UAE services market hits $791 million

The UAE’s IT services market expanded beyond analyst expectations in 2007, according to IDC.

The market grew 41% from 2006, to reach $791 million, driven by a transition from infrastructure investment to more strategic, services-intensive IT projects. The growing maturity of the market was also marked by the fact that systems integration services constituted the biggest part of the market, at 19%, over taking infrastructure related services such as hardware and software integration for the first time.

Outsourcing services were also in demand, taking up 18.1% of the market. Government, finance and construction/agriculture/mining sectors were the leading customers for services.

Margaret Adam, research manager, IT Services, IDC MEA said: “Organizations in the UAE are facing a myriad of challenges that are heavily impacting their investments in IT services. 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.”

"The more sophisticated service areas such as systems integration, application customization, and outsourcing were the fastest growing in 2007. Year-on-year growth of around 50% in these categories testifies to a maturing IT services market and a shift towards more strategic IT decision-making,” she added.

IDC expects the market for services in the UAE to reach $2.3 billion in the next five years. The strong regional economy, a maturing IT market and increased complexity of IT combined with a shortage of skills will fuel an average annual growth of 23.9%, the company said.

There was no change in the leaders in the UAE services market, with MDS, Emirates Computers, and Injazat Data accounting for over one quarter of service revenues.

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