The ICT industry in Australia

AUSTRALIA – INFORMATION TECHNOLOGY & INNOVATION

OVERVIEW

Australia’s Information Technology industry includes Computer Sales, Software, IT Services and E-Readiness. The market should continue to provide opportunities in consumer, government and business sectors in 2010, following a relatively robust performance in 2009.

The ICT industry accounts for 4.6% of Australia’s GDP and contributes 4.9% to Gross Value Add, boasting a larger contribution than mining, education, defense, agriculture and the individual manufacturing sectors.

The Australian ICT sector remains diverse and fragmented and can be characterized as follows:

Large players (mostly multi-national, excluding the carriers) who are generating the bulk of revenues.

Smaller companies (mostly domestic) who are generating innovation and exports.

A broad (and becoming broader) product spectrum from software and media content to electronics manufacturers.

Telecommunications generating > 40% of the ICT industry’s revenues.

Many industry stakeholders, with numerous industry associations, state & federal policy formation groups and research institutions.

TRENDS

Current trends in the Australian IT Industry include:

Hardware is the main casualty of the recession: Slower sales and refresh cycles will get longer. As CIOs are under pressure on budgets and spending- PCs, servers and storage will be heavily scrutinized to ensure that costs are kept to a minimum.

Software spending will generally grow, but slowly: Spending on software such as databases, ERM and CRM is expected to continue to grow at a slower rate.

IT Services are partly recession proof and will benefit from the crisis: Spending on outsourcing services is expected to increase in the short term.

Demand for ICT professionals will remain solid: Companies see the slowdown in the economy as time to upskill with quality professionals to address the challenge of increasing efficiency.

KEY FORECASTS

Government tenders will drive considerable spending in years to come. Regulatory compliance will continue to need spending by banks and intense competition in the retail sector is spurring spending on customer relationship management (CRM) and back-office systems. Competition and new service platforms in the telecoms sector is another driver for that key IT spending segment.

The main drivers of growth in the PC segment will be government programs, growing broadband penetration and greater affordability. In 2010, government projects in sectors, such as e-government, healthcare and education, will drive significant opportunities for IT vendors.

INDUSTRY DEVELOPMENTS

Australia is a nation of sophisticated ICT users who eagerly embrace new technology. The Australian market is used extensively by leading international companies to develop and trial new applications and they have acted to ensure that ICT systems are interoperable, secure, broadly available and contribute to productivity gains. From policies to encourage uptake of new technological solutions, to legislation to protect privacy and prevent spam, Australia is a location where companies can successfully develop solutions with global applications. Many international companies deliver solutions from Australia to both the region and the world, including:

Canon maintains its largest R&D center (outside of Japan) in Sydney, employing 330 staff and accounting for 30% of their overseas development operations.

EMC, the US information storage and management company, is represented in over 50 countries. Australia hosts one of their four global support centers.

Red Hat continues to expand its Regional Engineering and Support HQ in Brisbane.

MARKET SIZE

The Australian ICT market is estimated to be worth over A$120 billion.

While Australia is ranked 54^th in the world by population it is the fourteenth largest ICT market in the world, and the fifth largest ICT market in the Asia-Pacific region, after Japan, China, India and Korea.

KEY PLAYERS

Acer Computer Australia

Alcatel Australia

APCS IT

Canon

CSC

Datacom

EDS

EMC

Hewlett-Packard

IBM

InfoSys

Techex Communications

WestNet

GROWTH FIGURES AND FDI FIGURES

The ITC Industry in Australia experienced a compound annual growth rate of 12.8% between 2003 and 2008-- faster than Japan, Hong Kong, Singapore, South Korea and Taiwan.

Stock of Foreign Direct Investment in Australia by Industry:

Industry	$ million	% share of total
Agriculture, forestry and fishing	700	0.2
Mining	99,659	25.4
Manufacturing	73,848	18.8
Electricity, gas and water	16,105	4.1
Construction	13,037	3.3
Wholesale and retail trade	57,093	14.5
Accommodation, cafes and restaurants	914	0.2
Transport and communication	25,929	6.6
Finance and insurance	53,143	13.5
Property and business services	33,830	8.6
Other services	6,105	1.6
Unallocated	12,500	3.2
Total	392,862	100

RECENT DEALS

Prime Minister Julia Gillard just launched a new $22 million global research and development lab, which IBM has created at the University of Melbourne, partnering with the state and federal governments to create 150 new jobs at the facility over the next five years. The new lab will focus on research areas associated with IBM's global push towards what it terms "smarter planet" technologies that bridge the gap between more traditional engineering-led technology such as electricity or resource management and the new internet world.

INVESTMENT OPPORTUNITIES

Australia is a proven testing ground for global projects. The size of the market, its innovative outlook and a varied and sophisticated customer base combine to make Australia an ideal location to develop and test new ICT products and services. Software and processes that are built and adapted here are often rolled back into the global product development environment and subsequently used by customers worldwide. Australia’s ICT workforce is also advantageous to investment and offers extensive domain-level knowledge and quality technical expertise – particularly in architecture and integration. The result is targeted, clever and innovative ICT solutions for a range of companies across different industries. The A$2.7 billion software industry has benefited from comparatively low development costs and a highly skilled workforce, and has consequently become a target for strategic ICT investment; companies such as IBM, Canon, Citrix, EDS, Fujitsu, Google and NEC have built major software development facilities in Australia.

RESOURCES: INDUSTRY GROUPS AND ORGANIZATIONS

The Australian Information Industry Association (AIIA) is the nation’s peak industry body for the technology sector. AIIA sets the strategic direction of the industry, influences public policy and provides members with productivity tools, advisory services and market intelligence to accelerate their business growth, http://www.aiia.com.au.

The Technology Industry Development Council (TIDC) represents and articulates the views of the Technology Industry and related sectors, http://www.aigroup.com.au/industrysectors/ict/TIDC.

The Australian Interactive Multimedia Industry Association (AIMIA) is the peak national industry body representing the Interactive Media and Digital Content sectors in Australia, www.aimia.com.au.

Current Investment Opportunities in Australia:

For current investment opportunities in Australia, please click here : http://investinaustralia.com/current-opportunities

REFERENCES

Press Office, “New report provides detailed analysis of the Information Technology market”, OfficialWire, July 2010, http://www.officialwire.com/main.php?action=posted_news&rid=187757.
Unknown, “Information Communication and Technology Insights”, Manpower Professional, 2009, www.manpowerprofessional.com.au/.../2009_IT%20Market%20Insights-Australia.pdf.
Unknown, “Information Communication and Technology Insights”, Manpower Professional, 2009, www.manpowerprofessional.com.au/.../2009_IT%20Market%20Insights-Australia.pdf.
Unknown, “Information Communication and Technology Insights”, Manpower Professional, 2009, www.manpowerprofessional.com.au/.../2009_IT%20Market%20Insights-Australia.pdf.
Press Office, “New report provides detailed analysis of the Information Technology market”, OfficialWire, July 2010, http://www.officialwire.com/main.php?action=posted_news&rid=187757.
Press Office, “New report provides detailed analysis of the Information Technology market”, OfficialWire, July 2010, http://www.officialwire.com/main.php?action=posted_news&rid=187757.
Unknown, “Invest - IT - Sophisticated Market”, Australian Government, 2010, http://www.austrade.gov.au/ArticleDocuments/1358/INvest_ICT_Sophisticated Market.pdf.aspx.
Press Office, “New report provides detailed analysis of the Information Technology market”, OfficialWire, July 2010, http://www.officialwire.com/main.php?action=posted_news&rid=187757.
Unknown, “Invest - IT - Sophisticated Market”, Australian Government, 2010, http://www.austrade.gov.au/ArticleDocuments/1358/INvest_ICT_Sophisticated Market.pdf.aspx.
Unknown, “Invest - IT - Sophisticated Market”, Australian Government, 2010, http://www.austrade.gov.au/ArticleDocuments/1358/INvest_ICT_Sophisticated Market.pdf.aspx.
LeMay, Renai, “Gillard announces $22m for IBM R&D lab”, ZDNet Australia, October 2010, http://www.zdnet.com.au/gillard-announces-22m-for-ibm-r-d-lab-339306600.htm.
Unknown, “Information and communications technology”, Australian Government, 2010, http://www.austrade.gov.au/Invest/Opportunities-by-Sector/ICT/default.aspx.