Spending on IT and business services in the Middle East and Africa (MEA) – including Israel – will reach $30,3-billion in 2023, according to the latest Worldwide Semiannual Services Tracker from International Data Corporation (IDC).
In constant currency terms, this represents a 5% increase on the $28,9-billion that was recorded in 2022. IDC forecasts that the market will grow at a compound annual growth rate (CAGR) of 5,9% over the 2023 to 2027 period, reaching $38,1-billion in 2027.
“The MEA IT services market is forecast to continue growing through 2023 despite ongoing macroeconomic challenges and also the possibility of a global recession,” says Suraj Godse, a senior research analyst at IDC. “This projected growth can be attributed to the stable and strong economies of oil-producing nations in the Gulf, government investments in mega projects and events, and the expansion of in-country cloud services by hyperscalers across the region. However, it is worth noting that the forecast 5% growth for 2023 is slower than the previous year.”
IDC expects managed services and project-oriented services will be the fastest-growing market segments in 2023, followed by support and business services. Looking further ahead, IDC forecasts that spending on managed services in the MEA region will grow at a CAGR of 7,6% over the 2023 to 2027 period, while project-oriented services see a slower CAGR of 5,7%.
“Increased IT costs – mostly due to inflation/currency changes, disruptions in the IT supply chain, and a shortage of skilled labour – will continue to be a challenge,” says Godse. “The anticipation of a potential recession has also led to increased pressure on CIOs to reduce IT expenses. As a result, they are increasingly looking for more cost-effective opex-based IT solutions.
“Cloud-related services continue to drive growth in IT services revenue as organisations accelerate their cloud journeys by moving mission-critical applications to the cloud. Indeed, recent announcements by cloud hyperscalers regarding the launch of in-country cloud services across the MEA region are enabling organisations to expand their cloud usage via a hybrid multicloud approach for added cost savings.”