Government-Led Investment Initiatives to Spur IT Spending Growth in South Africa, Says IDC
17 Oct 2013
Overall IT spending in South Africa is set to increase 6.3% year on year in 2014 to total $14.59 billion, according to the latest forecast from International Data Corporation (IDC), the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. Referencing its recently released 'South Africa Vertical Markets 2013–2017 IT Spending Forecast' (IDC #ZV14V), IDC anticipates the consumer, finance, government, and communications verticals to be the biggest IT spenders during the five-year forecast period.
The consumer sector is expected to remain the largest in South Africa in 2014 with expected IT spend of $2.98 billion, accounting for 20.4% of the total South African IT market. The combined transport, communications, and utilities vertical will be the second largest vertical market, with organizations in the vertical investing $2.65 billion in 2014. The sector is forecast to grow at a compound annual growth rate (CAGR) of 6.5% over the 2013–2017 period, driven by the ongoing and planned infrastructure investments of the South African government. The finance sector, which includes banking, insurance, and securities services providers, will remain the third biggest vertical in 2014 with $2.33 billion in IT investments, representing 16.0% market share. IT spending in this vertical is expected to focus on the automation of back-office processes, as finance organizations look to speed up their introduction of new products and services to the market in order to remain competitive.
South Africa is one of the biggest IT markets in the Middle East and Africa (MEA) region, and is the most mature IT market in Africa. Despite this, end users in South Africa are faced with challenges related to budgetary pressures, lack of available IT skills, high costs for communications services, and growing regulatory and compliance demands. IT initiatives are therefore centered on cost efficiency, optimization, consolidation, and modernization.
"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 of the government."
IDC expects IT spending in South Africa to increase at a CAGR of 6.5% over the five-year forecast period to reach $18.18 billion in 2017. The government will constitute the fastest growing vertical during this period, with IT investment expanding at a CAGR of 12.5% through 2017. The other two top-performing verticals in terms of growth over the forecast period will be healthcare (9.2%) and combined finance (7.9%). From a technology perspective, investment growth will be strongest in IT services and software.
IDC's South Africa Vertical Markets 2013–2017 IT Spending Forecast (IDC #ZV14V) provides a detailed overview of IT spending trends and forecasts for 17 vertical markets and 10 product categories including hardware, packaged software, and services in South Africa. The study includes an overview of key industry developments, industry challenges, vertical-specific IT drivers and trends, and tables detailing IT spending by vertical market for each product for the period 2012–2017. Analysis is based on continuous research and monitoring of users' IT spending, emerging purchasing patterns, and supply and demand-side research. For more information about this report, please contact Jebin George at email@example.com.
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