Despite technology spending in Singapore expected to decline - as opposed to the growth expected pre-Covid-19 - the communications sector will provide a silver lining for the local market in the months ahead, reporting an investment increase of six per cent.
An analysis of GlobalData’s Market Opportunity Forecasts model reveals that the outbreak will lead to a decrease in overall spending from last year across almost all segments of the industry. Spending on hardware is expected to fall by 6.3 per cent against the growth of 10.7 per cent in 2019 and the projected growth of 8.4 per cent before the pandemic.
Enterprises in Singapore are restricting infrastructure upgrade plans to minimise capital expenditures to retain profitability during the on-going Covid-19 pandemic.
The demand for software is also set to fall, with enterprises delaying the roll-out of applications in 2020. The market for enterprise collaboration platforms, however, is expected to increase by 25.8 per cent, driven by the increasing demand for collaboration due to a sharp rise remote working.
Meanwhile, the technology services market in Singapore is also anticipated to fall, with enterprises looking to curb upcoming projects and non-critical technology spending and delay long-term digital transformation initiatives until at least next year. The aim? To mitigate the risk of financial instability in business operations.
Public cloud will lead the cloud space with the market projected to grow by 3.7 per cent over 2019. Enterprise customers in Singapore are likely to continue to invest in public cloud, owning to high infrastructure cost, data privacy and security and operational performance.
Looking at the sector-wise impact of Covid-19, the travel and leisure sectors across the city-state will be the most affected, with technology spending projected to fall by 18.6 per cent in 2020 when compared to 2019. Similarly, spending in consumer goods and the food service sectors is also expected to decline sharply.
As enterprises work remotely amidst the pandemic, remote accessibility and collaboration are critical for enterprises to achieve business continuity.
As a result, the adoption of cloud-based solutions has increased across enterprises in the country. SMEs, as compared to large enterprises, will continue to emerge as a significant market for cloud computing in the domestic Singapore market, owing to the absence of legacy infrastructure and fairly straight-forward requirements.
Technology vendors would do well to focus on SMEs in Singapore until the large enterprises work out their long-term digital transformation strategies.
Manish Chaurasiya is senior technology analyst at GlobalData