South Africa’s IT services set to break USD 4bn


The local information technology (IT) services market is expected to exceed $4 billion (R31 billion) this year, representing a year-on-year increase of more than 11 percent, according to the latest report by research firm IDC.

The growth is fuelled by economic expansion, the adoption of open-source software, government projects such as the e-government that is meant to provide technology access to rural areas, technology upgrade cycles, preparations for the 2010 soccer World Cup, deregulation, and growth in the small and medium business market.

Many firms are outsourcing non-core operations such as IT to companies such as Business Connexion, GijimaAst and IBM to save money and focus on the core business. IT outsourcing constitutes more than one-third of the services market, the largest market share of all IT services categories.

"Economic growth and national development projects are playing into the hands of IT services providers, in terms of hardware and software implementations, as well as custom development, outsourcing, and other services," said Pieter Kok, a senior research analyst at IDC South Africa.

IDC predicts that the local IT market will grow at an average annual rate of 11.3 percent to nearly $5.67 billion by 2011. The skills shortage in the country, however, remains a major inhibitor in the IT services market. This week the labour department said there was a shortage of 6 675 information and communication technology (ICT) managers. Kok said: "Despite public and private sector attempts to address the severe skills shortage, filling vacancies and keeping them has been a tough task.

Business Report