Saudi IT market set for double-digit growth in 2014
IDC forecasts 10.7% YoY surge in kingdom’s tech spend, to $11.5bn
Overall IT spending in Saudi Arabia is set to increase 10.7%, year on year, in 2014 to total $11.5bn, according to the latest forecast from International Data Corporation (IDC).
The research firm's recently released "Saudi Arabia Vertical Markets 2013-2017 IT Spending Forecast" predicts that the consumer, communications, finance, and oil and gas sectors will be the biggest IT spenders during the five-year forecast period.
The consumer sector is expected to remain the largest in Saudi Arabia in 2014, with expected IT spend of $4.18bn, accounting for 36.4% of the kingdom's total IT market.
The combined transport, communications, and utilities grouping will be the second-largest vertical market, with such organisations investing $1.95bn in 2014. This vertical is forecast to grow at a compound annual growth rate (CAGR) of 8.5% over the 2013-2017 period, driven by ongoing and planned infrastructure investments by the government.
The public sector, which includes government, healthcare, and education, will remain the third-biggest vertical in 2014 with $1.78bn in IT investments, representing 15.5% market share. The major drivers of growth in this sector will be increased social spending on e-government initiatives with the aim of improving service delivery to residents, as well as the construction of new schools and hospitals and upgrades to existing ones.
The limited availability of skills is the biggest issue businesses in Saudi Arabia face and is an identifiable trend across verticals. As the kingdom's nationalisation initiatives gather steam and the government continues to push organisations to comply with Nitaqat regulations, IDC anticipates that the availability of advanced IT skills will become scarcer, which will put more pressure on providers, and may result in project delays as well as increased investments in training.
"Saudi Arabia's IT market is the largest in the Middle East and will remain so throughout the 2013-2017 forecast period," says Mark Walker, director, Insights and Vertical Industries, IDC Middle East, Africa, and Turkey.
"As the government continues to invest in large infrastructure projects, IT vendors will find many opportunities across the market, but primarily in the communications, government, finance, oil and gas, and consumer verticals."
IDC expects IT spending in Saudi Arabia to increase at a CAGR of 8.9% over the five-year forecast period to reach $14.2bn in 2017. Government will be the fastest growing vertical during this period, with IT investment expanding at a CAGR of 12.9% through 2017. The other two top-performing verticals in terms of growth over the forecast period will be education (12%) and oil and gas (11.9%). From a technology perspective, investment growth will be strongest in IT services and software.