ICT in India and Indonesia

Category: Technology

There has been an increase in exploration of the international investment opportunities in the areas of Information communication technology. This has been an outcome of elevated demand of ICT services in different countries as a result of globalization. However, international investors conduct preliminary studies in order to assess the feasibility of venturing into a given economy (International Telecommunication Union 2007). Such feasibility study enables the international investors to make informed choices. Greenfield Foreign Direct Investment is an Australian based ICT company that intends to internationalize its business operation to Asian countries (UK Trade & Investment 2009). The firm is targeting India and Indonesia as a potential ICT business Hub. The paper will provide an analysis of both countries so that the Greenfield Foreign Direct Investment can make an informed decision in its internationalization plan.

India has the second’s largest ICT infrastructure in the world. The ICT industry in India has not only transformed the image of the India in the global platform, but also has enhanced the expansion of the country's economy by energizing the education sector (World Bank 2010). The Indian ICT sector has evolved in three major phases; up to 1984, 19984-1990 and post 1990. The firsst phase aimed at establishing the technological trajectories, where the industry was run by the state. In the second phase, the government realized that software development was a viable option for income generation. At the third phase, the software development and export flourished, and it was aggressively promoted by both national and sub-national government (Kam 2009). In contrast, the ICT sector in Indonesia can only be dated a decade ago.  However, the domestic demand since then has been increasing. This is as a result of strong investment in the infrastructure by the government. Furthermore, the government in Indonesia opened opportunities for the private sector to venture in the industry, hence, promoting an enormous growth over few years (Alampay 2009).

The ICT sector in India has been having an impressive performance over the years. The industry has essentially employed over 10 million Indian citizens. The software export and the business process have been the mainstay in the sector. In the last few years, ICT sector has grown considerably. For instance, majority of the global 2000 and fortune 500 ICT Corporation are currently sourcing IT from India (Information Technology Outlook 2010). The country accounts for the 55 percent of the global IT market. Although Indonesia has recently faced many challenges that have slowed down rapid expansion of the ICT sector, the demand and expansion of the ICT sector has been facilitated by a fast growing middle class population that provide a vast market for ICT products. The recent study indicates that the current growth is expected to continue for the next 10 t0 15 years (ICT-EurAsia 2013 & Mustofa 2013).

The future of ICT sector in India is also projected to be impressive. The country has projected an expenditure of $71.5 billion in the year 2014. This will be an account for 7.7 percent increase from $66.4 billion 2013. The expenditure is expected to broaden the ICT infrastructural to all provinces. Although the country has internet user base of 120 million, the population is expected to raise tip to 370 million at the end of 2015. Furthermore, India is expected to have more than 130.6 million mobile internet users by April 2014. On the other hand, Indonesia is projected to offer a number of ICT investment opportunities. The ICT infrastructure expansion by the government will enable the company to establish software and application development industry, thus, boosting the local industry. It is projected that the use of ICT will increase as the country integrates ICT in its major sector, such as e-learning, e-health and e-commerce. In addition, Indonesia is projected to become the largest vertical market for ICT spending in system integration, sustainable ICT and in datacenter in the future (Internetworking Indonesian journal 2009).

Geographically, India is located in the South Asia. It is bounded by the Indian Ocean to the south and the Arabian Sea. Its geographical location makes it a potential hub for ICT investment. This is because it borders China, which has an advanced ICT sector. Furthermore, its location means that it will open more investment opportunities to neighboring countries.  Indonesia is geographically located at the Southeast of Asia.  The country’s neighboring countries include Singapore, Australia and Philippine. Its closes proximity to Australia and Singapore makes it potential ICT investment hub. This is because it will be easy for diffusion of the technology, manpower and infrastructure support from Australia and Singapore, which act as major ICT centers in the region (Internetworking Indonesian journal 2009).

In the ICT education sector, India has strengthened its ICT education structure in order to ensure the rapid ICT expert demand is met. There has been an increased demand for ICT specialists to expand information technology investment in the country.  The number of graduates in ICT field has been increasing. In 2012, more than 22 percent of the students were admitted to ICT programmes in India. Furthermore, 58 percent of the Indian population in ICT are literate, and have undergone post-secondary education (Centre for Science & Media Studies 2013). This means that the country has adequate ICT skilled manpower. On the other hand, Indonesia has a strong education base for the ICT sector.  In 2012, more than 16 percent of the graduates were from technological institutions. Among this percentage, 8 percent accounted for post graduates. Although the percentage is still below the current demand, the educated population will essentially provide labor for ICT sector.  Although these two countries are both potential destination for Greenfield Investment Company, India has the greatest potential due to its economic and political stability. In addition, the country has strong ICT infrastructure base. For Indonesia, the recent political and economic instability makes it less preferable. It can only be preferred due to its proximity to Australia.

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