Malaysia’s enterprises need to recalibrate business models for ICT market recovery in post COVID-19 scenario, says GlobalData

Malaysia’s ICT spending for 2020 is expected to decline by 8.3% as opposed to the 8.2% growth expected before the COVID-19 outbreak. Against this backdrop, the enterprises in the country need to adopt new digital technologies and re-evaluate their business models to regain the lost ground in the post COVID-19 world, suggests GlobalData, a leading data and analytics company.

While Malaysia’s domestic ICT spending had grown by 8.5% in 2019, the COVID-19 outbreak will lead to a decrease in ICT spending from last year across almost all segments of the market.

Shamim Khan, Senior Technology Analyst at GlobalDatay, comments: “Spending on hardware is expected to fall by 9.1% as against the growth of 9% in 2019 and the projected growth of 7.3% before the COVID-19 outbreak. Enterprises in Malaysia are moving aggressively to contain costs and defer all capital expenditures on upgrades, which will strongly impact the spending on hardware for the year.”

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 set to increase by 29.7% in 2020 owing to the demand for collaboration due to remote working.

The market for ICT services in Malaysia is also set to go down, with enterprises looking to delay on new projects, hold-off non-critical IT projects, and hold-off their long-term digital transformation initiatives until at least next year.

Public cloud will be the silver lining in the cloud, with the market expected to grow by 3.5% over 2019. Enterprises in Malaysia are expected to continue to invest in cloud computing, as cloud-based applications and storage options offer strong business continuity from an operational perspective.

Looking at the sector-wise impact of the COVID-19 pandemic, travel and leisure, transport and logistics, and manufacturing will be the most affected, with ICT spending expected to decline by 21.9%, 18.7% and 16.7%, respectively, in 2020 when compared to 2019. On the brighter side, the government and healthcare sectors will remain largely unaffected, with ICT spending for these sectors expected to remain relatively flat in the year 2020.

Ms. Khan concludes: “The COVID-19 pandemic is driving in the demand for increased internet bandwidth, adoption of cloud-based services and increased usage of collaboration platforms, despite the overall ICT spend declining across all major verticals. The government has also announced a stimulus package of MYR250bn to lower the degree of impact. Moving forward, Malaysian enterprises will need to adopt new technology, restructure their business and workforce and undertake a transformation of their digital infrastructure, all of which will be essential for the recovery of the ICT market of Malaysia.”

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