Dimension Data remains the largest
Dimension Data South Africa remains the country’s largest IT services company with a market share of 14%, according to a research report by BMI-TechKnowledge.
The report says the South African IT services market reached a value of R21.5 billion in 2007, reflecting a year on year growth of 8.5%. The market is expected to grow at a compound annual growth rate (CAGR) of 10.1% over the next five years, reaching a total of R34.7 billion by 2012.
The three largest players have maintained their positions between 2006 and 2007, with the largest player Dimension Data accounting for 14.0% of the total South African IT services market in 2007, followed by Business Connexion and GijimaAst with 11.6% and 7.7% respectively.
Derek Wilcocks, Executive Director: Services, Dimension Data Africa, says that that one of the biggest growth areas in the South African IT market was the outsourcing portion of the IT services which grew from 41.6% in 2006 to 43.4% in 2007.
“This can be attributed to the increase in the demand for hosted application management and hosting infrastructure services, as well as network and desktop outsourcing services (NDOS). With the move towards managed services, customers now have the option of outsourcing only selected areas of their IT environment, with the flexibility of simultaneously signing smaller managed services contracts with different service providers for different IT areas,” says Wilcocks.
According to Wilcocks managed services has become an integral part of successful organisations and in the current economic times has additional benefits. “Choosing to outsource processes to external service providers that can perform them more efficiently, allows the organisation to focus on its core competencies and achieve greater efficiency.”
Wilcocks says this growth is being driven by the fact that businesses are facing increasing expectations and competitive pressures in today’s global environment. “In addition many businesses are being hampered by a lack of internal IT expertise. The costs related to finding and retaining highly trained engineers in-house is significant and always on an upward curve. Highly trained technology experts are in short supply, and they are also in need of ongoing training to ensure they stay abreast of the latest trends and developments.”
Wilcocks says by appointing external service provides like Dimension Data, businesses can overcome this constraint. “Within our organisation, we have the depth and breadth of professional skills required to deliver complex and robust IT services on our clients’ behalf. Our employees have deep and specialised expertise, gained through exposure to a wide range of projects across various industries and geographies. “
Wilcocks also says Dimension Data is uniquely positioned to help companies achieve organisational effectiveness.
“Our global presence, and proven capability for delivering world class technology services, has engendered their trust and respect. In addition, as we have developed and refined our approach to IT services in response to the evolution within the IT services market, we are able to accurately, flexibly and reliably meet our clients’ unique business needs and can ensure alignment between their business processes and objectives and their IT environment.”
Clinton Jacobs from BMI-TechKnowledge says the outsourcing activity area is expected to continue to account for the largest portion of the total IT services market and also reflect the fastest growth rate over the next five years, with a CAGR of 12.9%.
According to Jacobs other segments in the IT market that reflected a year on year increase are information system consulting which grew by 4.7%, reaching a total of R1,01 billion in 2007 and the IT training and education segment which grew from R354.6 million in 2006 to R389.8 million in 2007.
Deployment and support segments reflected some decline on a year to year basis and accounted for about 22.9% of the total 2007 IT services market, while the information system consulting segment accounted for 4.7%, reflecting a slight increase from 2006.
Jacobs says when planning and developing their services, IT services vendors need to always have the customers’ business in mind and seek to provide solutions that will not only generate revenue for themselves but also add value to their customers’ businesses.
“Sourcing the best talent, carefully structured packaged solutions as well as effective service delivery methods are some of the factors that vendors need to consider when providing their services.”
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