ICT spending to top $260 Billion in 2016 as digital transformation initiatives take hold across the Middle East, Turkey, and Africa
ICT spending in the Middle East, Turkey, and Africa (META) will top $260 billion in 2016 as organizations across the region increasingly embrace digital transformation initiatives in a bid to streamline their costs and bolster their flexibility. That's according to global technology research and consulting services firm International Data Corporation, which today hosted an event at Dubai's Madinat Jumeirah to announce a series of "IDC FutureScape Predictions" for the year ahead.
"Sitting at the heart of most digital transformation efforts across the region is some combination of the main 3rd Platform technologies – mobility, cloud, Big Data analytics, and social business," says Megha Kumar, IDC's senior research manager for software in the META region. "And while this trend undoubtedly signals a positive development for the region's ICT vendors, it is also worth noting that a number of macroeconomic factors are preventing the market from reaching its full potential. Indeed, declining oil prices, political instability, and volatile currency fluctuations have all played their part in IDC adjusting its initial forecast for 2016 down from $270 billion. With such factors in mind, we feel a more modest year-on-year growth rate of 3.8% is attainable for the region, with software and IT services responsible for much of the increase."
IDC expects the region's top three biggest IT spenders to remain unchanged in 2016, with Saudi Arabia leading the way at $14 billion. South Africa and Turkey will follow up with $13 billion each, while there is a substantial drop back to Iran and the UAE, which are both tipped to spend $8 billion on IT in 2016. A key facet of the digital transformation revolution that is beginning to take shape in the region is the emergence of the Internet of Things (IoT) ecosystem, with IDC predicting that IoT-related investments in META will create a market opportunity of $7.03 billion in 2016.
"The adoption of IoT will accelerate the rate of digital transformation as organizations and stakeholders seek actionable insights from the high volumes of data that will inevitably be generated by the proliferation of connected 'things' such as mobile devices, wearables, and sensors," says Kumar. "These insights will transform the way businesses and government organizations interact with customers, citizens, suppliers, and even employees, helping them to become more agile and innovative than they could have previously imagined."
IDC believes that IoT applications in the government, retail, transportation, manufacturing, and utilities verticals will offer the greatest growth opportunity for vendors operating in the META region, while security is expected to form a key component of any robust digital transformation strategy. With that in mind, IDC predicts IT security spending across META to grow 12% year on year in 2016, reaching a total of $1.5 billion. Cost optimization efforts and a lack of the required skills will drive demand for security services in the year ahead, while the proliferation of IoT technologies will push concerns around privacy and physical security to the top of the agenda.
Central to the region's digital transformation journey in 2016 will be the strong growth that is anticipated in public cloud spending. "IDC predicts that investments in public cloud services across META will grow 22.6% year on year in 2016 to total more than $500 million," says Kumar. "Much of this will be driven by the need to transform capital expenditure into operating expenditure, with public cloud increasingly being viewed across the region as a way of overcoming budget constraints. In light of this, IDC expects most non-core applications to be migrated to public clouds over the coming 12 months, while some organizations will even begin to shift their core applications in a bid to simplify their management processes."
International Data Corporation (IDC)
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For more than 47 years, IDC has provided strategic insights to IT professionals, business executives, and the investment community to help them achieve their key business objectives.