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UAE IT services market consolidates with high demand for value-added services

The IT services market in the United Arab Emirates has been growing substantially faster than expected, as demand has been shifting from infrastructural investment toward more strategic projects. According to a recent IDC study, IT services spending in UAE skyrocketed by 41.0 per cent year-on-year in 2007 to nearly $791 million.

  • Staff Report
  • Published: 17:18 September 14, 2008
  • Gulf News

Dubai: The IT services market in the United Arab Emirates has been growing substantially faster than expected, as demand has been shifting from infrastructural investment toward more strategic projects.

According to a recent IDC study, IT services spending in UAE skyrocketed by 41.0 per cent year-on-year in 2007 to nearly $791 million.

In coming years, IDC expects IT services spending in UAE to continue to expand rapidly, fueled by a strong economy, a maturing IT market, skilled-labor shortages, increased foreign investment, and the increasing complexity of IT and its impact on operational management across all economic sectors.

This is supported by the fact that IT services providers within the region have been investing heavily to expand both their services teams and offerings.

"Organizations in the UAE are facing a myriad of challenges that are heavily impacting their investments in IT services," said Margaret Adam, Research Manager, IT Services, IDC MEA.

"The desire to accelerate revenue growth and rapidly take advantage of the opportunities in the region, as well as compliance and regulatory pressures and a drive for cost effectiveness, all fuel growth in the UAE IT services industry."

While 2006 saw infrastructure-related services, such as hardware and software installation and support, making up the largest portion of the IT services market, the situation changed in 2007 when systems integration services took the lead, constituting 19 per cent of the market.

It was followed by hardware support and installation (15.7 per cent) and software support and installation (12.8 per cent).

The combined outsourcing category comprised 18.1 per cent of the IT services market in UAE last year.

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