Asia-Oceania Vision 2020:

Enabling IT leadership through collaboration

Executive Summary

An ASOCIO Report prepared with KPMG in India

President's Message

On the occasion of the 25th Anniversary of ASOCIO, I am proud to present the report “Asia-
Oceania Vision 2020 - Enabling IT leadership through collaboration”. KPMG has prepared this
report working closely with IT Associations of the 20 ASOCIO member economies.

Since its humble beginning in 1982, ASOCIO has grown to become an important regional IT
Association. Over 25 years, ASOCIO has brought IT Associations of 20 economies together to
discuss and act upon issues of importance. These, among many others, include creating
opportunities to increase the IT trade across the region through bilateral and multilateral
collaborations, working with regional governments, helping the IT associations of countries
with nascent or developing industries, and preparing position papers on important regional
issues.

The 21st Century is slated to be ‘Asia’s Century‘. The region is expected to become one of the
single largest economic regions of the world, with a growing population as well as progressive
economies.

In spite of the tremendous economic transformation, the region is likely to continue to be

diverse. In addition to economic diversity, social, political, religious and linguistic diversities
form the foundation of Asia. This diversity, manifested through deferring prosperity levels and
strengths and challenges facing the individual countries, is also reflected in the structure of IT
Industry around the region.

The march of technological advancements in ICT is expected to continue unabated in the

foreseeable future of the region. We are sure to see a showcase of ICT applications in the
Private, Government and NGO sectors impacting the socio-economic fibre of individual
economies. We also foresee an emergence of a diverse set of globally competitive IT
organizations in the region, who are likely to be key enablers of this IT-enabled transformation,
not only in the region but also globally .

This report looks at this IT Transformation over the next decade to chart out the vision for year
2020. It outlines the challenges faced by the region which present IT opportunities in the
region as well as globally. Above all, it outlines the urgent necessity of collaboration across the

© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
region in all the areas of eco-system of IT, including industry, academia and governments.

Most importantly, it outlines an action agenda for ASOCIO to realize this vision. Moving
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forward, this is indeed an exciting opprtunity for ASOCIO to make a difference to the IT
environment in the region. In short, it opens up new avenues for ASOCIO in its journey for the
next 25 years.

I take this opportunity to thank KPMG for preparing this report. My gratitude also goes out to
all ASOCIO member associations and others who provided their invaluable inputs to the report.

Ashank Desai
President
ASOCIO
Foreword

The world today is more focused on Asia-Oceania than never before, as it is capable of
sustaining high economic growth rates. The region is built on strong fundamentals, and has the
potential to hold a global leadership position in the coming years. Growth rates in the Asia-
Oceania region as a whole are expected to be higher than in any other region in the next
decade. This 'foresight' is attracting a lot of interest in the region.

Leaders of economies in Asia-Oceania are trying their best to make the most of the current
overdrive. Unfazed by the global financial crisis, Asian economies are making aggressive
economic as well as social development plans. Even developed economies in the region, such
as Australia, have demonstrated resilience and have marched through the recession with
strong performing financial markets. The big four Australian banks are now in the list of top
twenty banks globally despite the financial crisis.

The multiplier effect of a developed information, communications and technology (ICT) industry
is not unknown. History has shown that technology has the potential to change society.
Therefore leaders of Asian economies accord particular attention to this industry and have
added ICT development as a priority area in their agenda.

Our report looks at the current growth and future prospects for the IT industry in this region
over the years. The current trends influencing the industry have been examined and the growth
potential of the Asia-Oceania economies, up to the year 2020 has been estimated. Asia-
Oceania’s dominance seems evitable and the year 2020 is expected to be a turning point for
the region. Asia-Oceania is also expected to become the largest supplier of Information
Technology (IT) and Business Process Outsourcing (BPO) services to the world, with about
74.5 percent of global demand expected to be sourced from here by 20202.

The focus of this publication is also on Collaboration through Diversity. The Asia-Oceania
canvas is painted with different strokes of development. The region witnesses remarkable
diversity ranging from cultural and linguistic dissimilarities to varying levels of economic growth
and development. Economies, such as Australia, Japan and Singapore are building an
ecosystem that is conducive for innovation, while others such as Laos, Nepal and Myanmar are
still trying to develop their economies for globalization. This diversity results in distinct

© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
capabilities and challenges for each country, and therefore presents a unique opportunity for
mutual collaboration and co-operation. firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.

Collaboration, especially within the ICT industry, can create opportunities for all economies in
the region. Collectively, the region can achieve growth rates that could transcend what
countries can hope to reach growing in isolation.

As Asia-Oceania moves into the second decade of the 21st century, the next 10 years would be
extremely important for the region to establish its leading position in the world economy. The
catch phrase 'For the first time, we have a nation for a continent, and a continent for a nation '
by the first Prime Minister of Australia Sir Edmund Barton in the 19th century, is likely to hold
true for the entire Asia-Oceania region in this century.

Kumar Parakala
Global Head of Sourcing Advisory
COO, Advisory, KPMG in India
Chairman, Australian Computer Society (ACS)

1. Asia-Oceania has been defined as South Asia, Asia Pacific, and the Australian continent
2. KPMG Analysis based on aggregation of projections outlined in individual country profiles
© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in India.

Asia-Oceania Vision 2020:

Enabling IT leadership through collaboration
Setting the Context
All eyes on Asia-Oceania
Asia-Oceania is already the emerging regional economy in terms of population, production and trade.3 By
2020, this region is set to command a leading position in world economics not just due to its share in
world gross domestic product (GDP), but also because of an expected transformation in the social and
economic status of the region.

Asia-Oceania is poised to see a dramatic rise in domestic consumption, as nearly 90 percent of Asia-
Oceania's people are expected to live in countries that have achieved middle-income status by 2020.

The region is already moving towards greater integration. Going forward, it is expected to play a larger
role and participation in the global politico-economic debate, the size of the region, the growth of its
middle income population and a sizeable increase in the region's trade and investment profile being
contributing factors.

Asia Oceania Today Asia Oceania in 2020 (estimates)

Income status: Income status:

Share in world GDP: 35.7 percent in 2005 Share in world GDP: 43.2 percent in 2020

Average per capita income: Average per capita income:

USD 4,775 in 2005 (in PPP terms) USD 8,476 by 2020 (in PPP terms)

Trade and Investment: Trade and Investment:

World exports share: 27 percent in 2006 World exports share: 35 percent

Share in FDI stock: 11.4 percent in 2006 Share in FDI stock: 20 percent

90 percent population expected to live in middle income

status countries

Moving towards a regional entity by 2020

Sources: KPMG analysis, EIUForesight 2020, Monetary Authority of Singapore

ICT-led growth: Asia-Oceania as a supplier and a consumer

The contribution of the ICT industry to the dynamics of the region in the next decade is expected to be © 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member

vital. Many countries are planning to take advantage of the demonstrated benefits of ICT-led growth –
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such as low investment requirements, lower gestation, increase in jobs, export opportunities, and stricter
environmental standards, among many other factors. Poorer countries that pursue ICT-led growth may
have the added benefit of getting a much easier entry into mainstream globalization due to its many
benefits.

As the region recognizes the multifold benefits of ICT adoption, not only to the economy but also to
social development, ICT penetration is likely to increase, making the region a significant consumer of ICT.
Therefore the region’s role both as a consumer of ICT as well as a supplier of ICT is expected to grow.
There may be some constraints to this projected growth as the region faces several challenges –climate
change, an ageing population, poverty, political instability and industry-specific challenges such as piracy
and shortage of talent.

3. ADB, http://www.intracen.org/btp/regional_meetings/india/delhi_summary.pdf
 These challenges can hinder the current growth initiatives of countries that are exploring the new
opportunities that ICT-led growth may bring. Global opportunities such as e-governance, mobile
commerce or telecom assume much larger proportions in Asia-Oceania because of the relative under-
penetration and large population of the region.

The trends and prospects for the region today, set the tone for future expectations for ICT industry
growth by 2020. A collective vision for the IT-BPO services industry in the region has been
developed in the report to illustrate the potential for growth in the coming decade. The hardware
and communications segments under 'ICT' have not been included in the projections for 2020 in
this report.

Diversity leads to potential for effective collaboration

The large diversity in political, social and development conditions in Asia-Oceania, if effectively leveraged
for collaborative growth, is likely to act as a facilitator for nations to address common challenges,
leverage each others’ competitive advantage and thereby aim for a much larger target market in the ICT
industry by 2020. The report examines this collaboration imperative, in light of the aspirations of individual
countries in the IT-BPO services industry by 2020.

ASOCIO Member Economies

Predominantly Demand Markets Emerging Supplier Countries

Australia Bangladesh

Hong Kong India

Japan Indonesia

New Zealand Malaysia

Singapore Pakistan

South Korea Philippines

Taiwan Sri Lanka

Thailand
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Vietnam

Potential Supplier Countries

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Cambodia, Laos, Mongolia, Myanmar, Nepal

Sources: KPMG Analysis

A Collaborative IT-BPO Vision for 2020 in Asia-Oceania

Information technology and business process outsourcing (IT-BPO), a major component of the ICT
industry, has a large services element that significantly contributes to growth in the sector. The IT-BPO
vision for the region can be viewed in aggregate for both, the demand and supply, of IT-BPO services of
the constituent countries. While predominantly demand-side countries aim to move higher up in the value
chain in ICT, the supplier nations within Asia-Oceania are aiming to garner larger market share in the
global sourcing industry.
The contribution of IT-BPO services demand in GDP to Asia Oceania Computing Industry Association
(ASOCIO) member economies4 is slated to go up from an average of 1.6 percent in 2008 to nearly 2
percent by 2020. For supplier countries, the contribution of IT-BPO services export to GDP is likely to be
even higher, estimated to go up from an average of 2.5 percent in 2008 to 4.7 percent by 20205.

Collaboration could be along four key elements – Investment, Trade, People Mobility and Knowledge
Sharing and Creation. The most obvious form of collaboration, where benefits are tangible, includes
those opportunities that lie in the trade and investment category. Collaboration for trade is likely to lead to
a larger regional marketplace, while at the highest level collaboration for innovation might have much a
wider effect, impacting individual countries, the region as a whole and perhaps even the world

Role of ICT in the growth of Asia-Oceania

ICT in 2008 Role of ICT in ICT in 2020

regional growth
Each country is seeking to
? Very high diversity in the Collaboration can allow
?
move towards a knowledge region can drive bilateral as countries to leverage each
economy, and wants to well as regional ICT other’s strengths and aim for
leverage ICT-led growth collaboration higher growth for the region

Several global as well as

? ICT-led growth has several Leveraging opportunities
?
regional opportunities, both benefits such as low effectively can lead to
for demand markets as well investment, low gestation, inclusive growth, especially
as supplier countries high employment potential for developing countries

However, global, regional and

? ICT growth drivers in the ICT-led growth can help
?
industry challenges could region are strong, due to alleviat challenges, bringing
constrain ICT-led growth if large population and under- large populations into the
not tackled effectively penetrated markets consumption bracket

Sources: KPMG Analysis

Collaboration for Growth

© 2009 KPMG, an Indian registered partnership and a member firm of the KPMG network of independent member
Collaboration within the region could result in several wide-ranging benefits such as a larger regional
market, workforce rationalization, and a narrowing digital divide among countries. It can allow developing
countries, and more specifically poorer countries, to gain from the experiences of more developed
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countries within the region and tap opportunities for sustainable development. Effective collaboration is
likely to create a win-win situation, with each individual member economy able to gain advantages,
whether by addressing a shortage of human resources, or accessing know-how to tap export markets, or
even through strategies to reduce piracy and Intellectual Property Rights (IPR) infringements.

Under the umbrella of ASOCIO, member economies have the opportunity to collaborate for growth and
may therefore be better equipped to achieve ‘Vision 2020’.

4. ASOCIO Member economies currently does not include China

5. IT-BPO services demand and export has been estimated by KPMG for 16 ASOCIO member economies for 2008 and 2020. Estimates do not include data for
Cambodia, Lao PDR, Mongolia, Myanmar and Nepal. GDP estimates for 2008 and 2020 at market prices sourced from EIU
 Contacts

KPMG Contacts ASOCIO Contacts

Viral Thakker Reginald C. Nery Ashank Desai

India Leader Partner President, ASOCIO
Sourcing Advisory Makati City, Philippines Mumbai, India
Mumbai, India +63 917 577 5296 +91 22 6695 1313
+91 22 3090 1730 rcnery@kpmg.com ashank.desai@mastek.com
vthakker@kpmg.com
Lucas Lim
Tommy Woo
Brett Hall Secretary General, ASOCIO
Partner, Risk Advisory Services
ASPAC Leader Tokyo, Japan
Hanoi, Vietnam,
Sourcing Advisory +81-3-2614-0035
+84 4 3946 1600
Singapore lucas@jisa.or.jp
twoo@kpmg.com.vn
+65 6411 8335
bretthall@kpmg.com.sg Kwang Woo Song
Partner, IT Advisory
Chiaki Enoki Seoul, Korea
Partner, Business Advisory +82 2 2112 7810
Tokyo, Japan kwangwoosong@kr.kpmg.com
+81 (3) 3266 7621
chiakienoki@kpmg.com Priyanka Jayatilake
Partner
Ning Wright Colombo, Sri Lanka
Partner, IT Advisory +94 777 313 390
Shanghai, China
priyankajayatilake@kpmg.com
+86 21 2212 3602
ning.wright@kpmg.com.cn
Wahid Ahmed
Ian Hancock Director, IT Advisory
Partner in Charge, IT Advisory Karachi, Pakistan
Sydney, Australia +92 (21) 3568 5847
+61 (2) 9335 8161
wahidahmed@kpmg.com
ianhancock@kpmg.com.au

Paul Bahnisch Ali Ashfaq

Partner
Partner, IT Advisory
Dhaka, Bangladesh
Petaling Jaya, Malaysia
+880 (2) 988 6450
+60(3) 7721 3388
aashfaq@kpmg.com
pbahnisch@kpmg.com.my
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Stanley Chang Ganesan Kolandevelu

Director
Partner, Risk Advisory Services
Vientiane, Lao PDR
Taipei
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+856 21 900 344

+886 2 8101 6666
gkolandevelu1@kpmg.com
schang@kpmg.com.tw

Alan Brame
Partner, IT Advisory
Auckland, New Zealand
+64 (9) 367 5811
alanbrame@kpmg.co.nz

Iwan Atmawidjaja
Partner
Jakarta, Indonesia
+62 21 574 2333
iwan.Atmawidjaja@kpmg.co.id
in.kpmg.com

For detailed report, please contact:

Shailesh Narwaiye
snarwaiye@kpmg.com

The information contained here in is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate
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