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Malaysian enterprises must be prepared for a post COVID-19 world

Enterprises in Malaysia should be reorienting their business models to better accommodate for and suit a post COVID-19 world.

According to GlobalData, the data and analytics company, ICT market recovery needs to be utmost in decision maker’s minds.

The analysts find that 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.

As a result, the enterprises in the country need to adopt new digital technologies and re-evaluate their business models to ensure their business remains successful, states GlobalData.

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.

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 expected to go down, GlobalData finds, 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 bring business, 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, GlobalData states.

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 a more positive note, the government and healthcare sectors will remain largely unaffected, with ICT spending for these sectors expected to remain relatively flat in the year 2020.

GlobalData senior technology analyst Shamim Khan says, “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.”

Khan says, “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.”