'IT services market in UAE to touch $2.3 Bn by 2012'
Monday, 15 September 2008, 15:43 IST
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Dubai: The IT services market in the United Arab Emirates (UAE) is growing substantially faster than expected and may touch $2.3 billion by 2012, according to a new study. The study by market research and analysis firm International Data Corp (IDC) showed that growth has been marked by demand shifting from infrastructural investment to more strategic projects. Year-on-year growth in IT services spending skyrocketed by 41 percent in 2007 to touch $791 million, an IDC statement said. "Organisations in the UAE are facing a myriad of challenges that are heavily impacting their investments in IT services," IDC Middle East and Africa's (MEA) research manager for IT Services Margaret Adam said in the statement. "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," she added. Spending on IT services in the UAE would continue to grow by an annual average of 23.9 percent over the next five years to reach $2.3 billion in 2012, IDC said. According to the study, in coming years, IDC expects IT services spending in the UAE 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 within the region have been investing heavily to expand both their services teams and offerings," it said. 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 percent of the market. This was followed by hardware support and installation (15.7 percent) and software support and installation (12.8 percent). The combined outsourcing category comprised 18.1 percent of the IT services market in UAE last year, the IDC statement said. "The more sophisticated service areas such as systems integration, application customisation, and outsourcing were the fastest growing in 2007," Adam said, adding that year-on-year growth of around 50 percent in these categories testified to a maturing IT services market and a shift towards more strategic IT decision-making. On the demand side, the combined government sector, with 26.7 percent of total services spending, was the largest customer for IT services, followed by the financial sector with 16.7 percent. The third-largest sector, with an 8.6 percent market share, was the combined sector of agriculture, construction, and mining vertical.
Source: IANS
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