Market research company International Data Corporation (IDC) forecasts the total South African IT services market to expand at a compound annual growth rate of 8.7% to exceed $17 billion, about R136 billion, in 2015.
It adds that IT services spending in SA has shown moderate growth, despite global economic uncertainty. It grew 8% year-on-year in 2010 to contribute more than a third of the total IT spending in the country.
The IDC expects the IT services market to exceed $5 billion, some R40 billion, in 2012.
"After the freeze in IT budgets that came about as a result of the global economic crisis, 2010 saw a rebound in IT services spending," says Suzanne Nolan, research analyst for IT services at IDC SA.
"The growth in IT services spending was driven by a recovering economy, increased business confidence, expanding bandwidth availability, and various infrastructure investments made in the country in 2010."
In a recent research report, the IDC stated that IT outsourcing constituted around 40% of the South African IT services market, which represents the largest market share of all IT services foundation markets, followed by systems integration and installation and support services.
"This growth was mainly driven by discrete managed services rather than by traditional information system outsourcing contracts," says Nolan. "The healthy growth in outsourcing services signifies a level of sophistication and maturity within the IT services segment."
According to the IDC, services such as network and desktop outsourcing and infrastructure hosting saw increased uptake in 2010, fuelled by the incremental supply of data centre space and increased customer awareness of the managed services model.
Looking ahead, the corporation expects a continued spending focus among end-user organisations on areas and solutions that help reduce operating expenses while increasing efficiency.
''As a result of continued price pressures and the need to improve client service, vendors are advised to pursue alternative service delivery models, such as cloud services. Not only will this help end-users optimise their IT investments, but it will enable services providers to improve their quality of delivery and create new revenue streams.''
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