The International Data Corporation's (IDC's) latest report, "Competitive Profiles and Analysis of Leading IT Services Players in South Africa" has found that Business Connexion (BCX) has knocked Dimension Data from the top of the log.
IDC also found the top IT services providers in South Africa are in a battle for dominance as the competitive landscape heats up in line with the continuing maturation of the South African market.
BCX increased its share of the market's value to 14.2% in 2012, displacing long-time incumbent Dimension Data, thanks to strong annuity-based revenues and an expansion of its service offerings through a number of strategic acquisitions, says the research company.
IDC adds BCX "also benefited from its ability to execute a range of IT services, from software and hardware support installation, to systems integration and information system outsourcing (ISO)".
BCX CEO Benjamin Mophatlane says the IDC's research "is reflective of our group-wide growth strategy, and speaks directly to the efforts we are continuously making to meet increasingly complex customer requirements".
Dimension Data placed second in IDC's rankings of the leading service providers in South Africa, vacating the top spot it held in the previous year, says IDC. Meanwhile, T-Systems maintained its position as the third leading IT services provider in South Africa, it adds.
Large providers are responsible for a major portion of South African IT services market revenues. In 2012, for example, the top two providers accounted for 28.1% of the total IT services market revenue, with the top 10 together accounting for 64.5%.
The market supremacy of the large providers has increased over recent years and IDC believes this top-end dominance will continue over the next few years.
Changing landscape
IDC says, to meet increasingly complex customer requirements, service providers have had to expand their portfolios, often through acquisitions. "Providers are also expanding to access opportunities in untapped markets, targeting end-user organisations either by vertical or by business size. In light of the rapidly maturing South African IT services market, IDC expects this acquisition trend to continue in 2014 and beyond."
It notes an increasing number of providers in adjacent sectors are also entering the IT services market.
"Telcos are aggressively targeting network-related services and providing cloud and data centre services. Meanwhile, hardware providers are pushing the benefits of integrated systems and offering specialised implementation services.
"As such, IT services providers that demonstrate an ability to offer hardware, software, and service solutions, either through internal delivery capabilities or through a wider partnership ecosystem, will present themselves as strong candidates in what is a busy and increasingly crowded market."
Lise Hagen, research manager for software and IT services at IDC South Africa, says "local providers, which often have a multinational presence, are increasingly capturing the lead in the market, with six of top 10 providers in 2012 being local firms, compared to five in 2011".
"There is also an increase in the number of smaller IT services players, especially those focused on niche markets. However, the ability of a firm to provide specialised services could also lead to acquisitions by larger players looking to expand their service offerings. Acquisitions, in fact, will continue to play a large part in the South African IT services landscape," she adds.
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