IT: A resilient R68,7 billion market
Given the economic uncertainty that just won’t abate, the South African IT market has performed remarkably well.
The South African IT market revenue grew 10.7% from R62 billion in 2009 to reach R68.7 billion in 2010. The IT market is expected to grow at a compound annual growth rate (CAGR) of 7.6% to reach R99.1 billion in 2015. BMI-T expects the IT market to grow by 8.5% to R75.5 billion in 2011.
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.
The Consumer and SME segments have become important contributors to IT industry revenues as corporate organisations spend more conservatively.
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.
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.
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 South Africa. 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.
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.
Overall IT Market revenues are expected to grow at a CAGR of 7.6% p.a. over the five year forecast period 2010 to 2015. The following trends are expected to drive the IT Market:
- Storage will be a category that should outperform other hardware areas due to continued virtualisation and cloud computing initiatives.
- Hosting is the standout category, looking forward, in the IT services arena, considering the drive towards cloud computing.
- Adoption of Software as a Service and collaboration are areas that will drive growth in the software market.
The bottom line
The IT market is maturing in South Africa. 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.