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IT industry poised for rapid growth and expansion in New Zealand

Famed for its innovative knowledge based economy, New Zealand is a world leader in the application of technology to add value with its array of innovative IT companies. New Zealand is one of the quickest countries in the world at adopting new technologies, with one of the highest rates in the world for internet usage, mobile phone and electronic transfer technologies. Multimedia is an emerging industry in the country that presents lots of investment opportunities given its number of leading telecommunications companies in GPS and radio communication. IT is a fast growing export sector in NZ and gave an estimated NZ$ 1.5 Billion in 2009 and overall GDP of 4% from the ICT sector. However, it has been challenged to increase GDP contribution to about 10%.

 

Employment forecast for the sector have pegged at 125,000 expected by year 2012 compared to the current levels at about 41,000. The New Zealand government has committed to partner with private companies to build an ultra-fast broadband service estimated to cost NZ$ 3.5 Billion and cover about 75% of New Zealanders in the next ten years. The government’s NZ$1.5 Billion commitment is aimed at creating a robust ICT industry based on services development and delivery using the Ultra-fast Broadband (UFB). Regardless, the current copper, 3G and cable networks will provide services for some time to come. Broadband uptake continued by 14% last year, way above the OECD average, a trend that pundits expect to continue through to 2010/2011. By that time, is it hoped that fiber based services will be more widely available.

 

Major IT industry players in New Zealand like Vodafone, TelstraClear and Telecom have invested in VDSL2 technology and are introducing these networks. Telecom has signed a NZ$ 150 Million deal to provide internet backhaul connections for Vodafone. Other industry players like IBM New Zealand posted an after tax profit of NZ$ 20,152,000 in 2009 compared to $14,271,000 in 2008, which represented a gross margin of 5% from their pre-tax profit of $28,096,000. Its growth was driven by software and systems.

 

New Zealand IT industry experienced a tough year of tightened budgets and focus on survival was vital but 2010 is expected to ease the pressure even though markets will remain volatile. Government initiatives such as the UFB, centralized procurement and market inroads by maturing technologies like cloud computing, mobility and an advanced customer care solutions will fuel new activity and present a number of transformational tipping points.

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