ICT spending in UAE to grow 2.5% to $16.7b this year

null

Spending on information and communications technology (ICT) in the UAE is expected to reach $16.7 billion this year, a year-on-year increase of about 2.5% compared to $16.3 billion a year ago, an industry expert said.

Jyoti Lalchandani, vice-president and regional managing director for research firm International Data Corporation (IDC), told exclusively to TechRadar Middle East that out of the total $16.7 billion, IT spending is expected to be about $7.9 billion this year compared to $7.6 billion in 2018, with a growth of about 3.9%.

“We are seeing a more than 3% year-on-year decline in overall hardware sales such as mobile phones, laptops, tablets, desktops, monitors, projectors and IT peripherals.  The other half which constitutes software and IT services are expected to grow,” he said.

On the consumer side, he said the sentiment is weak due to uncertainty, value-add tax (VAT), anxiety, low disposable incomes and challenges in the market. “Re-export is a lot slower while small- and medium-sized businesses are also under considerable pressure due to lack of liquidity,” he said.

Cloud is the way forward

Software spending is expected to grow 6.6% to $1.3 billion this year while IT services (hardware and support services, consulting services, training, education, system integration services, managed services, outsourcing) are expected to grow at 8% to $2.9 billion.

“What we are seeing this that organizations are now leveraging some of the new technologies in order to save more in a bid to become operationally more efficient, drive more revenue and to have a competitive advantage. Companies are slowing down investments and moving to the cloud,” he said.

According to IDC, cloud spending in the Emirates is expected to grow by 30.7% to $574 million compared to $439 million last year. However, Lalchandani said that the public cloud spending for the region is expected to be $2 billion this year and by 2022, it is expected to be worth $4 billion.

“One of the concerns companies had is the residing of the data outside the country. Now with public cloud providers coming in [the region], we are going to see a lot more openness and investment in the cloud. Cloud spending is going to double in the next three years,” he said.

Oracle has opened a data centre in Abu Dhabi in February this year while Microsoft is set to open data centres in Dubai and Abu Dhabi soon.

Lalchandani said the real opportunity is going to be for some of the channel players and the emergence of public cloud brokers in “lift and shift” services as companies move from on-premises to the cloud.

“The on-premise [non-cloud] spending is declining quite rapidly and a lot of spending is moving to the cloud as a subscription-based model. Speed and agility are the key drivers for the cloud,” he said.