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However, markets in other parts of the region have seen growth, in particular those in Qatar and Saudi Arabia. This has been driven in part by government investment in building an improving infrastructure. These areas, along with a minor recovery in other countries in the Middle East, lead to a more positive outlook for this year.
"We believe that we will see growth of between 10% and 11% in terms of overall IT spending. We have some big markets in the region - Saudi always is the largest market in the region for IT, they spend close to $10bn on IT and the UAE spends close to $5bn," says Lalchandani.
Power crisis affects spend
In specific areas of IT, companies are looking to tap into this spending power, while still providing efficiency to the firm. "The power crisis worldwide, the cost of electricity, the economic crisis, now companies are wanting to save money, and with all those things in mind, how do you make your data centre more efficient. For the same output how do you use less electricity?" Rodney Callaghan, vice president, Gulf countries, APC by Schneider Electric tells AMEinfo.com.
The trends in IT spending are moving forward with the technology breaking through. A move towards cloud computing and desktop virtualisation has radically changed the spending agenda of IT managers and CIOs. According to a survey conducted at an IDC meeting of CIOs, nearly 70% wanted to look at virtualisation as one of their core strategies for this current year. Widespread spending on services within a cloud computing structure is likely to follow on from virtualisation.
"In terms of cloud, cautiously optimistic is how I'd define it, the ecosystem is still being built, vendors are coming together and trying to understand how it would work in terms of pricing structure and delivery model. The CIOs have not yet embarked on the virtualisation journey yet and as a consequence, the cloud comes after that so I still see cloud as something that will take at least a couple of years to become an accepted delivery model," says Lalchandani.
IT outsourcing yet to be fully implemented
Outsourcing is another major trend affecting the regional spending of IT companies. Firms appear to have been slow to embrace the concept of fully outsourcing their IT services, but there have been indications that this is about to change.
"You are going to have what you call select sourcing, so selectively outsourcing certain aspects of IT - be it application development or testing or other areas. We had a lot of reluctance given concerns about security, compliance and cost savings and there were cultural considerations as well. But now we see companies becoming a lot more open in select sourcing and seeing where this can add value."
A worsening shortage of IT skills within the region is partly causing this move towards select sourcing and outsourcing. Other major strategy changes within IT spending are expected on top of this. "I think we are going to see a shift in the way CIOs spend their IT dollars, the challenges around budgets is always going to be there. They've got some discretionary items on the agenda, some non-discretionary ones, many of the plans they have in terms of new projects and new initiatives will go on but the way they allocate their money and spend is going to change," reveals Lalchandani.
Attitude shifts in IT managers
Despite this perceived shift, there are issues surrounding changing attitudes of IT managers. "It's sometimes hard to convince a customer that he needs to put more capital in at the beginning to save money over the lifetime of the project, sometimes the view of the investors is quite short term," says Callaghan.
In the next six months to a year, the IDC is predicting there will be a lot more focus on measuring IT costs and ensuring a good return of investment for businesses. "The focus is going to be what value can be added to the business through IT so there will be a focus on aligning IT goals and business goals," Lalchandani concludes.
Peter Ward, Reporter
