The combined IT services market of the so-called Other Gulf Cooperation Council (OGCC) countries, comprising Qatar, Oman, Bahrain, and Kuwait, is expected to expand at a compound annual growth rate (CAGR) of 12.5% over the coming years to total $1.82 billion in 2018, according to the latest forecasts released by International Data Corporation (IDC).
The global advisory services firm expects this growth to be driven by government-led infrastructure development projects, egovernment initiatives, transformations in the transportation and banking and financial services sectors, and private sector developments as governments in the region pursue diversification strategies into non-oil sectors.
“The willingness of CIOs to procure outsourcing services is increasing across the OGCC countries,” says Eric Samuel, a senior analyst for IT services at IDC Middle East, Africa, and Turkey. “And we are now at a stage where CIOs are actively evaluating the capabilities of ICT services providers to build and operate their ICT environments. Some organizations are already reaping the benefits associated with these technologies, such as improved operational efficiency, reduced capital expenditure, and enhanced ICT management. And as the outsourcing services offered by ICT services providers mature over the coming years, we expect the adoption of such services to increase notably.”
IDC’s latest data shows that the OGCC IT services market reached a total value of $1.13 billion in 2014, up 11.7% on 2013. Qatar presented the strongest growth in the region, with IT services spending fuelled by large-scale, infrastructure-driven, and government-led projects in the transportation, healthcare, and education sectors.
Qatar will continue to have the fastest growing IT services market of all the OGCC countries, and IT services spending in the country will surpass Kuwait’s total by the end of this year. Qatar is also expected to lead IT services spending in the region through 2018.
The competitive landscape in Qatar is changing at a rapid pace. An increasing number of global ICT companies are now competing with local ICT providers, either directly or through partners, as they strive to capitalise on the myriad ICT opportunities present within the country.
However, this increasing competition is exerting downward pressure on project pricing, which is impacting the margins of many ICT providers in the region. ICT project pricing is also becoming more complex as greater numbers of organisations expect their ICT partners to develop and implement solutions that are capable of solving their specific business challenges rather than merely meeting their operational requirements.
“IT services maturity has significantly improved in the OGCC countries, and both public and private sector organisations are looking at implementing complex IT solutions while addressing the challenges associated with finding and retaining experienced in-house IT personnel,” continues Samuel. “As a result, organisations are expected to take a cautious approach to CAPEX outlays when implementing ICT solutions, and this is also expected to drive spending on hosting, cloud, and managed services over the coming years.”
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