According to a recent report from IDC, Driven in the long term by large-scale infrastructure projects, the IT services market in UAE is expected to expand at an average annual growth rate of 11.4% to exceed $2 billion in 2015.
Such projects include the ENEC nuclear power plant in Abu Dhabi, the Dubai World Central expansion project, the Dubai and Abu Dhabi metros, Al Ain Airport, countrywide railway developments across the UAE, Khalifa Port and Industrial Zone, and the expansion of the Ruwais refinery.
“The UAE economy has gone from boom to recession to recovery in the space of three years. This has drastically altered the IT requirements of organizations operating in the region, and services providers need to ensure they have the necessary capabilities and expertise to cater to this change in demand,” says Rima Ruhman, research manager for IT Services, IDC Middle East, Africa, and Turkey.
The biggest market in terms of IT services investment in the UAE in 2010 was the government sector, which accounted for $328.22 million in services-related spending and 28.1% market share. The finance vertical placed second, with 17.2% share, followed by telecommunications (11.1%) and the combined agriculture, construction, and mining vertical (8.5%).
“Although organizations will continue to grow and to spend on expanding their infrastructures, they are now more focused on the returns on their IT investments and on improving operational efficiencies. This will lead to an increase in spending on efficiency-driven initiatives, such as infrastructure and application consolidation, virtualization, and datacenter optimization,” Rima adds.
The systems integration category accounted for the largest share of IT services revenue in the UAE in 2010, at 19.3%, followed by hardware support and installation, with 13.7%, and software support and installation, with 10.9%. The combined outsourcing category made up 24.6% of the country’s total IT services market.
The report suggests that a relatively healthy economic outlook is expected to create a positive environment and encourage spending on IT services, which will particularly impact large-scale infrastructure projects. These projects will involve large investments across the entire spectrum of IT services, including consulting, systems integration, and network consulting and integration services.