Outsourcing success belies poor IT spending data

Dubai: Outsourcing services in Saudi Arabia had a stellar year in 2005 with spending up 57 per cent, according to a recent IDC study of the kingdom.

Also seeing strong growth was the customisation field, with investments rising 32 per cent compared to the year before.

Despite these standouts, however, overall the growth in information technology services was modest. Spending in Saudi Arabia grew 6.4 per cent to more than $700 million.

IDC believes total services spending will pick up again this year, growing by more than 13 per cent. High oil prices, rapid IT developments in the banking and telecommunications sectors, and growing adoption of outsourcing services will be the main drivers in this growth.

"The surge in demand for customisation and outsourcing services caught many vendors off guard but enabled them to sustain revenue," says Philip van Heerden, a research manager at IDC Middle East and Africa. "Although support and deployment services and system integration were again the largest IT services areas last year, they both shrank. They will pick up again this year but expand at less than half the rate of the total IT services market." Saudi Business Machines again took the top spot among the vendors in Saudi Arabia in 2005, followed by Atos Origin, Ebttikar, and Al Alamiah. The newly formed Ejada took fifth, partially relying on the client base of the firms that joined forces to create the company.

The government led the country in spending on IT services last year followed closely by agriculture, construction and mining.