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Sat 23 Mar 2019 11:00 AM

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MENA spending on IT forecast to hit $160bn in 2019

Gartner research says regional businesses are set to increase IT spending in all segments except for devices

MENA spending on IT forecast to hit $160bn in 2019
Gartner analysts said software and IT services are projected to exhibit the strongest growth in 2019.

Information technology (IT) spending in the Middle East and North Africa (MENA) is projected to reach $160 billion in 2019, a 1.8 percent increase from 2018, according to the latest forecast by Gartner.

“In 2019, businesses in MENA are set to increase their IT spending in all segments except for the devices segment,” said John Lovelock, distinguished research vice president at Gartner.

The achievement of a 1.8 percent growth rate this year is placing MENA seventh out of the 11 regions tracked by Gartner in 2019, he said.

The research comes as consumer spending in MENA has reached a tipping point. Consumers are on pace to spend $532 million on upgrading or replacing their mobile phones in 2019, and expect to spend $63.7 billion on mobile services in 2019, up $1 billion from 2018.

In the enterprise sector, organisations are increasing their spending on software, which continues to be the fastest growing sector in 2019. Nevertheless, despite the rapid growth of software as a service in the region (25.8 percent in 2019), the region is below the global average for the percentage of total cloud spending.

“The MENA region is not expected to reach the level of cloud usage that the United States had in 2017 until the end of 2022,” said Lovelock.

Gartner analysts said software and IT services are projected to exhibit the strongest growth in 2019, with an 11.5 and 7.5 percent increase year over year respectively.

“Most organisations in the MENA region are paying off years of technology deficits, and implementing software systems that standardise and automate existing business processes,” said Lovelock. “Only a few leading local organizations are overcoming technology hurdles, and moving more quickly toward artificial intelligence and digital business systems, and participation in digital business ecosystems.”

The communications services segment, the largest spending segment in MENA and the fourth fastest growing segment in the world, is set to increase 1.8 percent year over year.

The devices market is projected to exhibit a decline of 2.2 percent in 2019. “While coverage continues to expand throughout the region, sales of mobile phones, particularly among consumers have stalled or declined in some countries. In addition, it is worth noting that the stabilization of the mobile phone installed base for consumers and businesses has not yet led to a price war among local providers,” added Lovelock.

Gartner also said the banking and securities industry is projected to total $13.2 billion in 2019, the largest IT spending among 11 industries. It will also exhibit the fastest growth rate at 5 percent year over year.

“Banks in MENA must keep investing in IT in order to participate in the international banking system. At the same time, IT security has always been on the radar and has now become the No. 1 priority for senior banking executives,” said Miriam Burt, managing research vice president at Gartner.

The transportation, education and wholesale trade sectors are on pace to achieve growth of 1 percent, 2.4 percent and 2.8 percent this year respectively, and are set to be the three industries achieving the weakest IT spending growth rates in 2019.

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