Vietnam is projected to see information technology (IT) spending up 17% year-on-year in 2011 following strong growth of 24.9% in 2010, making it the leading market for IT spending in the Asia Pacific region in terms of growth rate. IT services will be the biggest contributor to IT spending growth rate, which is expected to stage year-on-year 18.5% growth to surpass US$347 million in 2011.

According to the latest report of International Data Corp. (IDC), most economic sectors in Vietnam have the need to expand IT investments, including Business Process Outsourcing (BPO) services, businesses developing in remote and rural markets and government-based projects. New technology services models will also push IT vendors to better understand end-users’ demands and revisit their business offerings.

IT services will be the biggest contributor to IT spending growth rate, which is expected to stage year-on-year 18.5% growth to surpass US$347 million in 2011. Hardware spending is expected to post 17% year-on-year growth and packaged software is projected to grow at 14.4%.

Nguyen Lam, country director of IDC Vietnam, said a number of factors such as increased inflation, rising trade deficit, exchange rate risk, weak execution of the national IT master plan and shortage of skilled labor are threatening the speed of development of the ICT market in Vietnam. However, 2011 will mark a transformative year for Vietnam’s information and telecommunications marketplace, he said.

The Government recently announced its plans to become a strong developer in ICT by 2020 and government-based projects in Hanoi, HCMC and Danang cities are predicted to bring about more ICT spending from the public sector. This will give opportunities for IT developments in a wide range of sectors like healthcare, education, energy networks, ecological environment, transportation, and communications.

Rural areas will gain IT attention due to the Government’s high priority projects, in the education and public sector. Intel and broadband service providers in Vietnam this year will cooperate to speed up business penetration in rural and remote areas.

Under IDC predictions, data center services will further expand this year with strong growth. Besides big datacenters such as Vinadata, Thang Long, Matbao, leading service providers such as Lac Viet, Sao Bac Dau, HPT, Viettel, VDC and FPT have also invested in their own datacenters in 2010.

IDC also expects that social media will play a bigger role in local business marketing. With over 26 million Internet users, local business communities are now leveraging cyberspace to conduct marketing campaigns, form executive networks, and recruit employees through sites such as Caravat and Linkedln.

Although more IT service providers have made investments to provide cloud services in Vietnam, the deployment of cloud computing still faces challenges such as security risks. However, IDC believes cloud computing services will transit from being just a hype to become a more concrete trend based on Vietnamese needs.

This year, security-as-a-service will be offered by IT service providers for financial industry services in niche areas such as security and vulnerability management. For the BPO services, IDC expects BPO opportunities in Vietnam to surface in 2011 as local businesses search for better cost alternatives to achieve operational efficiencies.

Digital content will see increased commercialism after the Ministry of Information and Communications announced its project “Program for Digital Content Industry (DCI) by 2010” to enable its current digital content to be available for commercial use by 2011.

The ministry identified six content areas to be developed for mass market offerings but only four key areas will be commercially-generated content. They are mobile network services, online games, online advertising and e-commerce.

IDC also predicts that 3G deployments will raise mobile operators’ value-added services as Vietnam’s 3G subscribers are expected to reach 8 million in 2011. The 3G geographic coverage in Vietnam will be close to 98% by the end of 2012, boosting the supply and demand of more 3G-based mobile services in 2011.