The South African IT services market reached a value of R47.4 billion in 2014, growing at 4.8% year-on-year, according to the IT Services Market report released by BMI-TechKnowledge.
The research firm says the growth is lacklustre but there are pockets of strength and some exciting prospects for the future.
BMI-T says this growth was in an environment of rapid convergence of IT and telecoms, which was reflected in significant ICT corporate consolidation.
The public sector had a notable impact on the fortunes of many players in the IT services arena, with some major contract renewals and extensions, according to Clinton Jacobs, senior IT analyst at BMI-T.
"Indian system integrators are also making their presence felt in South Africa. Several Indian companies have experienced good growth and significant wins in a variety of market segments, such as banking, telecoms and mining," says Jacobs.
BMI-T's research shows the three largest players in the IT services market, each with approximately 14% market share, are Dimension Data, Business Connexion and EOH. The latter continues to grow significantly through a combination of organic growth and acquisition.
The IT services market is expected to grow at a compound annual growth rate of 7.4% over the next five years to reach a total of R67.7 billion by 2019.
"This will likely be driven by the continued pressure on companies to reduce costs and become leaner, as well as by the impact of mega trends, such as the Internet of things and hybrid cloud computing."
BMI-T found there was double-digit growth in IT services in 2014, in the areas of custom application development, training and system integration.
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