?China is expected to be the world’s fastest growing enterprise software market with an estimated compound annual growth rate (CAGR) of 14.6% from 2008 to 2013, according to Gartner.
The research firm said that the software market in China is expected to rebound to an annual growth rate of 14.8% in 2010. Gartner analysts said that the increasing globalisation of the Chinese economy is leading to a growing need for modern software with the latest features and improved functionality.
According to Gartner’s forecast, China will for the first time surpass $6bn in software revenue in 2010, accounting for 27% share of Asia/Pacific region and equivalent to 2.7% of the total worldwide software market share. The Chinese software market is expected to scale 30% of the Asia/Pacific region market and 3.3% of the total worldwide software market revenue by 2013, representing $9.4bn in revenue.
The top four major vertical industries in terms of software spending are manufacturing, financial services, communications and government. Gartner estimates that in total these industries account for 60% of total software spending in China.
A survey by Gartner found that 46% of respondents in China plan to increase their software spending in 2010, far higher than other countries surveyed and organisations in China in 2010 are expected to spend approximately 23% of their IT budgets on software compared to 33% on hardware.
In addition, the firm expects increases in spending across the infrastructure and application software segments in 2010. However, the infrastructure software market’s size is forecast to be nearly double that of application software through 2013, with a CAGR of 15.1 %, while application software has an expected CAGR of 13.7 %. In the next five years, the fastest-growing segment will be data integration and data quality tools, with a CAGR of 32.4 %.
Hai Hong Swinehart, research analyst at Gartner, said: “Chinese enterprises have historically preferred to develop applications using their own labour because it costs less. However, this tendency has resulted in legacy and quickly obsolete software as well as inhibiting Chinese enterprises’ sustainability and business IT continuity.
“Growth will mainly be driven by replacing immature infrastructure with standardised systems and the large vendors stand to benefit. China is still a hardware-centric country that tends to spend more on infrastructure, and we expect this to continue through the forecast period to 2013.”
