Mounting confidence in Malaysia’s local industry will boost the growth of its ICT industry, with total IT spending for the country reaching growths of 9% to reach US$6.5 billion in 2011, according to research firm IDC.

"Moving into 2011, IDC anticipates more changes brewing in the Malaysian ICT market, allowing for the capitalization of growth. However, the theme that strikes a chord, as exemplified by the 2011 predictions, is the hardening of strategies that capitalize on opportunities to live out the “new normal" marketplace," says Roger Ling, Research Manager for Software Research at IDC ASEAN.

The following are IDC's top 10 ICT predictions for the Malaysian ICT industry in 2011. These trends are what IDC believes will have the biggest commercial impact on the Malaysian ICT market in 2011.

Prediction #1: IT Spending Continues
In 2010, consumer confidence returned to the local market due to recovery in the global economy and this injected growth into Malaysia's IT spending for the year. The total IT spending for Malaysia, which was driven mainly by purchases of hardware and packaged software, grew by 6% in 2010.

The growth in IT spending in 2011 is expected to be driven by factors such as continued efforts to raise the level of broadband penetration by the government, outsourcing initiatives by organizations looking to address increase IT complexity, and the continued adoption of system infrastructure software for the operation and management of computing infrastructure resources. The latter is a key element of IT infrastructure deployment and operations.

Prediction #2: Telecommunications Spending Will Remain Strong in 2011
IDC expects to see further growth in telecommunications spending for Malaysia in 2011. The total telecommunications spending for Malaysia is expected to grow by 5.3%, hitting US$7,361.6 Million in 2011. Fixed data will take the lead with a predicted 12.7% growth from 2010 followed by wireless data and wireless voice, performing at 10.3% and 3.8% respectively. IDC expects to see a 3.2% decline in fixed voice from 2010.

For the fixed-line market, asynchronous transfer mode (ATM) and frame relay will continue to take a backseat because of the migration to pure IP-based systems such as internet protocol (IP) virtual private network (VPN). Public switched telephone network (PSTN) revenues will continue its decline as the shift to voice over internet protocol (VoIP) gains greater traction. Fixed broadband subscriber growth is also expected to grow strongly. This is largely due to the Malaysian government‟s mandate to achieve broadband penetration rate of 75% by 2015.

Prediction #3: Transforming the Dumb: Telecom Operators Will Look into Smart Piping
In 2011, IDC expects efforts by both mobile and fixed line operators to ramp up products and services that will transform current traditional data pipes, or “dumb pipes” into ”smart” ones. A “dumb pipe” is the traditional connectivity which internet service providers offer to end users. Transforming a “dumb” pipe to a ”smart” one would involve a service provider introducing products or services within that connectivity for subscribers to use. The transition to “smart pipes” would enable operators to generate new streams of revenues instead of being just a channel for data to reach one point from another. Service providers can then bill subscribers for transactions such as services used or products purchased. Testament to this transformation is seen in examples such as the 1store by Maxis Communications.

Prediction #4: Local Partners Staging Their Claim in Cloud
As interest in software-as-a-service (SaaS) continues to gain momentum in Malaysia, there will be a growing demand for SaaS offerings in enterprises. Services partners will have to review their business models, resources, and expertise to include SaaS services as part of their portfolio. These services will include reselling, customization, integration, training, and configuration.