Mobile phone purchases to fuel record IT spending in Mena region in 2018

Software spending to rise 12.7% as firms upgrade back office systems

A Galaxy S9 smartphone stands on display during a Samsung Electronics Co. 'Unpacked' launch event ahead of the Mobile World Congress (MWC) in Barcelona, Spain, on Sunday, Feb. 25, 2018. The South Korea-based technology giant is banking on new features such as augmented reality-based emojis, camera upgrades, and stereo speakers in a form-factor similar to last year's model in order to take on Apple Inc.'s iPhone X. Photographer: Simon Dawson/Bloomberg
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IT spending across the Middle East and North Africa (Mena) will rise 3.4 per cent in 2018, the highest spending increase in three years, fuelled by upgrades to back office systems and the continued appetite for mobile phones, according to the US market research firm Gartner.

Spending will rise to $155.4 billion this year from $150.2bn in 2017, Gartner said, on the back of a steady increase in outlays for communications services, a segment that includes mobile phones. Communications services spending – which account for over two thirds of the region’s total outlay – is due to rise 3.4 per cent over the year to $106.6 billion.

“Communications services are expanding coverage and increasing data transfer rates while keeping prices low,” Gartner said in a statement on Monday. “The rising demand of premium mobile phones by consumers is also set to fuel growth in the devices spending segment in 2018.”

Mobile phone shipments in the Mena region are forecast to rise 1.4 per cent in 2018 to 101.1 million, according to data from fellow industry research firm IDC. Spending in software will see the biggest rise throughout the year, Gartner forecasts, rising 12.7 percent to $6.2bn, following similar double digit growth over the past two years.


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“The growth has been driven by companies pursuing new functionalities in major back-office systems like supply chain management, enterprise resource and customer service,” according to Gartner.

IT spending will be led in 2018 by the region’s banking and insurance sectors, which are poised to see increases of 3.6 per cent and 2.9 per cent over the coming year, according to Gartner’s global head of research Peter Sondergaard.

“IT spending in the banking sector is driven by its move into digital business and the corresponding investments in technologies such as analytics, blockchain and artificial intelligence,” he said. “For the insurance sector, IT spending is led by investment in software applications."