UAE market for IT services grows 23% to $508m

Dubai: The IT services market in the UAE grew 23 per cent last year to $508 million and will grow 15 per cent this year, according to a report by the International Data Corp (IDC).

While standard installation and support services still make up the largest chunk of the IT services market, the increased adoption of outsourcing and consulting services point to more strategic IT decision-making in the region and is a clear sign of maturation of the IT services sector.

"We're entering a new era and vendors will need to change tactics to take advantage of it," says Margaret Adam, Senior IT Services Analyst for IDC MEA. "IT services providers should streamline their operations and focus on strategic alliances, developing a pool of highly skilled individuals who can educate customers to the benefits of technology to their business."

In demand

Hardware and software support and installation was highest in demand, accounting for a third of market value, followed by systems integration with 26.1 per cent.

The combined outsourcing category comprised 16.per cent of the UAE IT services market last year, having grown 28.2 per cent. IS Consulting grew 88.6 per cent in 2006.

The top three players on the UAE IT services market in 2006 were MDS UAE, Emirates Computers, and Injazat, which together garnered less than a quarter of total revenue.

On the demand side, government contracts played a dominant role, responsible for 26.5 per cent of services spending.

Banking followed with 13.1 per cent of total IT services expenditure in 2006.