Companies seek solutions to aid efficiency in global slump Despite a gloomy global economic outlook, industry experts are seeing growth opportunities for essential software and related services in emerging markets, led by the mainland. These experts see continued demand for Linux and other low-cost open-source software, security and storage systems, and online subscription-based business-automation applications - all solutions designed to sharpen enterprise efficiency in the face of a potential decline in corporate information technology spending. 'There has been an assumption that budgets will be reduced, but we haven't seen that in a major way [on the mainland or worldwide]. Deals are still happening on time. So far, so good,' said Jim Whitehurst, the president and chief executive of United States-based Red Hat, a top global distributor of the Linux operating system. His observation echoed market research firm Gartner, which last week declared that the worldwide information technology industry would not see the dramatic reductions witnessed during the dotcom bust - a time when budget growth was slashed from mid-double-digit to low single-digit levels. 'In a worst-case scenario, our research indicates a [global] IT spending increase of 2.3 per cent next year, down from our earlier projection of 5.8 per cent,' said Peter Sondergaard, a senior vice-president and global head of research at Gartner. 'Developed economies, especially the United States and western Europe, will be the worst affected, but emerging regions will not be immune.' According to analysts at International Data Corp, the sheer size of China and India will help diminish the impact of any budget cuts to their respective information technology sectors. IDC forecast the Asia-Pacific market excluding Japan would post a moderate growth of 3.1 per cent this year and 5.5 per cent next year. Mr Whitehurst said the economic downturn could mean less new business, but it could prove a boon to the adoption of Linux and other open-source software on the mainland and other emerging markets, where governments encourage their use. 'We expect more companies will make the switch, replacing the expensive proprietary systems in their infrastructure, and discover how we drive down costs and improve their productivity,' he said. Red Hat supplies both Linux and its JBoss middleware products to the mainland's financial services, government, telecommunications, medical care and manufacturing sectors. Demand on the mainland for Linux reached 43.1 million yuan (HK$49 million) in the second quarter, up 16.2 per cent year on year, and is poised to grow further among small companies, according to Beijing-based CCID Consulting. 'Even in an economic slowdown, security and storage needs continue to grow. Companies must still pay attention to meeting regulatory requirements, handling growing data and protecting their information,' said Bernard Kwok Chuen-wah, a senior vice-president for the Asia-Pacific and Japan at Symantec, a leading global security and storage software provider. 'We're seeing opportunities in many market segments in China,' Mr Kwok said, noting the storage and security needs related to the planned rollout of 3G cellular network services. Symantec has committed US$150 million to a joint venture with Huawei Technologies, the country's largest telecommunications equipment maker, which will produce security and storage appliances for the global market. Lai Yam-Ting, the managing director of Automated Systems Holdings, which has been a long-time solutions provider to the Hong Kong government and large local companies, said demand remained steady on the mainland. 'We started with small deals, which we hope will pave the way for bigger projects,' said Mr Lai. He expects business on the mainland to make up to 40 per cent of his company's business from 10 per cent last year. Research firm Celent estimated there were about 42 million small and medium-sized enterprises last year, which contributed 60 per cent to the country's total gross domestic product. 'Of these, more than 72 per cent had IT needs,' Celent said, citing the need to improve work efficiency and management quality. The mainland's nascent software-as-a-service market, in which business-automation software is delivered via online subscription, reached 3.04 billion yuan in the second quarter, according to Analysys International.