IT industry matures to international level

Information technology services spending in the UAE grew by more than 15 per cent in 2007, after an almost 23 per cent boost last year to nearly $508 million (Dh1.86bn), according to a study from IDC. 

The international market intelligence provider on the technology sector said the IT services market in the UAE is embracing the outsourcing model and other value-added services as it matures.

While standard installation and support services will continue to make up the biggest chunk of the market, the increased adoption of outsourcing and consulting services both point to more strategic IT decision-making in the region and it is a clear sign of maturation, the IDC study found.

“We’re entering a new era and vendors will need to change tactics to take advantage of it,” said Margaret Adam, Senior IT Services Analyst for IDC in the Middle East.

“IT service providers should streamline their operations and focus on strategic alliances, developing a pool of highly skilled individuals, who can educate customers to the benefits of technology to their business.”

The top three players in the country’s IT services market in 2006 were MDS UAE, Emirates Computers, and Injazat.

On the demand side, government contracts played a dominant role, responsible for 26.5 per cent of total services spending. Banking followed with a 13 per cent share, and the telecommunications sector was the third largest with 11 per cent of total IT services expenditure in 2006.

“The small- and medium-sized enterprise segment offers a significant opportunity for IT services providers,” said Barti Rajan, research analyst for IT Services, IDC UAE. “Small and medium enterprises are beginning to recognise that purchasing external services is an alternative to trying to find affordable, skilled IT staff.”

IDC expects the IT services market in the UAE to increase at an annual average rate of 13.7 per cent over the next five years as the federal and local governments pursue their economic development strategies, key sectors continue to expand rapidly and demand shifts towards outsourcing functions, combined with investments in infrastructure.

Statistics

26.5 per cent – was the government spending incurred in the service sector of information technology. The banking sector followed with a 13 per cent share and telecommunications market was third at 11 per cent. (WAM)