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Huge appetite for AI to boost META’s tech spending

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 06 Feb 2024
The impact of generative AI’s emergence will reshape the IT landscape the Middle East, Türkiye, and Africa.
The impact of generative AI’s emergence will reshape the IT landscape the Middle East, Türkiye, and Africa.

Overall spending on information and communications technology (ICT) across the Middle East, Türkiye, and Africa (META) region will top $238 billion this year, an increase of 4.5% over 2023.

This is according to the latest predictions report revealed by research firm, International Data Corporation (IDC) at last week’s IDC Directions META event held at the Dubai International Financial Centre, where more than 400 senior executives gathered.

Announcing its regional forecasts for the year ahead, IDC revealed that it expects the region’s telecommunications services spending to increase 5% year-on-year (YoY) in 2024, to reach $133 billion, while IT products and services spending is set to grow 3.9% YoY to $105 billion this year.

“As META's digital economy increasingly takes shape, IDC forecasts that digital transformation spending in the region willtop $59 billion in 2024 and accelerate at a compound annual growth rate (CAGR) of 15% over the coming years to cross the $88 billion mark in 2027,” says IDC.

Spending on the following technologies will boost overall ICT spending:

  • Spending on public cloud in the META region will top $13 billion in 2024, representing year-on-year growth of 21%.
  • Software-as-a-service will account 59% of this public cloud spending, followed by infrastructure-as-a service, at 23% and platform as a service, at 18%.
  • Cyber security spending has surpassed previous growth projections and is forecast to cross the $6.5 billion mark in 2024.

Urge for AI innovation

IDC further predicts that spending on artificial intelligence (AI) in the region will top $3 billion this year, up 32% on 2023.

IDC's group VP and MD for the META region, Jyoti Lalchandani, explained that AI investment priorities of organisations will likely evolve over the coming years as they move beyond their initial focus on reducing costs.

"Across the META region, there is a clear appetite for AI in general, and generative AI in particular, with spending on AI forecast to reach $6.9 billion by 2027," revealed Lalchandani.

"However, many organisations are already questioning whether they are over-pivoting on cost reduction and not focusing enough on how AI can help them to grow their revenues. We expect revenue growth outcomes to take centre stage in the next three to five years and providers must track this shift carefully with their core buyers, to ensure that their AI-related offerings continue to align with the evolving business goals of their customers."

IDC's global president, Crawford Del Prete, presented the event's keynote address, titled: “The AI Moment: Welcome to the Next Era of Technology”, during which he heralded GenAI's emergence as a golden era of innovation.

"The impact of generativeAI’s emergence will reshape the IT landscape as companies strive to not only boost productivity, but also create new ways of meeting the needs of customers," said Del Prete. "We are increasingly seeing companies invest aggressively in GenAI to capture an advantage and ensure they are not left behind. Indeed, by 2027, we expect global spending on generative AI to top $150 billion, accounting for around 30% of all AI-related investments." Thomas Meyer, IDC's group vice president of research for the EMEA region, explained the support mechanisms that tech vendors must put in place for their customers. "As generative AI adoption grows in the META region, tech providers must develop a responsible AI strategy.

"As part of this strategy, they need to support their customers in unlocking funding for investments and delivering return on investment and significant business outcomes for prioritised use cases."