South Africa’s IT Services Sector Will be Worth $7.4bn By 2018

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VENTURES AFRICA – In its latest report, global advisory services firm, International Data Corporation (IDC) projects that IT services spending in Africa’s second largest economy will increase 10.5 percent year on year to hit $5.7 billion in 2015 and eventually reach $7.4 billion in 2018.
The report titled “South Africa IT Services Market 2014-2018 Forecast and 2013 Analysis” x-rays a number of key markets and provides detailed spending trends and forecasts, including key developments within the industry, challenges, and drivers. Principally, its analysis is informed by hard data collated via surveys, technology assessments, country demographics and economic data.
According to the report, systems integration will be the fastest growing IT service for the next five years as related spending is expected to increase at
a Compound Annual Growth Rate (CAGR) of 13.6%; this will be driven by technologies such as cloud, social and mobility which require significant levels of integration with existing backend infrastructure.
The outsourcing services macro market is, and will remain, the largest in South Africa with an expected 45.4 percent share of South Africa’s IT services market in 2015. This can be explained by current economic challenges that have heightened the attractiveness of outsourced services that reduce costs and optimize investments; this trend is expected to continue into 2015 at least.
Providing some qualitative insight from the findings of the report, Lise Hagen, IDC’s research manager for software and IT services in Africa, said; “IT initiatives in 2015 will not only continue to focus on technologies that enable continuous improvement and optimization, but also deliver value to the business. New investments in IT will focus on technologies that can demonstrate cost efficiencies, such as automation, cloud, and SaaS.”
“CIOs and IT decision makers are increasingly coming under pressure to cut costs and deliver services based on highly efficient IT processes that align with business objectives, while simultaneously supporting and sustaining business growth. For their part, providers need to help demonstrate that IT is not just a cost center, but a fundamental part of the business that can drive revenue and value as well as reduce costs,” she added.
Apart from the Combined Systems Integration service expanding at a CAGR of 13.6 percent, other top-performing services should be applications related. IDC posits that Application Management Outsourcing and Application Consulting and Customization will both expand at the same CAGR of 13 percent.