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Saudi IT services market to grow 13.8% in 2014

IDC expects double-digit growth for the coming five years

Saudi IT services market to grow 13.8% in 2014
The Saudi IT services market is on pace to reach a total value of $2.76bn this year

The Saudi IT services market is on pace to reach a total value of $2.76bn by the end of 2014, according to the latest forecasts from IDC.

This would represent a 13.8% increase on the $2.43bn generated in 2013, the research house said. IDC attributed the strong growth to the large-scale, infrastructure-driven projects across the government, healthcare, education and transportation verticals.

IDC said that IT services spending in Saudi Arabia will continue with double-digit growth over the coming five years, expanding at a compound annual growth rate (CAGR) of 12.8%. Spending will be driven by infrastructure developments, e-government initiatives, and modernisation drives across verticals, as well as the increased focus on digitisation, IDC said.

The current transformation of telcos into integrated ICT providers will also drive market maturity and facilitate investments in managed and data centre-delivered services, IDC added.

"Saudi CIOs have begun embracing disruptive technologies like cloud computing, mobility, and big sata analytics," said Hamza Naqshbandi, senior manager for IT services at IDC META.

"Some organisations are already reaping the benefits associated with these technologies, such as improved operational efficiency, lower operating costs, and enhanced customer relationship management. This uptake will spur additional IT infrastructure mondernisation investments across key verticals like education, healthcare, and transportation over the forecast period, and we expect to see strong demand for various outsourcing services such as hosting infrastructure and managed services."

The competitive landscape in Saudi Arabia is changing rapidly as the IT services market is becoming more concentrated, IDC said. The research house explained that the top five service providers accounted for almost 33% of the total IT services spending in 2013. And at the same time, end users are becoming more price sensitive as a result of the entry of low-cost offshore service providers to the Saudi market.

This, the research house said, is leading to fiercer competition, which will compel providers to improve their integration and project management capabilities and offer superior service-level agreements. 

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