Asia’s IT sector growth leaves North America trailing

The IT sector in the Asia-Pacific region is set to expand nearly twice as fast as its North American counterpart in the five years to 2009, driven by explosive growth in countries such as India.

A new study, carried out by research consultancy IDC for Microsoft, predicts Asia’s IT sector will contribute over 1m new jobs, $11.3bn in new tax revenue and some $350bn to the region’s economies between 2004 and 2009.

The findings, seen by the Financial Times, highlight Asia’s rising importance within the global technology industry and suggest more international companies will set up in the region to take advantage of the sector’s superior growth.

The study, which excludes China because of the paucity of reliable data, will also help Microsoft and other companies to lobby governments to crack down on piracy and foster the development of a legitimate technology industry in Asia.

According to IDC, more than 40 per cent of the Asian IT sector’s employment and tax revenues – equivalent to more than $9.8bn – in 2004 came from the “Microsoft ecosystem”, made up of the US software group, its suppliers and associated companies.

“Growth in the Asia-Pacific IT sector is rebounding and growth is expected to continue on an upward trajectory through 2009,” the study says.

Revenues generated by Asia’s IT industry are expected to increase at an average annual rate of 8.6 per cent, nearly double the economic growth forecast for the region in the 2004-09 period.

By comparison, the North American IT industry is expected to grow by 4.9 per cent a year, with Europe forecast to report average annual increases of 6.5 per cent, according to the report.

The authors of the study say Asia’s growth will be spurred by the rapid development of most of its economies, which will lead governments and companies to make more use of hardware, software and IT services.

The addition of 1m new jobs to the 3m people employed in the IT industry will be driven by the creation of more than 19,000 new companies, with the fastest growth coming from software.

Software’s contribution to the region’s IT industry is dwarfed by hardware and IT services. However, the report argues that as Asian economies mature, their need for more sophisticated IT products will fuel a rise in software spending.

In India, software growth over the period is expected to be more than 19 per cent a year.