IT spending in region to increase to $8.4 billion

Information technology spending in the Gulf is predicted to rise to $8.42 billion (Dh31bn) this year from $7.26bn in 2007, according to an IT specialist.

Growth rates are expected to remain strong and average 14 per cent annually. Hardware, which forms 55 per cent of IT sector sales, is expected to grow by 18 per cent, followed by software (14 per cent) and the service sector (13 per cent).

Last year, Gulf governments spent $718.6 million on IT purchases. However, industry and the private sector – including energy companies, banks and factories – were responsible for 85 per cent of IT sales, especially hardware. The remaining sales were made to small companies and individuals.

Omar Shihab, research manager for personal computers and systems for the Middle East and Africa at market intelligence and consulting firm IDC, attributed the strong growth to a number of factors related to the economic boom in the region.

He noted a vast amount of investment is being pumped into infrastructure projects and the updating of IT resources in both the private and public sectors. Rising oil revenues and increased investment volumes in the region are behind the considerable growth in expenditure, he added. And governments have also been keen to extend technological support to service sectors such as education.

New users of the technology have also emerged, represented in small- and medium-size companies that seek to set up advanced technical infrastructure, said Shihab.

In 2007, Gulf counties spent $7.26bn on IT, according to Shihab. Saudi Arabia took the lion's share with 41 per cent ($3.027bn), followed by the UAE's 37 per cent ($2.7bn), Kuwait's 8.9 per cent ($646m), Qatar's 4.9 per cent ($355m), Bahrain's 3.9 per cent ($283m) and Oman's 3.3 per cent ($239m).

Of that total, the countries spent $4.254bn on hardware, $1.92bn on services and $1.087bn on software.

IT services will grow the fastest in the small- to medium-size enterprise market, predicted Shihab. Large companies can employ their own support staff, he noted, while smaller companies are looking for expert help to train and educate their employees.

Meanwhile, the research manager said the region still lags behind in terms of development and innovation in the sector. He noted most IT companies allocate only a small percentage of their revenue to development.