Clearly one of the best things about having and analyst and advisory company focused on emerging market is that I have visibility and engagement across some of the most exciting markets in the globe for IT investment and innovation. Despite all the hype of China, and uptake of IT services in India, for mine, (and anyone who has listened to me in the last year or so would be aware of my view) the most exciting market for IT solutions is currently ASEAN, or South East Asia. Specifically Indonesia, the Philippines and Thailand.
All three countries are at a unique juncture in their history. All are comparatively politically stable, economically positive, and given their history and political challenges, soundly governed. I have been waiting for this intersection for a long time.
Some Economic Comparisons
To quantify the opportunity, these three countries have a combined total of 370 million with 250 million people in Indonesia alone. The GDP of the three countries is on a PPP measure approximately $2 trillion. This is larger than Italy, South Korea and only a hundred billion or dollars less than the size of the UK economy.
Key economic indicators include low single digit unemployment (although it is clearly arguable that there is underemployment),sustained economic growth and increasing consumer expenditure and incomes.
Each country has specific industry sectors that allow it to have strong position in the regional economy.
Indonesia – Natural Resources, Retail, Financial Services
Thailand – Manufacturing, Telecommunications
Philippines – Professional Services, Telecommunications, Public Sector
Some challenges include the immaturity of trade based economic metrics in the Philippines and Indonesian economies (Thailand is very trade orientated, in part due to a significant manufacturing sector, e.g. Motor Vehicles), growth in Thailand and Foreign Direct Investment (FDI) in Thailand and the Philippines.
The Technology Sectors
Growth is anticipated across the board for technology. The key industry investment hot points of analytics, mobility, social and cloud all apply to varying levels. Interest in analytics is particularly strong. In Indonesia for example, we see significant interest in natural resource organisations (a key vertical for capioIT) focused on analytics to enable competitive advantage in the oil and gas industry. Cisco skills are at a premium in Thailand, and there is rapid investment in the telecommunications requirement for the Philippines to not just service local telcos but also the offshore BPO space.
According to capioIT, every key IT Services market is growing at double digit rates, with a passionate number of providers using leap frog steps to get technologically ahead of rivals.
Skills in technology vary. The Philippines is excellent at a global stage. In my 12 years as an analyst I have seen the skills level of Thailand and Indonesia improve at a rapid rate. Business English is improving and technical skills have risen as major IT providers such as Cisco, SAP and Microsoft have invested in ensuring that partners have enhanced training capabilities and focus. Local vendors are perhaps strongest in Thailand, however BPO has allowed some strong growth in the Philippines of local vendors. This is an area in which Indonesia has been unable to really develop strong local providers who act as more than just VAR’s or distributors.
Doing business is still hard in some of these markets. Like every other market, it requires local relationships, local contacts and an understanding of the political process. However, the 370 million consumers cannot be wrong. The opportunity is just starting to crystallise. You must remember it is an economy that very soon will overtake the United Kingdom in size. Add Vietnam in coming years and you have a powerhouse of markets that will overshadow virtually every other global opportunity.
If you require further information, please contact Phil Hassey, Founder capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology in emerging markets. Phil may be contacted by email below,