As South Africa places greater emphasis on systems integration over the next few years, IT services spending is expected to increase 10.5% year-on-year to reach $5.7 billion (R63.8 billion) in 2015. This is according to the latest forecast from the International Data Corporation (IDC).
The research firm says money invested in systems integration will increase at a compound annual growth rate (CAGR) of 13.6%, as technologies such as cloud, social, and mobility require increasing levels of integration, particularly with existing backend infrastructure and solutions.
In a recent statement, the IDC noted its IT spend forecast represents a continuation of the 10.5% year-on-year growth anticipated for the market this year, and a stark transformation from IDC's data for 2013, which shows the market declined 7% in dollar terms.
Lise Hagen, IDC's research manager for software and IT services in Africa, said IT initiatives "will not only continue to focus on technologies that enable continuous improvement and optimisation, but also deliver value to the business.
"New investments in IT will focus on technologies that can demonstrate cost-efficiencies, such as automation, cloud, and software as a service."
Challenging climate
The IDC notes pressure is growing on CIOs to deliver greater business value with increasing, but tightly controlled IT budgets. "Given the ongoing economic challenges, outsourced services continue to appeal to companies that want to limit and predict costs and optimise current investments," the research firm said.
As the focus on cost-reduction favours outsourcing engagements, the IDC expects the outsourcing services macro-market to remain the largest in SA and is expected to comprise 45.4% of the country's IT services market in 2015. This will be predominantly driven by growing spending levels in the managed services space as organisations increasingly make use of outsourcing services to address concerns around their costs and efficiencies.
Hagen added providers "need to help demonstrate that IT is not just a cost centre, but a fundamental part of the business that can drive revenue and value as well as reduce costs".
Looking ahead
As the research firm casts its eye over an extended period, it expects IT services spending in SA to increase at a CAGR of 9.5% over the five-year forecast period to reach $7.4 billion in 2018.
Meanwhile, it adds combined systems integration will constitute the fastest growing service during this period, with IT investment in this area expanding at a CAGR of 13.6%. The other top-performing services in terms of growth will be application related, with application management outsourcing and application consulting and customisation both expanding at CAGRs of 13% each.
Share