UAE IT sales to hit Dh22b

Dubai - The study also expects a year-on-year market growth of 3.5 per cent in 2015.

UAE IT sales market are expected to touch almost Dh22 billion by 2019, while per capita spending will surpass Dh2,000 by 2018, according to a recent Dubai Chamber of Commerce and Industry analysis.
The study also expects a year-on-year market growth of 3.5 per cent in 2015. The current value of the UAE IT market is estimated close Dh17 billion, compared to Dh12 billion in 2010.
According to the analysis based on Business Monitor International, software and IT services segment sales are set to continue registering positive and resilient growth, while hardware sales are expected to grow only marginally until at least 2019.
For all segments, 2015 will be the lowest growth year, with hardware sales even decreasing slightly, from Dh8.43 billion in 2014 to Dh8.37 billion in 2015, while in the medium term, hardware revenues would grow by one per cent per year, to reach about Dh8.7 billion in 2019. Software sales would hit at Dh4.7 billion in 2019, growing by nine per cent on average each year from 2015, while IT services spending would increase by 10 per cent during the same period, reaching Dh8.4 billion in 2019.
The analysis further predicts that this growth will be highly supported by the government sector, through many IT projects directly - such as e-government services, IT hardware for education, smart city initiatives - or indirectly through government-backed enterprises.
The economic sectors that are expected to benefit the most from the various projects are healthcare, education transportation, construction, water and power plants. Furthermore, cloud computing and migration are also projected to grow and drive the IT industry in the near future.
The favourable economic developments in the UAE in recent years have positively impacted the IT market. The country's average annual GDP growth rate during the 2010-14 period was 4.5 per cent, while the annual disposable income per capita reached $30,000 in 2014.
High incomes and standards of living, alongside a higher propensity to consume and increased consumer and business confidence are all factors that contribute to the continuous development of a dynamic, growing and profitable IT market.
The IT market in the UAE has experienced robust whilst slowing growth in recent years. It grew by seven per cent year-on-year in 2014 and it was growing even stronger by 9.6 per cent on average per year since 2010.
Companies still mainly use IT for basic applications, but the situation has started to change, especially as government and related organizations undertake several investments in internet technology and innovation such as the smart city initiative in Dubai, which is expected to lead to higher demand for advanced IT solutions and to further boost sales in the sector.
IT activity in the UAE includes sales of hardware, software and IT-related services. The country has been established as a business hub also for IT companies, as it is usually the first to introduce new products and services in the region. An increasing number of regional and global vendors establish their footprint in the Middle East through the UAE. Moreover, the IT market makes slightly more than one per cent of the country's GDP with its share growing.
Looking at per capita figures, similar patterns have been observed, namely that IT purchases per person have been increasing with the years. Spending on IT-related products and services reached Dh1,785 per capita in 2014 (from Dh1,400 in 2010). Growth rates per capita are also similar but a little lower than those for total IT spending.
- alvin@khaleejtimes.com
Moreover, the UAE ranks higher than other Middle East countries in the Networked Readiness Index of the World Economic Forum, at 23rd out of 143 countries in 2015. It also ranks second in the Mena region in total telecommunications sales ($9.4 billion in 2014), after only Saudi Arabia ($21 billion).
Information technology in the UAE generates hardware, software and IT services sales. Hardware is currently the largest segment, but IT services are rapidly growing and could reach the same levels as hardware by 2020.
According to BMI estimates, hardware sales in the UAE increased by 3.3 per cent in 2014, but they are estimated to decelerate slightly in 2015. This 0.7 per cent fall is the first to be observed in recent years and it indicates a temporary sluggish market for computers, while sales of notebooks are expected to increase marginally.
Software sales reached Dh3.1 billion in 2014, compared to Dh2.9 billion in 2013. Growth of the segment has remained above nine per cent in recent years, expanding faster than hardware. The UAE is a fast-growing enterprise resource planning market with continued modernisation initiatives and with the aim to increase international competitiveness. Looking forward, cyber-security is expected to be an important growth driver.
IT services registered revenues of Dh5.3 billion in 2014, increasing by Dh0.6 billion in one year (12 per cent growth year-on-year). It is anticipated that managed services will be a leading growth area, with rising growth in cloud computing and real-time analytics. In particular cloud computing has notably emerged in recent years, from just above Dh100 million in 2011 to more than Dh500 million sales in 2014.
In summary, the IT market in the UAE is booming, with only a small slowdown to be observed in the hardware segment during 2015. All other years and other segments will continue registering positive growth. The private sector accounts for the majority of IT spending locally, but the government is expected to keep its share at about 40 per cent. The UAE comes second only after Saudi Arabia in the sales of telecommunications for Mena countries.
There are great opportunities for both local and international enterprises, especially in the area of cyber security and the most innovative areas of IT. Except for IT-related companies, other sectors can be benefited, such as healthcare, education and transportation. Especially for Dubai, the smart city strategy is expected to provide great opportunities for businesses. It includes 100 initiatives on transport, communications, infrastructure, electricity, economic services and urban planning, with 1,000 government services set to go smart by 2017.
- alvin@khaleejtimes.com