The South African IT services market grew by 25,2% between 2007 and 2008, reaching a total of R27-billion in 2008, and BMI-T expects the market to grow to R38,6-billion by 2013, at a CAGR of 7,4%.
This is according to BMI-T's latest report, "SA IT Services Market Sizing and Forecast 2008 – 2013".
Clinton Jacobs, BMI-T’s IT sector business manager and author of the report says that IT outsourcing activities accounted for 40% of the 2008 total IT services spending, fuelled by exceptional growth in managed services and hosting.
Macro-economic pressures and concerns about skills shortage, business continuity and the need to focus on core business are all contributing to increased focus on IT outsourcing in its different forms.
“There continues to be a significant move towards selective outsourcing, which allows businesses to select only those outsourcing services that they require. This outsourcing trend is giving customers the flexibility to use different IT services providers for various managed services, thereby presenting opportunities to niche players,” adds Jacobs.
The financial services sector continues to be the most significant contributor towards the overall South African IT services market. This is particularly driven by the financial services industries aim to improve efficiencies and ensure information security is maintained.
As the local IT services environment matures and competition increases, companies are looking to the rest of the continent for growth. “A number of IT services providers are now making the rest of Africa a priority,” says Jacobs.
BMI-T forecasts the hosting of IT infrastructure and software applications to be the fastest growing segment over the forecast period; this is followed by managed services. The adoption of these outsourcing services will be influenced by the growing need to have continuous access to IT resources and cost savings that result from utility based models.
Other IT services areas that BMI-T expects to reflect significant growth over the forecast period are information system consulting and system integration.
As IT functions become more integral to business strategies, more companies are expected to seek the services of information system consultants and system integrators, with the aim to leverage the use of their IT investments.