Indonesia Digital Transformation Market Size
| Study Period | 2019 - 2029 |
| Base Year For Estimation | 2023 |
| Market Size (2024) | USD 20.40 Billion |
| Market Size (2029) | USD 49.57 Billion |
| CAGR (2024 - 2029) | 19.44 % |
| Market Concentration | Medium |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Indonesia Digital Transformation Market Analysis
The Indonesia Digital Transformation Market size is estimated at USD 20.40 billion in 2024, and is expected to reach USD 49.57 billion by 2029, growing at a CAGR of 19.44% during the forecast period (2024-2029).
- With the introduction of Industry 4.0 in the manufacturing sector, numerous factories are embracing digital technology to improve, automate, and upgrade the whole process. Industry 4.0 technology, such as robotization, is already commonplace in many enterprises.
- Rapid technological advancement is expected to be accompanied by strong economic expansion. According to the Ministry of Finance, adopting new technologies may boost Indonesia's economy by as much as USD 2.8 trillion by 2040. The use of technology, particularly digital, robotics, and automation, is growing in the country and has a significant influence on many industries, including manufacturing, energy, and housing, driving the demand for the studied market in the country.
- For instance, Indonesia's digital economy is on a rapid growth trajectory, bolstered by the widespread adoption of digital technology and the prominence of platforms like Tokopedia and GoJek. To realize its vision for future cities, comprising "Decent Cities" (comfortable, liveable, and safe), "Greener Cities" (resilient to climate change and disasters), and "Smarter Cities," Indonesia initiated the "Smart City" vision spanning from 2015 to 2045.
- Furthermore, the Ministry of Communication and Informatics in Indonesia unveiled the "Digital Indonesia 2021-2024" strategy, focusing on digital infrastructure, governance, economy, and society. This blueprint outlines Indonesia's policy objectives, implementation strategies, and timelines for its digital transformation, with a key emphasis on ensuring a more balanced distribution of the digital economy across the nation's regions.
- Indonesia's Ministry of Communication and Informatics (MCI) introduced the "Roadmap Indonesia Digital 2021-2024," designed to propel the nation's digital evolution. The roadmap is structured to facilitate a more even economic landscape, leveraging technology, digital connectivity, and innovation.
- However, the Indonesian digital transformation market is witnessing a demand for more skilled human resources. According to a World Bank Report, technology graduates of the nation frequently fall short of the industry norm, and there will be a shortage of 9 million ICT professionals in the period between 2015 and 2030. In addition, internet and technology business needs more and better facilities in terms of quantity and quality. There is a gap in Indonesia's infrastructure for both internet and energy.
Indonesia Digital Transformation Market Trends
Increase in the adoption of big data analytics and other technologies in Indonesia
- Indonesia has increasingly embraced IoT solutions to enhance business processes and elevate its cities, making them smarter, safer, and more efficient. The government's robust support for smart city initiatives is a key catalyst for this surge in IoT adoption. Indonesia's smart city endeavors are channeled into five core areas: smart mobility, building and environment, industry, health, and governance. Given the evident advantages, the country's IoT expenditure was set for a significant uptick.
- A joint study by Google, Temasek, and Bain & Company forecasted Indonesia's digital economy to surpass USD 124 billion by 2025. The Indonesian government actively promoted digital adoption among its 64 million MSMEs, urging them to embrace a 'Go Digital and Go Global' mindset. Their ambitious target was to have 30 million MSMEs digitally onboarded by 2024.
- Additionally, the landscape of physical IoT devices, spanning from cars and home appliances to factory robots and sensors, was set to revolutionize various aspects of Indonesian life, from healthcare to transportation. Concurrently, the demand for AI and machine learning experts surged, especially in sectors like banking, e-commerce, medicine, space exploration, and translation.
- Moreover, Indonesia's significant investments in 5G and IoT were poised to reshape the country's connectivity paradigm. The advent of 5G was anticipated to have far-reaching implications across industries, particularly in bolstering immersive services like augmented reality, streaming, and gaming. Ericsson's research suggested that within two years of the 5G networks' commercial launch, an estimated five million Indonesian smartphone users could opt for 5G services. As of September 2023, Indonesia's mobile network boasted a median download speed of nearly 24 Mbps, with upload speeds averaging around 13.33 Mbps. Furthermore, the recorded peak download speed for Indonesia's 5G network in May 2023 surpassed 166 Mbps.
- Indonesia stood out as a frontrunner in harnessing IoT's potential. The technology reshaped healthcare spending, industrial productivity, and corporate expenses. Notably, industries like manufacturing, agriculture, and natural resources collectively contributed 50% to Indonesia's GDP, stood to gain the most from IoT applications.
Manufacturing is Expected to be the Fastest Growing Market
- Indonesia is a notable industrial manufacturer that extensively embraces automation in its sectors. Manufacturing plays a significant role in a nation's GDP, with Indonesia's manufacturing sector contributing more than 18.67% to its economic output in 2023, making it the primary contributor. The substantial manufacturing activities in Indonesia are expected to bolster the demand for the market under examination.
- In 2023, Statistics Indonesia reported that Indonesia's manufacturing sector contributed approximately IDR 3.9 quadrillion to the country's GDP. Over the past decade, this sector has consistently held the position of being Indonesia's primary GDP contributor while also emerging as a pivotal investment destination and a major job creator.
- According to local economic studies, it has been determined that micro, small, and medium enterprises (MSMEs) constitute more than 99% of all business entities in Indonesia, with the food and beverage sector accounting for at least 44% of these enterprises. Consequently, the increasing adoption of technology in the region's manufacturing sectors will significantly augment market prospects. As an illustration, the Indonesian government is actively encouraging the local food and beverage industry to embrace digital advancements and transition towards the utilization of technological innovations as an integral component of the national Making Industry 4.0 industrial strategy.
- Moreover, the increasing region's automotive industry and the adoption of automated technologies in the manufacturing hubs are expected to drive the market. According to the local automotive industry association Gaikindo, new vehicle sales in Indonesia increased by 3% to 101,048 units in March 2023, compared to 98,536 units sold in the same period last year. Moreover, the existence of vendors already offering robotic technology is expected to create a significant impact on the market's growth. For instance, Hyundai Robotics is presently operating its first industrial robotic automotive facility in Indonesia, and the utilization of UR3 Cobots at JEIN, a producer of car audio-visual and navigation equipment, will be a noteworthy impetus for market growth.
- A study conducted by the Journal of Science and Technology Policy Management has revealed that the implementation of Industry 4.0 will enhance the manufacturing sector in Indonesia. Several companies constantly try to drive significant automation technologies and create substantial market demand in the region's manufacturing sectors. For instance, in August 2023, Rockwell Automation, the company specializing in industrial automation and digital transformation, announced its inaugural ROKLive Jakarta event. This event aims to showcase the advantages of adopting automation and digital transformation as crucial catalysts for efficiency, sustainability, and expansion within the manufacturing industry. Such activities would enhance the market opportunities for many vendors in the region.
Indonesia Digital Transformation Industry Overview
The Indonesian digital transformation market is fragmented due to the presence of numerous players in the country, including Accenture PLC, Google LLC (Alphabet Inc.), Siemens AG, IBM Corporation, and Microsoft Corporation, as well as mid-sized firms, small enterprises, and start-ups. Players in the market are adopting strategies such as partnerships, mergers, innovations, and acquisitions to enhance their product offerings and gain sustainable competitive advantage.
- In April 2024, Neura Robotics and OMRON Robotics and Safety Technologies Inc. unveiled a strategic partnership. Their joint goal is to transform the manufacturing landscape by integrating cognitive robots into factory automation. These robots harness cutting-edge AI to elevate efficiency, flexibility, and safety standards. The collaboration paves the way for many new applications, from intricate assembly tasks to detailed quality inspections and adaptive material handling processes.
- In April 2024, Microsoft unveiled its plans for a monumental USD 1.7 billion investment over the next four years in Indonesia. This investment will primarily focus on bolstering the nation's cloud and AI infrastructure. In addition, it aims to provide AI skilling opportunities to a staggering 840,000 individuals and offer support to Indonesia's burgeoning developer community. The Minister of Communications and Information Technology of Indonesia underscored the pivotal role of Microsoft in propelling Indonesia toward its ambitious vision, Golden Indonesia 2045.
Indonesia Digital Transformation Market Leaders
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Accenture PLC
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Google LLC (alphabet Inc.)
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Siemens AG
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IBM Corporation
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Microsoft Corporation
*Disclaimer: Major Players sorted in no particular order
Indonesia Digital Transformation Market News
- May 2024: Edgnex, a UAE-based data center firm, revealed its plans to construct a data center in Jakarta, Indonesia. The firm, owned by Damac, made this announcement at the Indonesia Cloud & Datacenter Convention. The 15MW facility, a joint venture between Damac and Edgnex, will be situated along MT Haryono. The initial phase of construction is slated for completion by the fourth quarter of 2025.
- February 2024: Digital Edge Holdings Pte Ltd unveiled its second facility in downtown Jakarta, named EDGE2. This facility will be managed by PT Ekagrata Data Gemilang, a subsidiary of PT Indointernet Tbk (Indonet) and part of the Digital Edge family. EDGE2 is primed with cutting-edge technology specifically tailored to meet the rising needs of hyperscale and artificial intelligence (AI) deployments. Its design sets new benchmarks in data center connectivity and sustainability and bolsters Indonesia's digital economy by enhancing its critical data infrastructure capacity.
Indonesia Digital Transformation Market Report - Table of Contents
1. INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. INDUSTRY ECOSYSTEM ANALYSIS (Detailed Coverage of Key Stakeholders in Digital Transformation Industry Product/Solution Providers, System Integrators/VARs, Connectivity Providers, Regulatory Bodies, End-users, Service Providers, etc.)
5. MARKET DYNAMICS
5.1 Market Drivers
5.1.1 Increase in the Adoption of Big Data Analytics and Other Technologies in Indonesia
5.1.2 The Rapid Proliferation of Mobile Devices and Apps
5.2 Market Restraints
5.2.1 Concerns About the Privacy and Security of Information
6. CURRENT MARKET SCENARIO AND EVOLUTION OF DIGITAL TRANSFORMATION PRACTICES
7. KEY METRICS
7.1 Technology Spending Trends
7.2 Number of IoT Devices
7.3 Total Cyberattacks
7.4 Technology Staffing Trends
7.5 Internet growth and penetration in Indonesia
7.6 Digital Competitiveness Ranking
7.7 Fixed and mobile broadband coverage
7.8 Cloud adoption
7.9 AI adoption
7.10 E-commerce penetration
8. MARKET SEGMENTATION
8.1 By Type
8.1.1 Analytics, Artificial Intelligence and Machine Learning
8.1.1.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.1.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.1.3 Use Case Analysis
8.1.1.4 Market Outlook
8.1.2 Extended Reality (XR)
8.1.2.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.2.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.2.3 Use Case Analysis
8.1.2.4 Market Outlook
8.1.3 IoT
8.1.3.1 Current Market Scenario and Market Projections for the Forecast Periodd
8.1.3.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.3.3 Use Case Analysis
8.1.3.4 Market Outlook
8.1.4 Industrial Robotics
8.1.4.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.4.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.4.3 Use Case Analysis
8.1.4.4 Market Outlook
8.1.5 Blockchain
8.1.5.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.5.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.5.3 Market Outlook
8.1.6 Additive Manufacturing/3D Printing
8.1.6.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.6.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.6.3 Use Case Analysis
8.1.6.4 Market Outlook
8.1.7 Cybersecurity
8.1.7.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.7.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.7.3 Use Case Analysis
8.1.7.4 Market Outlook
8.1.8 Cloud and Edge Computing
8.1.8.1 Current Market Scenario and Market Projections for the Forecast Period
8.1.8.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.8.3 Use Case Analysis
8.1.8.4 Market Outlook
8.1.9 Other Types (Digital Twin, Mobility and Connectivity)
8.1.9.1 Current Market Scenario and Market Projections for the Forecast
8.1.9.2 Key Growth Influencers (Drivers, Challenges, and Opportunities)
8.1.9.3 Market Breakdown by Type (Digital Twin, Mobility and Connectivity)
8.1.9.4 Use Case Analysis
8.1.9.5 Market Outlook
8.2 By End User
8.2.1 Manufacturing
8.2.1.1 Oil, Gas and Utilities
8.2.1.2 Retail & e-commerce
8.2.1.3 Transportation and Logistics
8.2.1.4 Healthcare
8.2.1.5 BFSI
8.2.1.6 Telecom and IT
8.2.1.7 Government and Public Sector
8.2.1.8 Other End Users (Education, Media & Entertainment, Environment Etc.)
9. COMPETITIVE LANDSCAPE
9.1 Company Profiles
9.1.1 Accenture PLC
9.1.2 Google LLC (Alphabet Inc.)
9.1.3 Siemens AG
9.1.4 IBM Corporation
9.1.5 Microsoft Corporation
9.1.6 Cognex Corporation
9.1.7 Hewlett Packard Enterprise
9.1.8 SAP SE
9.1.9 Oracle Corporation
9.1.10 Infosys
9.1.11 Amazon Web Services Inc.
9.1.12 Apple Inc.
9.1.13 Cisco Systems Inc.
- *List Not Exhaustive
10. KEY TRANSFORMATIVE TECHNOLOGIES
10.1 Quantum Computing
10.2 Manufacturing as a Service (MaaS)
10.3 Cognitive Process Automation
10.4 Nanotechnology
Indonesia Digital Transformation Industry Segmentation
Digital transformation is the process of incorporating digital technologies such as artificial intelligence and machine learning, extended reality (VR & AR) for industrial applications, IoT, industrial robotics, blockchain, digital twins, 3D printing/ additive manufacturing, industrial cyber security, wireless connectivity, edge computing, smart mobility, and others across various end-user industries.
The Indonesian digital transformation market is segmented by type (analytics, artificial intelligence, and machine learning extended reality (XR), IoT, industrial robotics, blockchain, additive manufacturing/3D printing, cybersecurity, cloud and edge, computing, and other types (digital twin, mobility, and connectivity) and end users (manufacturing, oil, gas, and utilities, retail & e-commerce, transportation, and logistics, healthcare, BFSI, telecom, and IT, government and public sector, and other end users (education, media & entertainment, environment etc). The market sizes and forecasts are provided in terms of value in USD for all the above segments.
Indonesia Digital Transformation Market Research FAQs
How big is the Indonesia Digital Transformation Market?
The Indonesia Digital Transformation Market size is expected to reach USD 20.40 billion in 2024 and grow at a CAGR of 19.44% to reach USD 49.57 billion by 2029.
What is the current Indonesia Digital Transformation Market size?
In 2024, the Indonesia Digital Transformation Market size is expected to reach USD 20.40 billion.
Who are the key players in Indonesia Digital Transformation Market?
Accenture PLC, Google LLC (alphabet Inc.), Siemens AG, IBM Corporation and Microsoft Corporation are the major companies operating in the Indonesia Digital Transformation Market.
What years does this Indonesia Digital Transformation Market cover, and what was the market size in 2023?
In 2023, the Indonesia Digital Transformation Market size was estimated at USD 16.43 billion. The report covers the Indonesia Digital Transformation Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the Indonesia Digital Transformation Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
Indonesia Digital Transformation Industry Report
Statistics for the 2024 Indonesia Digital Transformation market share, size and revenue growth rate, created by Mordor Intelligenceā¢ Industry Reports. Indonesia Digital Transformation analysis includes a market forecast outlook for 2024 to 2029) and historical overview. Get a sample of this industry analysis as a free report PDF download.
