South African IT services to exceed R40bn in 2012

The South African IT services market is set to exceed R40 billion ($5 billion) in 2012, according to a new study conducted by market research and advisory company IDC.

The group noted that the local IT services market 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.

“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,” said 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.”

In a recent research report, IDC cited that 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.

According to IDC, services such as network and desktop outsourcing and infrastructure hosting saw increased uptake in 2010, fuelled by the incremental supply of datacentre 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 $17 billion (about R136 billion) in 2015.

Looking ahead, IDC said it expects a continued spending focus among end-user organisations 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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South African IT services to exceed R40bn in 2012