The coronavirus (Covid-19) outbreak has underscored the importance of digital adoption amongst enterprises, reigniting concerns regarding business continuity, data security, collaboration and seamless customer experience. Against this backdrop, the demand for digital transformation presents IT vendors in Asia-Pacific with a substantial revenue growth opportunity in the medium to long-term, says GlobalData, a leading data and analytics company.
Sunil Kumar Verma, Lead ICT analyst at GlobalData comments: “The Covid-19 outbreak will definitely lead to increased uptake of digital adoption amongst enterprises over the next few years. During this period, vendors should leverage government framework and policies along with inorganic/organic growth strategies to create a digitized environment and develop digital capabilities. IT providers that can leverage capabilities around technologies such as AI, blockchain, cloud, and big data, and rethink their future business models by evaluating digital transformation will have a competitive edge.”
An analysis of GlobalData IT Client Prospector reveals that the digital technology spending ratio of the companies to their overall ICT budget in 2020 in the APAC region is neither high nor too low, when compared to companies across other regions for cloud and 5G.
However, spending on IoT is relatively smaller in APAC compared to the other geographies. So far, enterprises in APAC region had shown a keen interest in embracing digitalization across multiple verticals such as manufacturing (Industry 4.0), telecommunications (BSS/OSS overhaul), retail (visual search and deep tagging), professional security services (AI-based security surveillance CCTV), and banking (virtual assistants/chatbots). These offer strong opportunities for IT vendors in APAC, despite the challenges in the near term.
Indeed, digital capabilities have continued to boost the revenue of major IT providers in India and APAC and have become increasingly important for them. For instance, digital offerings accounted for 28.6% of TCS’s overall revenue in FY2019, as compared to just 9.7% for FY2015.
Similarly, Infosys has an agile digital service architecture to facilitate the clients in digitalization journey. Digital offerings accounted for 31.2% of Infosys’s total revenue in FY2019. Wipro too has been pursuing a ‘Digital-first’ approach and has identified four key technologies, namely digital, cloud, engineering services and cyber security, to invest and build capabilities around actively.
Tech Mahindra reported 41% growth in its annual digital revenues for FY2019 and aligned its go-to-market offerings against six business-led themes - Strategy & Design, Digital Customer, Intelligent Operations, Future Enterprise & Innovation, Digital Insights and Digital Foundation. Wipro’s digital offerings accounted for 41.2% of its overall revenue for Q42020.
Sunil concludes: “The pandemic will only accelerate the demand for digital transformation, and IT vendors in APAC will do well to prepare for the impending explosion in opportunities around digital transformation. Vendors need to continue to fill gaps for the new age digital experiences by leveraging partner capabilities and pursuing selective acquisitions to have an extensive digital portfolio for these impending opportunities.”