IT spending in Mena to rebound in 2020 after a year of decline

Gartner says non-oil economic initiatives in the UAE and Saudi Arabia will boost investment on technology

Organisations in the Middle East and North Africa will spend $4.8bn on upgrading data centres in 2020, almost 1.1 per cent more than last year. Getty

Spending on information technology in the Middle East and North Africa is set to grow at 2.4 per cent in 2020, after a decline of 2.8 per cent last year, according to consultancy company Gartner.

The total IT spending in the region is expected to reach $160 billion (Dh587.2bn) this year, which is $3.75bn higher than in 2019. Growth will be driven by non-oil economic activity, it said.

"In 2019, organisations in Mena disinvested in data centre systems, devices and communication services, which led to a decline of 2.8 per cent in the overall IT spending," said John Lovelock, research vice president at Gartner.

However, ongoing non-oil economic initiatives in the UAE and Saudi Arabia – the region's biggest economies – will boost IT spend in the region over the coming months.

"Non-oil economic initiatives such as Dubai Expo 2020, the Al Qiddiya entertainment, sports and arts complex, the Red Sea Project and the Neom living laboratory in Saudi Arabia are boosting business activity in Mena, which will heavily influence IT spending locally in 2020," he said

The overall increase in IT spend will also be driven by digital transformation activities by government and private organisations, Gartner said.

As local organisations continue to invest more resources into digitalisation, technology consulting budgets will also increase, the report said.

The communications services and devices industry will see the largest IT outlay among five sectors highlighted, totalling $134.89bn, according to the report. The remaining $25.34bn will go towards upgrading data centres, enterprise software and IT services.

"This year, businesses in Mena are on pace to increase their IT budgets across all segments, with spending on enterprise software expected to achieve the highest growth [12.3 per cent year-on-year], reaching $7.42bn," said Mr Lovelock.

Spending on devices will grow at 3.6 per cent, following a double-digit decline last year. IT services spending is expected to total $13.1bn, an 8.4 per cent year-on-year increase.

IT spending levels in Mena are among the highest in the world, after China, the emerging Asia-Pacific region and Latin America, Mr Lovelock said.