UAE year-on-year IT spending rises 41% to $791 million |
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The IT services market in the UAE has been growing substantially faster than expected, as demand shifts from infrastructural investment to more strategic projects.
According to a recent IDC study, IT services spending in UAE increased 41 per cent year on year in 2007 to nearly $791 million (Dh2.9 billion).
In coming years, IDC expects spending to continue to expand rapidly, fuelled by a strong economy, a maturing IT market, skilled-labour shortages, increased foreign investment, and the increasing complexity of IT and its impact on operational management across all economic sectors. This is supported by the fact that IT services providers in the region have been investing heavily to expand both their services teams and offerings.
"Organisations in the UAE are facing a myriad of challenges that are heavily impacting their investments in IT services," said Margaret Adam, research manager, IT Services, IDC MEA. "The desire to accelerate revenue growth and rapidly take advantage of the opportunities in the region, as well as compliance and regulatory pressures and a drive for cost effectiveness, all fuel growth in the UAE IT services industry."
While 2006 saw infrastructure-related services, such as hardware and software installation and support, making up the largest portion of the IT services market, the situation changed in 2007 when systems integration services took the lead, constituting 19 per cent of the market. It was followed by hardware support and installation (15.7 per cent) and software support and installation (12.8 per cent). The combined outsourcing category comprised 18.1 per cent of the IT services market in UAE last year.
"The more sophisticated service areas such as systems integration, application customisation, and outsourcing were the fastest growing in 2007," said Adam. "Year-on-year growth of around 50 per cent in these categories testifies to a maturing IT services market and a shift towards more strategic IT decision making."
The top three players in the UAE IT services market in 2006 - MDSMDS
, Emirates ComputersEmirates Computers, and Injazat Data SystemsInjazat Data Systems - were also the leaders in 2007. On the demand side, the combined government sector, with 26.7 per cent of total services spending, was the largest customer for IT services, followed by the financial sector with 16.7 per cent.
The third-largest sector, with an 8.6 per cent market share, was the combined agriculture, construction, and mining vertical.
IDC predicts that spending on IT services in UAE will continue to grow by an annual average of 23.9 per cent over the next five years to reach $2.3bn in 2012.
The study, UAE IT Services 2008-2012 Forecast and 2007 Vendor Shares, presents the IT services industry in the UAE in 2007 and forecasts expenditure on IT services through 2012.
By Staff Writer
© Emirates Business 24/7 2008
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