IDC: Singapore IT spending down 7.8 per cent in 2002

Spending on IT in Singapore fell 7.8 per cent in 2002 compared with 2001, and the outlook for this year shows only a modest rebound, according to figures released Monday by IDC.

Total IT spending in Singapore was US$3.05 billion in 2002, down from US$3.31 billion in 2001. Slow growth over the next two years means that spending will not return to the 2001 level until 2004 at the earliest, according to IDC figures.

The past few months has seen a worsening of the outlook for business investment which has dragged the IT sector down. Growth this year may be affected by a number of factors, particularly the panic surrounding the emergence of the Severe Acute Respiratory Syndrome (SARS) virus in Asia, IDC said in its report.

“The various economic sectors are certainly linked to each other, hence an impact on the retail, travel, tourism, entertainment and events businesses due to SARS will have an impact on the overall economy and consequently on the IT market,” said Piyush Singh, managing director at IDC Asia-Pacific, in the report.

Both hardware and software markets were affected, with hardware sales falling 9.25 per cent and packaged software sales falling by 20 per cent in 2002. Service revenues were flat in 2002.

Packaged software revenues will increase at a compound annual growth rate (CAGR) of 7 per cent over the next two years, hardware revenues will increase at a CAGR of 4.6 per cent and service revenues will increase at a CAGR of 4 per cent. By 2004, total IT spending will reach US$3.34 billion, IDC said.

Singapore is a small but advanced IT market in the Asia-Pacific (excluding Japan) region. Its success in 2002 was in deploying broadband services, where subscriber numbers grew by 54 per cent in 2002 and are expected to grow by 80 per cent this year.

Another popular area is wireless LAN (Wi-Fi) connectivity where subscriber numbers for this service will more than double in 2003 to around 25,000 subscribers, IDC said.