Saturday, Jun 01, 2013
Dubai: Demand for technology in the GCC is helping the industry see double-digit growth, but a few companies are beginning to wonder if a lack of talented people or falling oil prices might bring that to an end.
Omnix International, a Dubai-based system integrator, estimates that growth in the information and communication technology (ICT) sector in the GCC will be between 10 to 25 per cent in 2013, driven largely by a demand in banking and finance, tourism, oil and gas, utilities, telecommunications and government services, all looking to use technology such as cloud computing or analytics,
The double digit growth in being helped by “healthy oil prices, private sector expansion and an increased push towards government e-services,” the company said.
The GCC region is expected to grow at a rate of approximately 8.6 per cent from 2010 to 2015, according to a report from Business Monitor International. The value of the market is expected to reach $12.7 billion (Dh46.6 billion) from its current value of $8.4 billion.
Software is expected to grow at 10.3 per cent over the next five years, while hardware is expected to grow at 7.1 per cent. The growth rate coming mainly from the UAE and Saudi, the two largest IT markets in the GCC. The UAE is expected to spend $4.1 billion on IT in 2013. Saudi Arabia will spend $4.5 billion.
David Brooke, General Manager for Dell, said there is a lot of investment being created around the e-government initiatives, such as the m-government initiative launched last week in Dubai that aims to move all government services onto a mobile platform in two years.
“It’s a really primary investment area in the region,” he said, adding that government is also continued to spend in education.
Some companies say the 10 to 25 per cent is conservative.
Factors behind growth
SAP, which specialised in enterprise software and has been ramping up investments and training in the Middle East over the last year, says it is seeing growth of 30 to 40 per cent year on year, according to Sam Al Kharrat, the company’s regional managing director. That growth rate makes the region that fastest growing region for SAP.
Al Kharrat points to a number of factors behind the growth of software, including risk governance and compliance, cloud computing, and mobile platforms. Software to help companies with social media is also in demand, due to impact it can have on their company.
“Companies realise that consumers have the power to make or break their bands, sometimes within days.”
But while the growth has been good, there are some black clouds on the distant horizon.
Al Kharrat says the lack of qualified technical talent in the region in already beginning to affect growth in the region.
“I think [demand for talent] is already affecting growth. If you look at the raw demand for technology, it’s quite high,” he said. “The supply is not there, but the demand is there.”
Since much of the growth in the IT sector in the GCC is driven by government spending, Al Kharrat, Brooke, and Mohammad Hassan Metla, the chief financial officer at Omnix, all said they are keeping an eye on the price of oil.
Metla said a crash in prices would likely hit government services. While government budgets are usually priced to absorb fluctuations in oil prices. A recent rise in Shale Oil, which was previously either too expensive or too deep to drive fill, is causing some concern that prices could fall. Despite rising to more than $110 a barrel last year, US crude prices recently have been sitting between $92 to $94 a barrel. However. Metla said no one is expecting a return to the days of $30 a barrel, which occurred in 2009.
“It’s a concern, but it doesn’t keep me up at night.”
By Scott Shuey Business Editor
Gulf News 2013. All rights reserved.
