IT services to top USD5m in SA

The IT services market in South Africa has seen healthy uptake, growing some 8% year on year in 2010 to contribute more than a third of the total IT spending in the country. Market research and advisory company IDC expects the IT services market to exceed USD5 billion in 2012.

"After the freeze in IT budgets that came about as a result of the global economic crisis, 2010 saw a rebound in IT services spending," says Suzanne Nolan, research analyst for IT Services, IDC South Africa. "The growth in IT services spending was driven by a recovering economy, increased business confidence, expanding bandwidth availability, and various infrastructure investments made in the country in 2010."

IDC said IT outsourcing constituted around 40% of the South African IT services market, which represents the largest market share of all IT services foundation markets, followed by systems integration and installation and support services. "This growth was mainly driven by discrete managed services rather than by traditional information system outsourcing contracts," says Nolan. "The healthy growth in outsourcing services signifies a level of sophistication and maturity within the IT services segment."

According to IDC, services such as network and desktop outsourcing and infrastructure hosting saw increased uptake in 2010, fuelled by the incremental supply of datacenter space and increased customer awareness of the managed services model.

IDC forecasts the total South African IT services market to expand at a compound annual growth rate of 8.7% to exceed USD17 billion in 2015.

Looking ahead, IDC expects a continued spending focus among end-user organizations on areas and solutions that help reduce operating expenses while increasing efficiency. As a result of continued price pressures and the need to improve client service, vendors are advised to pursue alternative service delivery models, such as cloud services. Not only will this help end users optimize their IT investments, but it will enable services providers to improve their quality of delivery and create new revenue streams.

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