IT & Business Services Spending in the Middle East & Africa Set for Continued Growth Despite Looming Prospect of Recession

Spending on IT and business services in the Middle East and Africa (MEA) — including Israel — will reach $30.3 billion in 2023, according to the latest Worldwide Semiannual Services Tracker from International Data Corporation (IDC). In constant currency terms, this represents a 5.0% increase on the $28.9 billion that was recorded in 2022. IDC forecasts that the market will grow at a compound annual growth rate (CAGR) of 5.9% over the 2023–2027 period, reaching $38.1 billion in 2027.

"The MEA IT services market is forecast to continue growing through 2023 despite ongoing macroeconomic challenges and also the possibility of a global recession," says Suraj Godse, a senior research analyst at IDC. "This projected growth can be attributed to the stable and strong economies of oil-producing nations in the Gulf, government investments in mega projects and events, and the expansion of in-country cloud services by hyperscalers across the region. However, it is worth noting that the forecast 5.0% growth for 2023 is slower than the previous year."

IDC expects managed services and project-oriented services will be the fastest-growing market segments in 2023, followed by support and business services. Looking further ahead, IDC forecasts that spending on managed services in the MEA region will grow at a CAGR of 7.6% over the 2023–2027 period, while project-oriented services see a slower CAGR of 5.7%.

"Increased IT costs — mostly due to inflation/currency changes, disruptions in the IT supply chain, and a shortage of skilled labor — will continue to be a challenge," says Godse. "The anticipation of a potential recession has also led to increased pressure on CIOs to reduce IT expenses; as a result, they are increasingly looking for more cost-effective opex-based IT solutions.

"Cloud-related services continue to drive growth in IT services revenue as organizations accelerate their cloud journeys by moving mission-critical applications to the cloud. Indeed, recent announcements by cloud hyperscalers regarding the launch of in-country cloud services across the MEA region are enabling organizations to expand their cloud usage via a hybrid multicloud approach for added cost savings."

IDC's Worldwide Semiannual Services Tracker provides detailed, timely, and accurate information on the global IT and business services markets. It provides vendor revenue share and annual forecast data on a semiannual basis across 53 geographies and 14 market segments. It helps global and local players to assess services market dynamics and benchmark themselves. Essentially, the services tracker provides a holistic view of the past, present, and future of the services world. It also includes add-ons for cloud and security segmentation of the total IT services forecast.

To learn more about IDC Tracker products in the MEA region, please contact Sheila Manek at smanek@idc.com  or on +971 4 446 3154.