TECH SUPPLIER Dec 2021 - Technology Segment - Doc # META47121821

Competitive Profiles and 2020 Analysis of Leading IT Services Players in the United Arab Emirates

By: Eric SamuelProgram Manager, IT Services, Middle East and Africa

Abstract

The United Arab Emirates (UAE) IT services market contracted by 3.5% year on year in U.S. dollar terms in 2020 owing to effects related to the COVID-19 pandemic. Total market value was $2,763.4 million, down from $2,863.8 million in 2019. Measured in local currency, the market totaled AED $10,150.2 million.

The pandemic hit the UAE in February 2020, and the impact on businesses was felt immediately, with lockdowns and restrictions on movement being imposed. This impacted the spending propensity of businesses, including spending on IT. Many organizations were subsequently sought to renegotiate their existing services contracts with their engaged IT services providers. For new projects, a clear preference became evident to engage with IT services providers that offer flexible payment plans. Many organizations also preferred to engage with IT services providers that offered cloud services, as that would enable OPEX-based technology investments. Services providers that had developed strong cloud services capabilities thus benefitted more than others.

In addition, the adoption of offshore implementation and managed services accelerated. This represented another way for organizations to curtail their spending on IT services, as onsite and onshore service delivery is far more expensive than offshore service delivery. Again, IT services providers that had made investments to set up global delivery centers in low-cost destinations benefitted from this market development.

A strong drive was also evident toward automation to improve efficiency and productivity and reduce dependency on humans for repetitive tasks. Organizations increased their spending on robotic process automation (RPA) tools and engaged with IT services providers with deep knowledge in this domain, as well as those with implementation capabilities. This helped speed up implementation times and reduce costs.

The pandemic also forced most organizations to reconsider their business models. While doing so, most companies were found evaluating emerging technologies such as artificial intelligence (AI), machine learning (ML), augmented reality/virtual reality (AR/VR), the Internet of Things (IoT), and blockchain. Unsurprisingly, IT services providers that had built capabilities in these newer technologies were favored over traditional IT services providers.

Because of the above market developments, IT services providers that were primarily providing traditional services saw a decline in their business. IT services providers that had modernized their services offerings and developed capabilities in the latest technologies were less impacted by the downturn in spending. The broad adoption of cloud services has converted most technology spending from CAPEX to OPEX. As a result, many of the services providers that used to be paid upfront or upon completing project milestones are being paid via annuity models.

Broadly speaking, there are three categories of IT services providers in the UAE: multinational services providers (e.g., IBM, Accenture, Wipro, TCS, Tech Mahindra, and PwC), local services providers (e.g., Midis System Integration Group, Injazat Data Systems, Gulf Business Machines, Alpha Data, Digital14, Moro Hub, and Emircom), and telecommunications services providers (Etisalat and du). Telecom services providers in the country have been increasingly focusing on growing their ICT services businesses, partnering with IT services providers to develop their capabilities and/or extend their reach. For example, Etisalat has formed the Etisalat Digital division to drive IT services growth, and du has developed the New Business Innovation (NBI) group. In September 2019, Etisalat acquired Help AG, a leading security services company in the UAE, to expand its capabilities in the security domain.

This IDC Technology Segment study presents the top 90 IT services providers in the UAE, including respective market shares, based on their performances in 2020. Furthermore, it examines the performances of the top 5 IT services providers in the country. The study contains market size and shares for the top 5 service vendors by IDC's 12 foundation market categories.

The study answers the following questions:

  • What are the top 90 IT services providers in the UAE IT services market?
  • What are the top 5 IT services providers for each of IDC's 12 services categories?

"Organizations are prioritizing cloud-based investments as opposed to on-premises technology investments. They are evaluating investments in newer technologies as they accelerate their digital transformation programs, such as AI, ML, AR/VR, IoT, and blockchain. IT services providers that have developed capabilities around cloud services and other new technology areas are thus bound to increase their market share, while services providers that are still focused on traditional business models are likely to struggle." — Senior Program Manager Eric Samuel, IDC Middle East, and Africa


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