Are You Taking Emerging Markets Seriously?

August 27, 2013

News

Are You Taking Emerging Markets Seriously?

The more I think about emerging markets, the more the term “emerging” seems a misnomer. When I hear countries and regions described as “emerging”, I have a vision of them as hunched creatures shuffling out of a dark hole somewhere, blinking in the bright sunlight as smiling Western nations beckon them forth into a wonderful, glowing world of plenty…

It seems to me that image couldn’t be further from the truth. Okay, so some emerging markets (and while we’re on the subject, terms like “undeveloped” or “immature” don’t seem to fit either) are struggling relative to their wealthier cousins. But they’re certainly not short of growth. Or interesting, creative ideas – often from governments – about ways to stimulate it.

Not all of these ideas are ones we’d want to emulate, but they are fascinating. According to my colleague Venecia Liu, tech giant Huawei, together with a Chinese bank, has created a video ATM, which allows people to access bank services remotely, almost like sitting across from a teller in a branch. This is quite an efficient way of using the bank’s talent pool, without restricting staff to branches. In India, the government has gone further, deregulating ATMs to allow non-bank entities to own and operate ATM machines. This has allowed one provider – Tata Communications – to manage thousands of ATMs, taking a fee every time, a neat move by the telecom giant into financial services.

Nevertheless, although emerging markets are making a strong contribution to the evolution of the IT landscape, established businesses won’t just be able to waltz into these locations. Indigenous businesses and vested political interests will play a big part in how these markets evolve. For the countries themselves, there are many issues. As China is finding out, when all the workers have flocked to the cities and their once cheap labor runs out, how does an economy continue to grow?

Naturally, investors and expanding companies will be looking for low-cost opportunities and short time-to-value returns. Those still lagging in their emerging market thinking need to consider several key points:

  • Emerging markets’ lack of infrastructure creates both an opportunity and an obstacle. Is there a boom market for deploying shipping containers or modular data centers to kick-start momentum? Can ad hoc smart grids and small-cell mobile networks replace traditional broadband and high-grade infrastructure?
  • On the money side, how will accountants handle the highly volatile exchange rate fluctuations of local currencies in new markets and between established denominations? How do you prepare long-term forecasts when currencies spike and dive on a weekly basis, and per capita calculations are shaky at best?

A growing industrial base, consumer class and services industry ought to produce growth in all areas. Certainly, watching how this shakes out will make compelling viewing, but to be involved is the opportunity of a generation. We`ll explore this theme further in our upcoming IT spending webinar scheduled for Tuesday 8th October at 4:00PM UK time.

http://blogs.gartner.com/richard-gordon/2013/08/27/are-you-taking-emerging-markets-seriously/

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