Home / / Saudi IT services market to hit $3.09bn

Saudi IT services market to hit $3.09bn

Infrastructure expansion and modernisation projects driving growth, says IDC

Saudi IT services market to hit $3.09bn
Spending on IT services is set to rise by 12.5% this year, says IDC.

Saudi Arabia's IT services market is predicted to grow by 12.5% year-on-year, to reach overall value of $3.09 billion this year, according to IDC.

The analyst company said that growth is being driven by large-scale infrastructure expansion and modernisation projects in the government, finance, healthcare, education, and transportation verticals.

"In order to increase their business reach, better understand their customers, and enable effective decision making, private sector organisations are investing in business intelligence and analytics solutions, as well as in mobile technologies," said Uzair Mujtaba, a senior research analyst for IT services and software at IDC Saudi Arabia. "The government, meanwhile, is investing heavily in digitizing its citizen centric services. The Yesser e-government program is supporting this initiative by consolidating IT infrastructure for government entities and ministries in order to centralize the provision of services to its internal clients.

"IT security continues to be a leading concern among business leaders, and we are seeing considerable investments being made in advanced security solutions," said Mujtaba. "Organisations in the banking and finance verticals are investing in data centre expansion and new buildouts, with a particular emphasis on integrating their business continuity and disaster recovery capabilities with their infrastructure to ensure maximum availability of services to customers. The telecom vertical is also undergoing major transformation as operators endeavour to fortify their services portfolios and become end-to-end IT services providers."

"The price-sensitive end-user community and the general lack of formal procurement procedures means the Saudi IT services market is characterized by its highly relationship-driven landscape," added Mujtaba. "In this environment, only the most progressive services providers will be able to increase their market share, and developing capabilities around emerging technologies should be a key priority. Additionally, the implementation of complex IT solutions requires use of skilled IT personnel to operate the new IT infrastructure. Organisations that lack these skills internally will consider investing in managed services. It will thus be critical for services providers to offer quality managed services tied together with well-articulated service-level agreements (SLAs) that help build trust-based relationships with their customers. Employing a consultative approach toward addressing the business problems of customers will go a long way to creating a competitive advantage for IT services providers."

The Saudi service market is dominated by local players, IDC said, with locally-based organisations making up half of the top ten service providers. Existing multinational providers are gradually increasing their market shares, giving rise to fierce competition and greater emphasis on service capability enhancements. In order to tackle the challenges stemming from various macroeconomic factors, services providers are continuously working towards the facilitation of lean organisation structures. Due to these developments, managed and outsourced services are expected to gain significant momentum in the market as they increasingly become viewed as a more efficient and cost-effective way of conducting business.

"IDC expects the Saudi Arabian IT services market to continue exhibiting double-digit growth over the coming years, primarily driven by e-government initiatives, ICT modernisation efforts across verticals, and infrastructure developments such as data centre expansion projects," said Hamza Naqshbandi, senior manager for IT services at IDC Saudi Arabia. "However, in the current economic context of declining oil prices and stagnating government spending, cost pressures and eroding margins are forcing Saudi organisations to re-evaluate their IT budgets, which may slow the pace of IT services spending growth slightly.

"IT services providers will need to invest wisely in their solution-delivery capabilities - including quality management, project management, and governance, risk, and compliance (GRC) capabilities - as these are steadily becoming competitive differentiators in the rapidly changing Saudi Arabian IT services market," continued Naqshbandi. "Additionally, the strengthening of partner networks, as well as the move towards a more proactive consultative approach to project delivery that develops relevant solutions in response to end-user needs, will help services providers to become the trusted partners of choice."

Follow us to get the most comprehensive IT business news delivered fresh from our social media accounts on Facebook, Twitter, Youtube, and listen to our Weekly Podcast. Click here to sign up for our weekly newsletter on curated technology news in the Middle East and Worldwide.