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'Communications Tech sector to grow as digital transformation becomes reality'

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Fuseworks Media
Fuseworks Media

New Zealand’s Information and Communications Technology sector to grow strongly as digital transformation becomes a reality

The accelerated pace of digital transformation as Kiwi firms look to mitigate the impact of COVID-19 has been good news for some within the Information and Communications Technology sector, according to new research from Westpac NZ’s Economics team.

Westpac NZ Industry Economist Paul Clark says spending on ICT has been relatively robust as a result, and that should remain the case, although some moderation in the short-term is likely.

"With the digital genie now out of the bottle and firms more open to new ways of working, we expect that spending on ICT products like cloud computing, social networking software and collaboration platforms will continue to be buoyant," Mr Clark says.

However, Mr Clark believes the news is unlikely to be quite as good elsewhere. Even though the economy is expected to improve over coming quarters, ongoing COVID-19-related uncertainties are likely to mean slower investment in traditional ICT products and services. That includes hardware and software.

"Longer-term, however, we expect ICT spending to grow strongly across all market segments, with the export market likely to be a particular area of growth."

"Taking advantage of future growth opportunities will pose some big challenges. Indeed, firms in the ICT sector will find themselves being increasingly squeezed by two opposing forces. On the one hand they are going to face ever increasing demands for new ICT products and services, while one the other hand the means of addressing them are likely to become ever more constrained.

"That is likely to lead to a sustained period of corporate activity, with firms actively merging with and acquiring others, within and across market segments," Mr Clark says.

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