Middle East & Africa ICT spending to cross $270b in 2015

18/12/2014 07:14 AST

Accelerating innovation on social, mobile, cloud and big data is expected to fuel information and communications technology (ICT) spending in the Middle East and Africa (MEA) by 9 percent in 2015 to more than $270 billion.

Among the Gulf countries, Qatar is expected to see the biggest percentage growth in spending (by 11.36 percent), followed by Saudi Arabia by 5.44 percent and the UAE by 5.32 percent. Megha Kumar, software research manager at International Data Corporation (IDC), said majority of the growth will come from software, services and mobile phones, while wireless and fixed data will drive the growth in telecom services.

The MEA is the second-fastest growing market worldwide after Latin America. She said that public cloud services such as infrastructure as a service (IaaS) and software as a service (SaaS) will begin to cannabilize and disrupt traditional software and service base as competition intensifies from Tier 2 players.

IaaS is a model in which an organization outsources the equipment needed to support operations while paying on a per-use basis. SaaS is a model that allows organisations to gain access to software and it is hosted remotely while paying on a per-use basis. The UAE and Saudi Arabia are set to spearhead IaaS adoption in the Middle East and the spending will reach $280 million with a year-on-year growth of 33 percent.

She said that the uptake of SaaS will rise on non-critical business operations such as sales, marketing, customer relationship management, and talent management and the spending will reach $324 million with a year-on-year growth of 29 percent.

When asked how oil prices are going to impact the spending, she said, “If oil prices go down further then the government spending will slow down in countries that do not have surplus oil revenues. So, smaller countries like Bahrain and Oman, without surplus, may need some sort of aid to fund [their] ICT spending.”

She said that telecom operators will be looking at various business models to sustain growth and gain competitive edge. Rather than generate their own content or compete with content aggregators, telecom operators (telcos) will collaborate with content aggregators and gaming console vendors to provide value-added services to consumers.

Telcos are expected to intensify their focus on the untapped small- and medium-sized enterprise market as they try to differentiate themselves from the crowded market by becoming one-stop shops and will transform to become “IT and digital services players”.

In the ICT space, hardware contributes 30 percent while telecom contributes the biggest chunk at 60 percent and software and services at 10 percent.

Saudi Gazette