The Saudi IT services market is expected to reach a total value of $2,762.28 million for the year 2014, according to the latest forecasts...
online-videoThe Saudi IT services market is expected to reach a total value of $2,762.28 million for the year 2014, according to the latest forecasts released today by International Data Corporation (IDC).

That would represent a 13.8% increase on the $2,427.45 million generated in 2013, with this strong growth continuing to be fueled by large-scale infrastructure-driven projects across the government, healthcare, education, and transportation verticals.

IDC’s forecast shows that IT services spending in Saudi Arabia is expected to exhibit consistent double-digit growth over the coming five years, expanding at a compound annual growth rate (CAGR) of 12.8% to total $4,438.96 million in 2018. Spending will be driven by infrastructure developments, egovernment initiatives, and modernization drives across verticals, as well as by the increased focus on digitization and data explosion. The current transformation of telcos into integrated ICT providers will also drive market maturity and facilitate investments in managed and datacenter-delivered services.

“Saudi CIOs (Chief Information Officer –n.b) have begun embracing disruptive technologies like cloud computing, mobility, and Big Data analytics,” says Hamza Naqshbandi, senior manager for IT services at IDC Middle East, Turkey and Africa. “Some organizations 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 mondernization 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. 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 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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