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Emerging impacts

Emerging impacts

It's one thing to acknowledge the importance of emerging markets, but quite another to identify those with the best potential

Several of the major US technology vendors earn more than half of their revenues from overseas activities -- companies like Cisco, Intel, Hewlett-Packard, and IBM.

IBM recently announced its strongest revenue and profit performance in almost a decade, which reflected the strength of Big Blue's global model. In the fourth quarter IBM generated 65 per cent of its business outside the US. Performance was especially strong in the Asian region excluding Japan (20 per cent growth and profitability more than 40 per cent). By capitalising on the opportunities in the growing global economies IBM delivered an overall 10 per cent revenue growth.

The term "emerging markets" is commonly used to describe business and market activity in rapidly changing economies around the world. With access to ICT improving in low-income countries, emphasis is shifting from well-known demand-side benefits towards supply-side benefits, such as more efficient supply chains, better communications, improved productivity, and lower input costs.

New terms have emerged to describe the emerging markets, such as BRIC and BRIMC. BRIC stands for Brazil, Russia, India and China; while BRIM adds Mexico to the group. BRIC economies are expected to join the global economic powers although the other emerging markets are unlikely to match India and China in strength. IDC now recognises a group of emerging economies it calls BRIC+9. This is the classic BRIC plus Mexico, Poland, Turkey, Argentina, Columbia, Saudi Arabia, Thailand, the UAE, and Vietnam.

So take your pick if you are looking at offshoring. The multinationals are at various levels of effectiveness -- servicing, manufacturing, partnering, and selling -- in these developing economies in their fight to stay alive in today's globalising economy. Tata Consulting Services recently created a business unit that will focus on emerging markets. It also set up a specialised M&A team to focus on verticals where TCS has replicable products.

The technology-for-emerging-markets team in Microsoft Research India is also seeking to address the needs and aspirations of people in emerging markets, including those who are increasingly consuming new computing technologies and services, as well as those for whom access to technology remains largely out of reach.

Growing workforces, ongoing productivity gains, increasing consumption levels, and technological improvements should all continue to thrive in developing countries. The economies of several countries that are emerging now have not yet reached first world status but have in many ways outpaced their developing counterparts in the use of technology.

Len Rust is publisher of The Rust Report


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