Hong Kong: German software giant SAP AG is seeing a sustained pickup in its Asia business, led by strong demand from the fast growing China and India markets, its top regional executive said.
The company saw its Asia software revenue grow 13% in the first quarter, outpacing 10-11% growth for its global software revenue, Stephen Watts, president of SAP Asia Pacific Japan, said on Tuesday.
In late April, the company reiterated its previous guidance for 4-8% total revenue growth globally this year, a vast improvement over the 5% decline in 2009 at the height of the global recession.
“One, two months ago it was all about cash flow and the bottom line,” he said, speaking about SAP’s clients in the region. “Now the discussions we’re having are about growth again.”
Watts said he was “confident” that regional demand would continue to improve this year and that the company’s Asia operations were “busy” in the current quarter, but declined to be more specific.
“Certainly if I look across the market, the conversations are more positive; sentiment is picking up,” he said.
Asia had been one of SAP’s best performing major regions in recent years, accounting for 15-16% of the company’s global revenue, versus 12-13% six or seven years ago, Watts said.
SAP, whose customers include McDonald’s Corp, Audi AG and Apple Inc, counted Australia and Japan as its top regional markets in Asia, but was seeing China fast close in on the pair, he said, adding that China sales were now at about 70% of those for Japan and Australia.
“Typically these fast-growth markets are growing two to three times faster than more mature ones,” he said.
SAP competes in China with global archrival Oracle Corp, and homegrown players Kingdee International Software group and UFIDA Software, which it is increasingly running up against in the domestic market.
Last month, SAP announced plans to acquire Sybase Inc in a deal valued at $5.8 billion, as it moves compete with Oracle.
Despite the deal’s large premium, SAP argued that it made strategic sense because it would allow it to benefit from the “explosion in mobile data” especially in the Asia-Pacific region where Sybase had a strong presence.