The enterprise information and communication technology (ICT) revenue opportunity in Indonesia is forecast to increase at a compound annual growth rate (CAGR) of 16.3% between 2023 and 2028, mainly led by a high proportion of revenue contributions from cloud computing, Internet of Things (IoT), and artificial intelligence (AI) solution areas and strong demand from manufacturing, retail, and banking, financial services, and insurance (BFSI) segments, according to GlobalData, a leading data and analytics company.
GlobalData’s ICT Customer Insight Survey* indicates a positive outlook for enterprise ICT spending in Indonesia, with 92.1% of respondents claiming that there has been an increase in their enterprise ICT budgets in 2024 compared to 2023.
Pragyan Tarasia, Technology Analyst at GlobalData, comments: “Positive economic outlook, business growth, and the government’s support for key sectors like manufacturing, technology, e-commerce, and infrastructure projects are especially driving positive investment sentiment among enterprises in Indonesia. Ongoing investments and developments in 5G networks and the government’s push for digitalization and use of advanced technologies like AI, IoT and cloud technologies across sectors present a positive outlook for the ICT market in the country.”
IT services to drive enterprise ICT market
According to GlobalData’s forecasts, Indonesia’s ICT market will be primarily driven by IT services segment, which is forecast to grow at a CAGR of 15.3% to reach $48.1 billion in 2028. Further, in GlobalData’s recent ICT Customer Insight Survey, about 53.2% of respondents confirmed an increase in their enterprise ICT budget for IT services in 2024 compared to 2023.
Tarasia continues: “Enterprises in Indonesia are increasingly turning to an IT service model to manage the complexities and reduce the cost of IT implementation. By outsourcing complex IT infrastructure implementation and maintenance to service providers, enterprises can enhance agility, focus on core operations, and align with Indonesia’s digital transformation goals.”
Manufacturing to emerge as largest end-use vertical
GlobalData forecasts that the manufacturing sector will be the largest end-use vertical segment for the ICT market in Indonesia, in terms of revenue contribution, and will remain so over the forecast period. The segment is set to account for a 12.5% share of the total cumulative revenue forecasted for 2023-2028.
Tarasia adds: “With the manufacturing sector increasingly adopting industrial automation and smart manufacturing themes, there will be an increase in investments in technologies like IoT, AI, data analytics, and cloud. The surge in digital manufacturing, along with government initiatives, such as Making Indonesia 4.0, is encouraging enterprises to invest in technology and maintain industrial competitiveness. This positions the manufacturing sector as a key contributor in Indonesia’s ICT market.”
IoT will be the largest IT solution area in terms of revenue contribution through the forecast period, driven by growing demand for advanced sensor technologies and connected systems in sectors like manufacturing, defense, and agriculture, where real-time monitoring enhances efficiency and security. AI, on the other hand, will be the fastest growing IT solution segment, with its revenue set to expand at a CAGR of 49.2% during 2023-28. This growth is fueled by rising enterprise demand for AI-powered solutions across areas including logistics, human resources, education, cybersecurity, and customer services.
Tarasia concludes: “Major tech players like Microsoft, NVIDIA, and OpenAI are investing in the country’s AI initiatives. Notably, NVIDIA partnered with Indosat Ooredoo in May 2024 to launch a $200 million AI development center, and in April 2024, Microsoft committed $1.7 billion to develop cloud and AI infrastructure, including training 840,000 Indonesian workers. These developments are expected to create business opportunities and partnerships in the AI sector.”
*GlobalData’s ICT Customer Insight Survey carried out during H1 2024 highlights survey responses related to ICT investment priorities and budget allocations by enterprises in Indonesia
