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UAE 2012 IT services market expected to swell: IDC

Double-digit growth expected to continue, despite SLA concerns

UAE 2012 IT services market expected to swell: IDC
IDC said the services market is expected to record double-digit growth in 2012 to reach around $1.44bn.

The United Arab Emirates' IT services market has seen improvements in 2012, with the economy rebounding and new initiatives underway with a large IT-based component.

According to market research and consulting company IDC, the market is expected to record double-digit growth in 2012 to reach around $1.44bn, following 11% year-on-year growth in 2011. The growth was largely driven by an increase in project-based services and IT outsourcing.

The government sector in the UAE increased investment, leading to new initiatives and projects across the country to help improve economic growth. A number of projects were centred on eservices for citizens as a part of the UAE Federal eGovernment Strategy 2012-2014.

"The government sector is among the primary spenders on IT services in the UAE. It is expected to remain the largest contributor in the years ahead, with accelerated investments on improving public services across the Emirates," says Omar Saleem, senior analyst with IT Services Group, IDC Middle East and Africa.

"Apart from Dubai and Abu Dhabi, which have invested significantly in various e-services over the years, other emirates such as Sharjah, Ajman, and Ras al Khaimah made considerable investments in systems, infrastructure, archiving solutions, data centres, and portal development projects to launch new e-services in the past year."

Large-scale projects in the UAE present opportunities for project-based services, support services, and managed services. The UAE has yet to see widespread adoption of cloud in the government sector, although interest has certainly increased. The Dubai government in particular has shown interest in building on its shared services portfolio and using cloud as part of its Government Information Network and connecting various government entities. Certain government entities are already setting up their private cloud to connect local government departments. IDC expects local governments to introduce a number of services via cloud in the coming years.

''Although organisations in the UAE have invested considerably in new initiatives and projects in the past year, data security is consistently rated as a key concern. Service providers over the years have focused on improving their data security standards to protect their clients' data from loss or breach. In spite of this, some skepticism persists, which can inhibit the adoption of outsourced and hosted services'', says Saleem.

The past year highlighted how security breaches can disrupt business processes and impact revenues. As a result of these events, organisations are still quite reluctant to outsource the management of their critical processes and data to third-party service providers. A key source of their concerns is the absence of sufficiently defined or enforced SLAs or a lack of recourse when vendors fail to meet them.

IDC's United Arab Emirates IT Services Market 2012-2016 Forecast and 2011 Analysis is a study that IDC undertakes on an annual basis, drawing upon interviews with more than 80 services providers in the United Arab Emirates.

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