The South African services market is on a healthy path, growing 6,1% in 2006 to reach R19,8-billion – and it's expected to continue at a 6,4% growth rate to reach R26,9-billion by 2011. 

The is according to BMI-TechKnowledge's latest report, SA IT Services Market Sizing and Forecast, 2006-2011.
The report also reveals that, during 2006, the outsourcing sector was the single largest foundation market (41,6% share) in terms of IT services spending, followed by deploy and support (26,7%) while system integration accounted for 17,8%.
Natalie Bryden, senior analyst and author of the report, says that over the forecast period, the fastest growing sectors are expected to be hosted application management and hosted infrastructure services, as companies large and small seek to adopt such services en mass in the wake of an increased up take of broadband and efficient cost effective communications.
"With globalisation, almost every industry is experiencing increased competition and IT flexibility is becoming increasingly important in an ever-changing business environment. Companies that need to adapt quickly to competitive action and changing customer needs, such as financial institutions, are already at the forefront of SOA adoption."
In addition BMI-T has found that the regulatory environment globally and in South Africa is forcing compliance which is, in turn, being translated into IT spend as business continuity and IT security continue to be top-of mind.
"Companies are struggling to deal with the additional complexities that the convergence of IT and telecommunications is bringing and new skills sets will be required to deal with this dynamic environment.
Competition is fierce in the IT services space and new competitors are appearing at a faster rate than ever. Not only are foreign companies looking to expand their footprint in Africa, but South African companies are looking abroad to increase their revenues.
"In 2006, Dimension Data completed the acquisition of IS and became the largest player in the IT services market with a share of 12,1% of the IT services market, followed by Business Connexion (BCX) with an 11% share and GijimaAST with a share of 8,6%", adds Bryden.
In 2006 consolidation in the vendor space continued and BMI-T expects more mergers and acquisitions in the years to come as companies struggle with tightening margins and the need to expand their skills set to be able to address the issue of convergence.
"Expect integration, consolidation and architecture to dominate the IT priority list for years to come," she adds.