TECH SUPPLIER Jun 2020 - Market Presentation - Doc # AP46288620

2H19 Country Report on IT Services — Malaysia

By: Benjamin TenAssociate Market Analyst

On-line Presentation

Abstract

The Malaysia economy grew at a modest pace, in line with the slowdown of global economic growth. The country's gross domestic product (GDP) growth was 4.4% and 3.6% in 3Q19 and 4Q19, respectively. Moreover, Malaysia's full-year GDP growth in 2019 was 4.3%, the lowest growth since the global financial crisis in 2009.

The economy is set to grow at a slower pace in 2020 because of the slowdown in global and domestic demand, as well as the recent COVID-19 outbreak and political uncertainty in the country. IDC believes that IT services spending in the next two years will be adversely affected.

The government sector continues to leverage the expertise of service providers for IT consultation services. Smart City projects, in addition to initiatives involving technologies, such as artificial intelligence (AI), cloud, and blockchain by government agencies, were the IT consulting market's key drivers.

The demand for hosting infrastructure services continues to be driven by enterprises' lack of IT expertise to manage their IT infrastructure in a cloud environment. Enterprises in Malaysia are opting to adopt a hybrid cloud strategy that includes leveraging managed cloud services instead of solely migrating to a public cloud environment.

Meanwhile, demand from the banking and public sectors continues to drive the resilient growth of the hardware deploy and support services market, with clients procuring IT hardware, such as servers and storage, as their technology refresh cycle approaches.

In the near term, all primary markets of the IT services market will be impacted by the pandemic, albeit at varying degrees. The managed services market will be the least affected by COVID-19, with the impact expected to be delayed compared with other markets. On the other hand, the growth of the project-oriented market, which involves IT services' onsite delivery, will be impacted instantaneously.


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