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|05 March, 2018

Consumer telco services to drive up Mena IT spend to 3-year-high

Spending on IT in the Mena region is projected to grow 3.4 per cent to Dh570 billion in 2018

Image used for illustrative purpose. Hewlett-Packard ProLiant commercial data servers destined for cloud computing are assembled by workers at a company manufacturing facility in Houston November 19, 2013.

Image used for illustrative purpose. Hewlett-Packard ProLiant commercial data servers destined for cloud computing are assembled by workers at a company manufacturing facility in Houston November 19, 2013.

REUTERS/Donna Carson

Spending on IT in the Mena region is projected to grow 3.4 per cent to Dh570 billion ($155.36 billion) in 2018, driven by consumer spending in the communication sector.

According to the latest forecast released by Gartner, 2018 will see the highest IT spend in Mena over the last 3 years.

It said the telecommunication consumer segment - mobile voice and data - will be the largest contributor to the rise in IT spending this year.

Spending on communication services is projected to increase from $102.99 billion in 2017 to $106.54 billion this year, grabbing the lion's share of IT spending and growing by 3.4 per cent. This is followed by devices at $27.39 billion in 2018, an increase of 1.6 per cent year on year.

"The communication services segment is growing to serve the increasing demand for premium mobile phones. Communication services are expanding coverage and increasing data transfer rates while keeping prices low. The rising demand of premium mobile phones by consumers is also set to fuel growth in the devices spending segment in 2018," it said.

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Software is projected to exhibit the strongest growth in 2018, with a 12.7 per cent increase year on year. Software spending has also been growing at a double-digit rate for the last 2 years. The growth has been driven by companies pursuing new functionalities in major back-office systems such as supply chain management, enterprise resource planning and customer service.

According to Gartner, cloud spending in the region is among the lowest in the world when measured as a percentage of total IT spending.

"There are insufficient local hyper-scale and large-scale data centres to support cloud systems, which cause local organisations to derive cloud offering from abroad," said Peter Sondergaard, executive vice-president and global head of research at Gartner. "Moreover, latency, legal and local currency makes this option problematic and limits cloud adoption among businesses in Mena."

In 2018, the leading segments driving IT spending growth in the region are banking and securities growing at 3.6 per cent, insurance at 2.9 per cent and retail at 2.8 per cent. IT spending in the banking sector is driven by its move into digital business and the corresponding investments in technologies such as analytics, blockchain and artificial intelligence. For the insurance sector, IT spending is led by investment in software applications, he added.

AI jobs
Globally, Artificial Intelligence (AI) will start creating jobs in 2020 and currently there is a shortage of talent in this field.

In 2020, Sondergaard said, around 1.8 million jobs will be lost due to AI while 2.3 million jobs will be created by 2021.

AI will also create $2.9 trillion in business value and save 6.2 billion hours of worker productivity by 2021, he added.

 

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