Major Emerging IT Markets

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We hear a lot about the IT industries of foreign countries in the U.S. media, but more often than not, it’s in the context of offshore outsourcing. That’s unfortunate, because there are some really interesting developments taking place overseas in IT that have little or nothing to do with outsourcing.

“Where’s the market headed over the short-, medium- and long-term? Not surprisingly, it’s really in emerging markets around the globe,” said Eric Prothero, group vice president of research outfit IDC’s Latin America division. He is currently heading up an initiative by the company to study the IT industries of the BRIC (Brazil, Russia, India and China) nations, the pre-eminent emerging technology markets in the world today. Altogether, nearly $65 billion is being spent on information technology (hardware, software and services) in those four countries today, and that amount is expected to grow to about $110 billion by 2009.

The Russian Bear Roars
After about seven decades of totalitarian communism and a rather rough transition to a more free-market economy, Russia is starting to look impressive, especially in the IT sector. “Russia’s the fastest-growing market right now of the four,” Prothero said. “We’re expecting it to grow more than 20 percent year-on-year over the next five years.”

The main driver behind growth in IT spending in Russia is natural resources. The country has a lot of them, as just a brief glance at a world map would suggest. “What’s unique about the Russian market is that a large proportion of spending goes to what we call the extraction industry, which includes oil and minerals,” Prothero said, and added that many of the dollars (or rubles, as it were) for IT go toward hardware to build the technical infrastructure to handle drilling and mining across the nation’s gigantic land mass.

Brazil’s Emphasis on Services
Much of Brazil’s IT spending growth will be driven by its substantial manufacturing industry, which includes chemicals, pharmaceuticals and cosmetics, plastics, paper and textiles. Of the four BRIC countries, its IT sector most resembles the economically developed nations of Europe, North America and the Pacific Rim, Prothero said.

“What’s unique about Brazil as compared to Russia, India and China is that the overall proportion of the market that comes from spending on services and solutions is a lot higher,” he explained. “In the portfolio of a typical CIO in Brazil, 38 percent of his budget in a year is spent on services. That’s pretty close to the global average, which is about 40 or 41 percent. But when you take a look at markets like Russia, India and China, they’re very hardware-dependent. Between 65 and 70 percent of their overall markets is hardware, and about 20 percent is focused on services.”

India: The Outsourcing Capital
All right, so at least one of the BRIC countries relies significantly on offshoring. About two-thirds of India’s technology sector comes from this very lucrative form of business. “If you look at the domestic market in India, it’s actually about a third of the total IT market there, about $9 billion,” Prothero said. “If you add in all of what we call IT exports and BPO (business process outsourcing) types of services that India does for the rest of the world, that adds another $20 billion or so.”

Still, the country’s companies are expected to boost spending on domestic operations in the future, Prothero said. “It’s still very hardware-driven. There’s still a lot of infrastructure being invested in for PCs and servers, which is more typical for an emerging market.”

China: Enter the Dragon
At $30 billion (equivalent to all of Latin America), China is by far the biggest BRIC market, accounting for nearly half the group’s IT spending. And it’s growing, thanks largely to massive capital investments and a sizable technically capable workforce. However, this expansion has been very uneven, taking place almost exclusively on the country’s heavily populated, urbanized Pacific coastline.

“The interesting part about China is that 90 percent of the IT consumption in China comes from the eastern part of the country, which, from a geographical point of view, only takes up about 25 percent,” said Prothero, who explained that it would be comparable to all of the United States’ technology and IT personnel being confined to the East Coast. “There’s this huge other part of the country that has so much opportunity for folks to develop over time.”

Brian Summerfield is Web editor for Certification Magazine. Send him your favorite study tips and tech tricks at

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