South African I.T. services market expected to soar
The report entitled ‘South African IT Services Report and Forecast 2004-2009’ reveals that the IT services market which in 2004 was at R18.4 billion is showing a year-on-year growth of 5.3% and accounted for 40.9% of the total IT expenditure in SA.
An annual compound growth rate (CAGR) of 8.4% between 2004 and 2009 is expected with the growth rates in 2006 and 2007 at 7.8% and 8.1% respectively.
The result is that the market value of the IT service market will grow from the current R18.4 to a whopping R27.5 billion by 2009.
Natalie Bryden, senior analyst at BMI-T, says: “The IT services outsourcing (ISO) together with deploy and support foundation markets will continue to generate the largest amount of revenue over the forecast period, while the software as a service (SaaS) market will remain the fastest growing sector of the services market.”
The IT services industry according to the BMI-T report will see shift in focus from the 2004 cost-cutting initiatives more optimistic initiatives that focus on how to increase revenues.
The 2004 trend on consolidating business through acquisitions and mergers will continue in 2005 with vendors and mid-tier players needing to consolidate internal issues by considering mergers with rivals or acquisitions of smaller firms.
Mega deals are also a thing of the past according to the report with enterprise decision makers ‘chunking’ projects into smaller pieces with defined outcomes creating a shift to shorter, smaller and best-of-breed deals.
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