- 74% of growth will come from software and services
- APAC’s digital growth is witnessing the rise of digital nationalism
According to Forrester’s Asia Pacific Tech Market Forecast, 2022 To 2027, technology spending in Asia Pacific (APAC) will grow 5.8% to reach US$732 billion in 2023.
Forrester is a research and advisory company that offers various services, including research, consulting, and events.
The report says 74% of growth will come from software and services as cloud adoption in the region increases. Additionally, software spending will continue to rise at a compound annual growth rate of 10.3% through 2027.
Despite challenges including fragile post-pandemic supply chains; a shortage of science, technology, and engineering workers; and questions around how quickly China can restart its economy, Forrester says APAC tech spending will continue to grow by 6.8% to 7.3% per year from 2024 to 2027.
“Asia Pacific currently accounts for 75% of global GDP growth,” said Leslie Joseph (pic), principal analyst at Forrester. “While we anticipate APAC tech spend growth to increase even further, it’s crucial that countries and businesses invest in the right technologies to continue to benefit from growing digital and cloud infrastructure.”
In a Forrester blog post, Joseph wrote that several compelling forces fuel this surge.
With a projected growth of 9.4%, the software is emerging as the digital backbone of APAC’s technological transformation. This sector is expected to grow and eventually become the most significant tech category in the region.
Despite tech consulting and systems integration services tech seeing a slight slowdown to 7.0% growth in 2023, outsourcing is projected to grow faster at 8.3% in 2023.
The growth in the communications equipment sector is predicted to fall below pre-pandemic levels, but new 5G markets such as India offer some hope. As Chinese enterprise spending on cloud infrastructure remains high, this sector will see 3.0% growth.
Although global PC shipments are experiencing a downturn, the APAC market defies the trend, with commercial demand for PCs in China driving growth. This sector will see a modest 3.5% growth in 2023.
Joseph also expanded on the significant trends in the region’s technology markets.
Cybersecurity takes centre stage, with APAC maintaining its unenviable position as the highest-attacked region globally. Governments are responding with expanded legal frameworks on cybersecurity and data protection. Alongside, operational resilience is emerging as a top priority for businesses, with a significant 72% of professionals considering it their organization’s primary focus.
The tech sector witnessed significant volatility in 2022. Despite widespread tech layoffs, the demand for tech talent in non-tech sectors ironically rose.
APAC’s digital growth is witnessing the rise of digital nationalism. This hyper-localization-globalization dichotomy will shape the future of tech in the region.
While Europe still grapples with the war in Ukraine, APAC’s economy still feels the squeeze from a contracting supply from China, its closest neighbour. Shifting global geopolitics adds to the region’s longer-term risks.
Asian AI maturity varies widely, with countries such as Singapore and China already far ahead of the rest of the region in research into and in the application of AI. The race has only begun, however.
In 2023, Forrester projects regional tech spend growth to be:
6.3% in Australia — In 2023, tech spending in Australia will rise to nearly US$46 billion (AU$70 billion). Renewed sustainability efforts and the local services economy will strongly influence Australia’s 2023 tech spend and digital growth.
7.4% in China — Forrester estimates that tech spending in China will grow 7.4% to hit US$14.356 billion (JP¥1.7 trillion) in 2023. Technology innovation will play a key role in industrial modernization, and generative AI will catalyze tech investments in all major industries.
10.1% in India — Tech spending growth in India will be the highest in the region and is expected to reach US$47.3 billion (IN₹3.9 trillion) in 2023. Strong government support for ongoing digitalization efforts will continue impacting investments in national digital infrastructure.
4.6% in Singapore — In 2023, tech spending in Singapore will hit US$16.506 billion (SG$22.17 billion). “The Silicon Valley of Asia” continues to be a stable regional hub for technology talent and innovation, with the government allocating high-level budgets toward innovation initiatives.
7.9% in the rest of Southeast Asia — In 2023, tech spending in the five major Southeast Asian economies (Indonesia, the Philippines, Thailand, Vietnam, and Malaysia) will approach US$47 billion, with Indonesia, Vietnam, and the Philippines having the highest growth rates of 9.3%, 9.3%, and 8.1%, respectively.