Healthcare sector to drive IT spend in MEA

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Healthcare sector to drive IT spend in MEA
Last year, consumers accounted for just over $50 billion of the total IT spending, or 47.6 per cent, in the Middle East and Africa region.

dubai - Faltering smartphone demand is set to slow spend by the consumer sector

By Abdul Basit

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Published: Tue 20 Sep 2016, 8:10 PM

Last updated: Thu 22 Sep 2016, 6:26 AM

Annual IT spending in the Middle East and Africa (MEA) is expected to increase more than five per cent to $110.94 billion in 2016 compared to $105.51 billion in 2015, the International Data Corporation (IDC) said in its forecast on Tuesday.

The global technology research and advisory services firm forecasts the market to total $133.56 billion in 2020, expanding at a compound annual growth rate (CAGR) of 4.8 per cent over the 2015-20 forecast period.

Jebin George, a senior research analyst for industry solutions at IDC Middle East and Africa, said: "The high rate of growth seen in the consumer sector over the last few years was driven by a surge in demand for smartphones."

"However, market saturation and a challenging economic climate have led to a slowdown in demand for new smartphones," George explained.

Last year, consumers accounted for just over $50 billion of the total IT spending, or 47.6 per cent, in the region. The consumer sector exhibited strong growth over the 2012-15 period, with spending increasing at a CAGR of 19.1 per cent; however, IDC expects that rate to slow considerably to 3.5 per cent for 2015-20, with faltering smartphone demand largely to blame.

Spending by the business sector is expected to total $57.69 billion in 2016, with IDC forecasting a five-year CAGR of six per cent through 2020.
The telecommunications ($12.88 billion), finance ($9.27 billion), government ($8.85 billion) and manufacturing ($7.13 billion) sectors will account for the largest share of spending this year.

However, the fastest-growing sector over the coming years will be healthcare, with IDC expecting IT spending by the industry to increase at a CAGR of 7.9 per cent over the 2015-20 forecast period.

"Organisations across the region are increasingly focusing on reducing costs and driving efficiency improvements as they try to come to terms with the prevailing economic environment," added George. "Businesses no longer see IT as a cost centre, but rather as an enabler of innovation and efficiency, and this change in perspective is helping to drive IT spending growth in the region."

Hardware traditionally dominates IT market spending and IDC expects this trend to continue, with hardware accounting for 69 per cent in 2016. However, looking forward, the growth in hardware spending is expected to be slower than for other technology categories, with IDC forecasting a CAGR of 3.3 per cent for the 2015-20 period. Consumers and telecommunications organisations will remain the source of greatest opportunity for hardware vendors.

Spending on IT services and software is expected to be more buoyant, with IDC anticipating respective CAGRs of 7.5 per cent and 6.4 per cent through 2020. The strongest demand for IT solutions will come from the finance, telecommunications and government sectors.

- abdulbasit@khaleejtimes.com


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