D

espite unfriendly economic conditions, a recent report has indicated that spending on information technology (IT) in Indonesia will grow by 12.5 percent thanks to larger purchases by companies outside the banking and telecommunication sectors '€” the two common big spenders.

'€œWe predict IT spending to reach US$16.8 billion by the end of the year,'€ said International Data Corporation (IDC) Indonesia head of operations Sudev Bangah.

The figure, he added, reflected a 12.5 percent increase on spending in 2013.

Sudev added that individual consumers would contribute an estimated $7.81 billion to overall IT spending this year.

As for the companies, the top three spenders by sector would be media and communications; banking, finance and insurance; and manufacturing, he added.

Based on IDC data, the three sectors would spend a combined $6.27 billion, with media and communications spending nearly $4 billion. The IT consumption by banking, finance and insurance would hit $1.2billion, with manufacturing reaching $1.08 billion.

'€œThis year, we will see the manufacturing sector join the billion dollars club,'€ he said, attributing the feat to the increase in foreign direct investment (FDI) in that sector.

Bangah further said that the increased spending by companies in the manufacturing sector was partly the reason why IT spending would still see growth this year.

Meanwhile, the IT budgets of telecommunications providers and banks would not differ greatly compared to spending from the previous year, considering that the telecommunication and banking sectors would see slow growth, he noted.

In addition, IT solution providers still consider banks and telecommunication providers as their primary clients.

'€œTwo of the top three telecommunication providers are our clients,'€ Teradata Indonesia president director Erwin Z. Achir said, adding that they served approximately seven main clients in 2013.

Teradata offers tailored IT solutions services, with the main focus on big data and business applications, to enterprises in Indonesia.

He added that Teradata'€™s Indonesian subsidiary was the '€œfastest growing subsidiary in Southeast Asia'€, with its double digit annual growth.

'€œMy target in 2015 is to have around six of the top banks as our clients,'€ he said.

Bangah further said that hardware remained the priority purchase, absorbing up to 86.9 percent of total estimated spending.

Trailing were spending on IT services and software, to which 8.6 percent and 4.4 percent of spending would respectively head, IDC data showed.

According to Bangah, hardware would still dominate spending due to the '€œfirst-time buyer phenomenon'€, which also existed in the enterprise segment.

'€œIT services are still small because many people in Indonesia are still discovering IT, and the first entry to that is hardware,'€ he said, adding that the situation generally held true for emerging economies.

EMC Indonesia country manager Adi J. Rusli concurred that IT infrastructure provision still generated up to 80 percent of business.

EMC is a provider of IT solutions, including those related to cloud computing, data centers and security.

'€œIndonesia is still outside the cutting edge in terms of the maturity and level of technological adoption,'€ he said.

Thus, many of the big, global trends such as cloud computing and big data was not as observable in Indonesia, he noted.

'€œFor example, only roughly 20 percent of enterprises have applied technology related to server virtualization,'€ he noted.