SINGAPORE - When Paresh Chugh, the chief
technology officer and managing director of Neogeno Pte
Ltd, a mid-sized systems integration and information
technology (IT) outsourcing services company based in
Hong Kong, read a recent IT report that infotech
spending among small and medium enterprises (SMEs) in
the Asia-Pacific region outside of Japan is set to gross
more than US$100 billion in 2004, he could scarcely
contain himself.
"I see immediate opportunities
for outsourcing services companies like us since the IT
report highlighted that most of the SMEs in Asia are set
to increase their IT infrastructure expenditure within
the next few years. There is at present a lot of
upgrading of internal systems and IT hardware and
resources within these companies, and also a need for
even smaller companies to outsource their core IT
systems so as to eliminate costly repetitive in-house
practices," Chugh said. He added that the outsourcing
bug that is starting to see a backlash in the United
States and Europe is not evident in Asia, especially in
countries like Singapore, Hong Kong, Thailand and Japan,
which is experiencing double-digit growth in
outsourcing.
Andrew Taylor, a senior electronics
analyst from Axiom Consulting Inc (Hong Kong) said that
SMEs in the Asia-Pacific region were planning to
increase their IT expenditure from $84 billion last year
by an additional $16 billion. So far, according to
market estimates, there are close to 27 million SMEs in
the Asia-Pacific region, with more than half a million
new ones opening up since last year. The upturn in the
global economy and the increase in capital expenditure
of larger companies and conglomerates is also driving IT
expenditure among SMEs in Asia-Pacific.
"The
bulk of the SMEs spend on back-end infrastructure,
including virtual private networks [VPNs], wireless LANs
[local area networks], intrusion detection systems
[IDS], firewalls and customer-focused enterprise
applications and storage networking," Taylor said.
According to research house IDC Corp,
post-economic hardships over the previous years have
forced SMEs to streamline operations, and this has been
the clarion call for some of the large vendors as well.
IT vendors like IBM, Cisco, Hewlett-Packard, Sun Micro
systems, Dell, Oracle, SAP, EMC and StorageTek have
created products and solutions suited for SMEs. SMEs
also want solutions that will enhance the intelligence
of their networks in the most cost effective way.
Similarly, networking-related spending reached a
high of $5.6 billion in 2003 in Asia-Pacific. "Much of
the money went to wireless LANs and VPNs. Wireless LAN
deployment jumped 49 percent, while spending on wireless
solutions leapt 130 percent in 2003 over 2002," said
Taylor.
The IDC Corp report also maintained that
most SMEs in Asia-Pacific still prefer to stick to DSL
(digital subscriber line) as their chosen method of
high-speed Internet access. In Singapore, more than 55
percent of SMEs deploy DSL to connect to the Net,
compared to just 34 percent across nine key Asian
markets. And the most common form of DSL is ADSL
(Asymmetric DSL) which offers speeds of up to 512 kbps
on a dedicated point-to-point connection. Singapore,
South Korea, Taiwan and Hong Kong are some of the Asian
countries that have a relative high level of bandwidth
capability and close to 60 percent of Internet users are
ADSL subscribers. Malaysia, Thailand and Indonesia are
known as the second tier countries where DSL subscriber
rates are relatively low, but they also show a great
deal of promise since Internet penetration rates are
still around only 30 percent of the population.
Another area of interest for SMEs is data
storage. SMEs in the region spent more than $340 million
on SAN (storage area networks) and NAS (network attached
storage) solutions last year. And the number of SMEs
switching to SAN and NAS solutions has increased by more
than 50 percent compared to two years ago. One reason
for the exponential growth is the fall in end user
prices, and also the enhancements made in
infrastructure-based SAN configurations.
Yet
another major phenomenon is the growth of wireless local
area network (WLAN) equipment in the Asian region,
which, excluding Japan, grew an annual 67 percent to
more than $250 million in 2003, according to the IDC
Corp report. And the number is expected to reach $338
million this year as wireless Internet and network
access in public areas and workplaces become even more
popular.
"This growth is driven by the increase
in public hotspot deployment, consumer and small
business sector demand, hence causing total revenue in
the WLAN segment to surpass $250 million," maintained
Chugh.
And large multinationals are not the only
early adapters taking advantage of the exponential
growth in the WLAN industry. Small and medium
enterprises are also seeing the benefits of switching
over to WLAN technology and its immediate cost savings.
Paul de Silva, a networking manager for
OpenSource Consulting, a networking consultancy based in
Australia, says that more and more medium-sized
companies with turnover in excess of $5 million are
switching to WLAN equipment in the office and educating
their workforce to take advantage of public utilities
that run on WLAN. "It's a rationalization exercise that
most IT departments are undergoing currently in
Australia," he stressed.
WLAN is increasingly
popular in Asia, especially among so-called corporate
mobile road warriors who travel frequently and need easy
access to hotspots to log into the Internet in airports
or commercial establishments. Hotspots are locations
that allow users to surf the Internet without literally
being plugged in, using their laptops or other portable
devices like handheld devices, or even the ubiquitous
cellphone to connect to the Internet.
(Copyright
2004 Asia Times Online Co, Ltd. All rights reserved.
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Apr 29, 2004
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