SA's IT revenue exceeds expectations

SA's IT market is expected to grow to R99.1 billion in the next four years, says BMI-TechKnowledge.

The technology research company says, despite current economic uncertainty, the local IT market has performed remarkably well, with revenue growing 10% between 2009 and 2010, from R62 billion to R68.7 billion.

It adds that the IT market is expected to grow at a compound annual growth rate (CAGR) of 7.6%, to reach R99.1 billion in 2015, and is expected to grow by 8.5%, to R75.5 billion in 2011.

“The consumer and SME segments have become important contributors to IT industry revenues as corporate organisations spend more conservatively.

“In general, it is seen that IT security concerns are growing as connectivity grows and attacks on organisations are becoming more frequent. Business efficiency is a priority in these tough economic conditions and IT has to ensure business benefit is derived from IT initiatives.”

As the South African market continues to mature, a move into the rest of Africa, especially the key hubs, is on most major IT companies' agendas, says BMI-T.

The hardware market grew by 7.6% in 2010, from R21.2 billion in 2009 to R22.9 billion in 2010. Hardware accounts for 33.3% of the total IT market and is expected to see a CAGR of 3.5% over the forecast period.

“Bundled PC and data offerings have provided good impetus to the PC industry, but smartphones and tablets are likely to cannibalise PC and especially notebook revenues,” says the company.

The South African IT services market is estimated to have reached R32.8 billion in 2010, showing a year-on-year growth of 13.3%, and accounted for 47.7% of the total IT expenditure in SA, it adds.

The IT services market value is forecast to grow to R49.8 billion by 2015. This reflects a CAGR of 8.7% over the forecast period.

“Increased spend on IT services can be attributed to upgrades and refreshes, as many companies delayed these for as long as possible. Also, companies are adopting managed services as complexity increases and the skills shortage remains, especially in certain disciplines.”

BMI-T says the packaged software market grew by 9.9% in 2010, to R13 billion, and is expected to show growth of 10% in 2010.

Packaged software accounted for 19% of the IT spend in 2010. The packaged software market value is forecast to grow to R20.8 billion by 2015. This reflects a CAGR of 9.8% over the forecast period.

“Virtualisation management, unified communications and business intelligence are some of the software areas that are driving the growth in the packaged software market.”

The research company says there are specific trends that are expected to drive IT market revenue.

The first is that storage will be a category that should outperform other hardware areas due to continued virtualisation and cloud computing initiatives.

Secondly, hosting is the standout category, looking forward, in the IT services arena, considering the drive towards cloud computing.

BMI-T says the third trend is the adoption of software as a service and collaboration that will drive growth in the software market.

“The IT market is maturing in SA. This can be seen in the continued consolidation in the industry as well as the convergence that is taking place with the telecoms industry. Cloud computing is on everyone's lips in the industry and it is expected to move rapidly from an industry push to a market pull.”