IT spending in the Middle East resilient and climbing
IT spending in the Middle East resilient and climbing
Beirut (RPN) – IT spending in the Middle East continues to rise, with five-year forecasts in some markets approaching the billion mark. Saudi Arabia’s highly lucrative market for technology products and services was valued at .5 billion last year, and projected to expand to .8 billion by 2013 – a compound annual growth rate of 8%.
Information Technology experts surveyed by RPN predicted that IT spending in the region will prove resilient despite ongoing financial turbulence in the region and in the global markets.
“We expect growth in IT spending in the MENA region next year, despite the uncertain economic environment and global financial crisis,” Johnny Karam, director for Symantec, in the MENA region, told RPN. “We project that spending in the region will outpace that seen in European markets, driven by sheer necessity,” Karam explains.
“Growth in infrastructure demands greater technological and security investments; upgrades to communications infrastructure will continue to be a driving force,” he added.
Saudi Arabia’s IT market is the largest in the region, driven by economic and demographic factors that analysts expect will sustain growth in spite of a turbulent global economy.
“Saudi Arabia’s IT market has a number of positive factors which should help it avoid stagnation, including a growing population and government projects,” according to a report by Business Monitor International.
“Oil and gas will continue to be a key vertical, with sector giants such as Saudi Aramco spending on improving dataflow,” the report adds.
With per capita IT spending in the Kingdom expected to reach 0 by 2013, Saudi’s growing and youthful population demographic is an important driving force for IT spending in the GCC region. PC penetration is expected to reach 30% within five years.
In addition to population demographics, government projects, and improvements to infrastructure, Symantec’s Johnny Karam believes that the increasing threat of cybercrime will contribute to growth in IT spending, with businesses allocating more financial resources to securing data.
“Data is the bloodline of business – it is a core asset that must be effectively managed and secured. The need for business to effectively manage and secure its data will be a major growth driver in the IT market going forward,” Karam told RPN.
As the Gulf’s second-largest IT market, estimated at .8 billion in 2009, the UAE is expected to post an 8% contraction in IT spending, on declines in hardware sales. Despite the slump, analysts project the Emirates will register robust and sustained growth over the five-year term.
“The total size of the UAE’s IT market is expected by BMI to grow at a compound annual growth rate (CAGR) of 10% to around US.1bn in 2013. A number of fundamental drivers, including local and federal government initiatives, significant population growth and development of non-oil sectors such as real estate and tourism, should help to prevent market stagnation,” the report indicates.
Strong state-sponsored initiatives promote e-commerce and e-government services in the country, with the goal of providing 90% of government services electronically. According to the Dubai Chamber, internet penetration in the UAE exceeded 54% at the close of 2008, well above the MENA region average.
“UAE’s IT market is poised for exponential growth … approaching $ 4.7 billion in 2013,” reports Dubai Chamber of Commerce and Industry.
“Fundamental drivers for this market include local and federal government initiatives and development of the non-oil sectors, which include real estate and tourism,” the department adds.
With the third largest market in the Gulf, IT spending in Kuwait approached 0 million in 2009 and is projected to exceed billion by 2013. Analysts credit the country’s affluent, tech-savvy population as an important growth driver, along with efforts by Kuwait’s Central Agency for Information Technology, or CAIT, to make more government services available online.
“CAIT has led the drive to launch the Kuwaiti government’s new portal for e-services, making all government services available through a single site, and eventually over a mobile platform …Kuwait has ramped up its e-government efforts, rolling out a number of new services for citizens in 2008,” the BMI report said.
Globally, Egypt’s IT market is one of the fastest growing, projected to reach .9 billion within five years, up from .2 billion in 2009, representing a compound annual growth rate of 12%
“While computers remain a luxury item for many, a series of factors should drive growth over the forecast period, including new oil and gas discoveries, a large young population, and stimulus package pay raises for civil servants and other groups,” the report said.
“Egypt’s emergence as a regional outsourcing location will attract more investment from vendors and create opportunities across various sectors,” BMI added.
Qatar’s 0 million IT market is expected to expand to 0 million by 2013, buoyed by high oil prices, expanding infrastructure, and the introduction of competitors into the telecoms industry.
Lebanon’s IT spending is projected to see a compound annual growth rate on par with that seen elsewhere in the region.
Patrick Antoun is Lebanon Country Manager for Mindware, an IT distributor. He estimates 100,000 computer units were sold in Lebanon in 2008, in a domestic IT market valued at over 0 million in 2008. Lebanon’s IT sector is expected to register 7% CAGR in 2009, on extensive reforms in important economic sectors, including telecom, education, government, banking, and media.
“Looking at the activities within Lebanon’s IT sector, we are positive that this market has a considerable potential for growth, and therefore has a rapidly expanding need for more sophisticated hardware and applications designed for specific industries,” Antoun said.
In an interview with RPN, Antoun emphasized that advancements in Lebanon’s communications sector will contribute to the robust growth in the country’s IT industry, particularly efforts to expand bandwidth and recruit DSL users.
“The steady increase in digital subscriber line (DSL) users is also indicative of an imminent expansion of the domestic PC market,” he added.
In an unexpected twist, analysts such as Symantec’s Karam, predict some growth in the IT industry, attributable to tougher economic times.
“Hardware is far more expensive than software, so extracting every drop of efficiency out of hardware is becoming more critical. Investing in software that helps to maximize the storage efficiency of the existing hardware is one important growth driver for IT spending right now,” Karam explains.
“Companies want to maximize returns on yesterday’s investment in this difficult financial environment; that means finding ways to really maximize the returns on hardware investments that they have already made,” he adds.
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