Gartner expects 2.4% spending growth after flat 2016
Dubai: IT (Information Technology) spending in the Middle East and North Africa is expected to rise 2.4 per cent in 2017 to reach $155.8 billion, driven by sectors such as banking, securities, and communications driving that growth.
According to the latest forecast from Gartner, an IT research company, others sectors that will also drive growth include media and services, and manufacturing and utilities.
Speaking at a press conference on Tuesday, Peter Sondergaard, senior vice president and global head of research at Gartner, said there is an environment of growth in spending this year compared to 2016, which saw flat growth. Performance in 2016 was driven by a sentiment of uncertainty amid a macroeconomic slowdown that led companies to cut costs and hold back their investments.
Sondergaard expected the growth rate to accelerate in 2018.
Gartner’s report projected IT spending will reach $161 billion in 2018 (up 3.3 per cent), $165 billion in 2019 (up 2.5 per cent), and $168.8 billion in 2020 (up 2.3 per cent).
“It is very clear that most organisations in this region probably spend at least 80 per cent of their budgets, management time, and people on traditional IT systems. What we believe will happen is an increased move towards spend on other domains like customer experience-based technology. This is where we have things like virtual reality, augmented reality, or embedded environments,” Sondergaard said.
He added that most organisations, including large banks, in the Middle East and North Africa region are not spending enough on such experience-based technology.
One of the key sectors utilising technology, however, is oil and gas, especially after the mid-2014 plunge in crude oil prices.
“The interesting shift that is happening in the oil and gas industry — both in this region and globally — is that the recovery after oil prices [increased] is not necessarily followed by a recovery in increased employment. What is happening is oil and gas companies are increasingly using technology as a way of improving productivity,” Sondergaard said.
He described data as “the oil of the 21st century,” but such a transformation is not being met with enough human talent due to a skill shortage in the region. For companies and governments, that will create a hurdle in being able to implement the needed digital changes.
In 2017, Gartner expects the devices segment to represent nearly 17 per cent of total IT spending, and to see a 4 per cent growth rate. The growth will mainly be due to a strong increase in mobile phone expenditure, but other devices such as personal computers are expected to see negative growth.
Meanwhile, software spending is projected to increase 9 per cent, with infrastructure software spending set to increase 6 per cent, Gartner said. Consumer mobile services will represent around 60 per cent of the total expenditures in communication services.