IT spending in UAE put at Dh21.6bn in 2011

IDC says buoyant consumer demand and infrastructure upgrades continue to drive IT spending growth across the UAE

Overall IT spending in the UAE grew 9.8 per cent year on year in 2011 to total $5.89 billion (Dh21.6 billion), according to the latest figures release today by International Data Corporation (IDC), the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets.

Referencing its recently released 'United Arab Emirates Vertical Markets 2012–2016 IT Spending Forecast' (IDC #ZV11U), IDC revealed that the market saw high levels of consumer spending on PCs and smartphones in 2011, with the home sector recording the largest vertical share of total IT expenditure in the country at 33.1 per cent.

The UAE's tech-savvy young population, the increasing adoption of broadband, and ambitious government plans to develop the country's infrastructure all resulted in increased consumer and government spending, enabling economic growth in the country. Joining the home sector as the UAE's leading verticals were the combined transport, communications, and utilities vertical, the public sector, and the combined finance vertical, with these four verticals together accounting for 77.5 per cent of total IT spending in the country in 2011.

Government infrastructure upgrades, as well as the Long-Term Evolution (LTE) and fiber-to-the-home (FTTH) implementations by telcos, were the driving force behind spending in the combined transport, communications, and utilities vertical, while increased spending in the education and healthcare sectors, as well as ongoing egovernment initiatives, were responsible for driving year-on-year growth in the public sector. Meanwhile, the expansion of branch networks and investments in back-office automation were behind the stellar spending levels seen within the UAE's finance industry.

Similar levels of overall annual growth are anticipated over the next five years, buoyed by high oil prices and the relative political stability enjoyed by the country when viewed against the backdrop of the wider region. "The political unrest in the Middle East has proven advantageous to the UAE economy," says Jebin George, a senior research analyst at IDC Middle East, Africa, and Turkey.

"The country saw minimal unrest among its citizens, and is viewed as a safe haven by international investors. Foreign direct investment (FDI) in the UAE increased considerably year on year in 2011, while most of the country's neighbors showed a decline over the same period. And in an effort to curb any potential unrest in the country, the federal government has announced various large infrastructure-development projects, primarily focused in the northern region, that will boost capital expenditure and have a positive impact on IT spending."

George said that vendors should look to scale up their investment in the country as they will find many opportunities within the communications, government, finance, oil and gas, and home verticals. "IT vendors can best position themselves to take advantage of the opportunities in the UAE by ensuring they have a local presence, developing the right partnerships, and providing customized and vertical-specific solutions. The country's small and medium-sized business (SMB) segment remains a largely untapped market, which can be accessed by educating customers and providing IT solutions that cater to the specific needs of SMB end users."

Looking ahead, the public sector will be the fastest-growing vertical over the next five years, with IT expenditure set to expand at a compound annual growth rate (CAGR) of 11.5 per cent through 2016. Rounding out the top three performing verticals over the forecast period will be the finance sector (9.6 per cent) and the combined transport, communications, and utilities vertical (9.5 per cent). The home sector will comfortably remain the biggest-spending vertical, while investment in storage, PCs, software, and IT services will all see strong double-digit growth.

Image from Shutterstock

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