There is good news for the Indian IT industry, specially the tier 2 players.
The small and medium enterprise (SME) driven Singapore market is headed towards
a major boom in the e-business application sector. A recent Frost & Sullivan
report for Nasscom suggests that despite the adverse economic climate, the total
e-business application software market in the country is expected to grow by
25.7% in 2002–up from $91.9 mn in 2001 to $115.5 mn.
The trigger for this growth, the report suggests, has been the emergence of
new application areas like CRM, collaborative commerce and e-commerce; ERP and
SCM showing just single digit growth rate. Major initiatives taken up by the
government for the island have also facilitated the growth of e-business in the
According to the report, by the end of 2005 the total revenue for the
e-business applications market would more than double to $232.6 mn. A compounded
annual growth rate (CAGR) of 21.9% over the forecast period–2001 through 2008–is
also expected. Talking about the market trends, the reports says that as the
enterprises have already achieved a high degree of automation for strategic
business processes, the Singapore market will be driven by the replacement
demand for mature applications in the future. The report also predicts marked
convergence towards solution suites. What this means is that while integrated
vendors will gain further foothold in the market, the SME market will most
likely form a substantial part of the second wave of e-commerce investment.
"The e-commerce application market in Singapore is expected to grow at
a steady pace with a larger percentage of enterprises rolling out their Internet
strategies," says Frost & Sullivan’s industry manager for e-business
Alok Shende. Considering the likely pressure of globalization on the top and
bottom lines of companies across verticals, the marketing consulting company
expects the share of e-commerce software to rise from 13.4% to 14.7% of the
total enterprise application market in 2008. While enterprise portals, as an
enterprise application, are still in the development phase, the marketing
consulting firm expects rapid penetration of the same in coming years. According
to the report, what will really trigger off the growth of the e-business
application market is the growing awareness of the Internet among the general
population and companies’ willingness to invest substantially in new
technology. "This will have a spill-over effect on e-business as a
whole," asserts Shende.
ERP: The ERP applications market is varied and ranges across all types
of industries and enterprises. Initially, customers tended to be large
organizations, typically MNCs. However, in the last two to three years, this
trend has been changing rapidly as the top-tier market faces increasing
saturation in Singapore. Vendors are focusing their efforts to tap the SME
segment, where demand is growing. The mid- and bottom-tier segment provides the
highest potential for long-term growth in the ERP software market in Singapore.
SCM: Large companies lead the way in the adoption of SCM strategies in
this region. On the other hand, not many local companies (SMEs) have embarked on
implementation of SCM applications. This could be due to the high costs of
implementation, long deployment time, as well as the resources required to
implement and maintain the same. The demand for SCM solutions is primarily from
verticals such as healthcare, electronics/high technology, hospitality,
shipping, manufacturing, consumer-packaged groups, and retail.
BI: The Business Intelligence (BI) market is still in its development
stage in the Singapore market. Competition in many industries such as telecom,
banking and finance, as well as services sector are forcing companies to look
for new ways to be profitable in the changing global marketplace. Increasing
numbers of customers in this region are looking at using BI tools and analytical
software to shorten development cycles, overhaul supply chains, improve customer
retention, and strengthen decision-making processes.
EP: Enterprise Portals (EPs) are the latest technology trend that is
gradually gaining momentum in the Singapore region. Some early adopters of this
technology in the market are banking/finance, telecom and government sectors.
E-commerce: In the E-commerce software market, large-sized
enterprises, and MNCs have been the prime drivers of demand. The SME market is
likely to form a substantial part of the second wave of e-commerce investment.
Companies in this tier have broadened investments in e-commerce applications, as
they have extended channels and adapted business models. However, Frost &
Sullivan make a projection that in many of these smaller companies, e-commerce
will not be seen as a strategic operation, at least while its benefits remain
CRM: In 2001, the spending on CRM technologies was reduced to a great
extent and sectors such as telecom and financial are wary of making further
investments. Companies of all sizes, but particularly large- and medium-sized
companies as well as industry verticals such as banking and financial
institutions as well as hospitality are driving demand for CRM and service
support technologies in this region.
C-commerce: The C-commerce software market in Singapore is still
evolving. There has been slow uptake in the demand for these solutions in the
market. Leaving aside a few verticals, the majority of the companies are still
evaluating the benefits that c-commerce solutions can deliver. Some of the
verticals that have been the early adopters of this technology are
manufacturing, high-tech, finance, and telecom service industries.
Opportunity for India
"Singapore with its well-built infocom infrastructure, a compact and
infocom savvy population and highly skilled workforce, is an excellent testing
bed for new services and applications," says Sunil Mehta, vice
president-research, Nasscom. Indian IT companies can use the Singapore market as
a springboard for their expansion into the Asia Pacific market. Also hardware
players in Singapore are looking at expanding their services since their margins
are getting squeezed. Indian IT services vendors have a great opportunity of
partnering with these players and offering integrated services to the Singapore
While Indian companies are known for high quality and low cost execution,
albeit in the lower end of the enterprise IT systems, Singapore also presents an
opportunity for the Indian IT companies to move into the higher margin eBusiness
consulting and implementation business. According to Nasscom, India’s software
exports to the Asia-Pacific region will touch $770 mn this fiscal year, and
increase to $6-7 bn by 2008, of which Singapore will constitute $60 mn.
Singapore’s annual investment in India now stands at over $1 bn a year.
Singapore has also recently opened The India Centre in Singapore, which is aimed
at developing a hub to aggregate Indian Companies and showcase the Indian
competencies to the rest of the world. On the initiative front, both the
countries have already signed the ICT Memorandum of Understanding to promote
closer co-operation and exchange of information as well as to foster business
partnerships. Following this a task force for information and communications
technology has also been set up. Singapore was also the focus country at ICT
Talking about the market strategy needed for Indian companies to enter the
fast growing e-business market, Shende suggests that it should be driven around
two points–first, around the market segment and second, around the application
Also, the Indian SME companies can target the SME market through joint
ventures with local partners thereby reducing the entry cost and ensuring a
captive customer base. No wonder then that TCS has its Asia Pacific operations
based out of Singapore. Beside TCS, Mphasis BFL, Mindtree Consulting, Megasoft,
Infrasoft Technologies, ICICI Infotech Services and Bhari Information Technology
are the other Indian companies that have already entered the market.
SHUBHENDU PARTH in New Delhi