesia will have around 1.7 billion connected devices by 2020 with over 470 million mobile subscribers and over 200 million active Internet users, according to the research firm.
Indonesian Telematics Society (Mastel) chairman Setyanto Santosa lauded the government’s $22-billion drive for a five-year broadband project as it would help improve ICT infrastructure in the country.
With higher fixed-broadband penetration, as planned in the project road map, the country would have faster Internet — which would encourage more investment in ICT, he added.
Frost & Sullivan has predicted that cloud and data center services will be the growth engine for the enterprises’ IT spending with a growth rate of 605 percent and 317 percent from 2013, respectively.
The growing spending in cloud services was mainly due to huge adoption by small and medium enterprises, Ajay said.
Google has said previously that small and medium businesses, which account for 90 percent of its market in Indonesia, are yet to fully take advantage of the potential of online advertising.
Indonesia’s Internet-based startups would also significantly grow in the near future as there was likely continuing investment for e-commerce players in the country’s growing market, said Frost & Sullivan associate director for ICT consulting in the Asia Pacific, Spike Choo.
Last year alone, local e-commerce giant Tokopedia secured $100 million in funding from Japanese SoftBank Corp. and US-based venture capital Sequoia Capital.
In addition, Frost & Sullivan has estimated that banking, financial services and insurances (BFSI) will remain the largest IT spender, with total spending of $1.04 billion or around 27 percent of total estimated spending.
“Meanwhile, Indonesia’s enterprises will move their data back to Asia […], in which BFSI companies will complete [the action] sometime between next year and 2017,” Ajay said.
“[Banks] are also looking for a second location — which is outside Jakarta — and many of them said that they own private data centers […],” he said.