Gov’t spending to underpin IT growth in SA
New report from the IDC suggests that government spending will underpin growth in South Africa’s IT sector over the next five years.
Annual spending on IT in South Africa will increase by 6,3% in 2014, to reach US$14,6bn (about R146bn), according to research and advisory firm International Data Corp (IDC).
Over the next five years, the biggest IT spenders will be consumers, financial services, government and the communications sector.
These forecasts are contained in the IDC’s new “South Africa Vertical Markets 2013-2017 Spending Forecast” report.
“The consumer sector is expected to remain the largest in South Africa in 2014 with expected IT spend of $3bn, accounting for 20,4% of the total market,” the IDC says.
“The combined transport, communications and utilities vertical will be the second largest vertical market.”
Companies and organisations in this market will invest $2,6bn in 2014, the IDC says.
The sector is forecast to grow at a compound annual growth rate of 6,5% over the 2013–2017 period, driven by the ongoing and planned infrastructure investments by government.
The finance sector, which includes banking, insurance and securities firms, will remain the third biggest vertical in 2014 with $2,3bn in IT investments, representing 16% market share.
“IT spending in this vertical is expected to focus on the automation of back-office processes, as finance organisations look to speed up their introduction of new products and services to the market in order to remain competitive,” it says.
The IDC says that South Africa is one of the biggest IT markets in the Middle East and Africa region and is the most mature IT market in Africa.
“Despite this, end users in South Africa are faced with budgetary pressures, lack of available IT skills, high costs for communications services and growing regulatory and compliance demands. IT initiatives are therefore centred on cost efficiency, optimisation, consolidation, and modernisation,” it says.
“The South African IT market is expected to show moderate growth throughout the 2013–2017 forecast period,” says Jebin George, a senior research analyst at IDC Middle East, Africa and Turkey. “The government and finance sectors will continue to be the biggest spending business verticals during this period, and will also be among the fastest growing. The focus on improving service delivery through online and mobile channels will drive spending in both these sectors. The IT investments in other verticals will primarily be driven by the large-scale infrastructure-related investments by government.”
The IDC expects IT spending in South Africa to increase at a compound annual growth rate of 6,5% over the next five years to reach $18,2bn in 2017.
Government will constitute the fastest growing spender during this period, with IT investment expanding at an annual growth rate of 12,5% through to 2017.
The other two top-performing sectors in terms of growth over the forecast period will be health care (9,2%) and combined finance (7,9%). From a technology perspective, investment growth will be strongest in IT services and software. — (c) 2013 NewsCentral Media