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The report concludes that the sector benefited from rising oil prices, which enabled government and private enterprises to update computer systems. Last year, however, ICT budgets were cut in response to the financial crisis.
Spending cuts
As the global economy starts to recover, regional firms are again looking at the opportunities new technology can present. In total, Meed estimates $4.24bn-worth of projects have been awarded or announced since 2009. Of this, 48% of the value was generated in 2009, with the remaining 52% falling into the first six months of 2010.
The general weakness in contract values in early 2009 reflects a general reluctance across most sectors to spend money on ICT projects, largely because the economic environment during that period was unstable. The second quarter saw contract values hit a low for the period covered, with a steep $100m decline compared with the first quarter, before recovering in the third quarter. But during that period, spending remained subdued, with contracts reaching a value of $1.3bn.
ICT project values peaked for 2009 in the final quarter, coinciding with the region's major technology exhibition and conference, Gitex, which is held annually in Dubai. Each quarter since the fourth quarter 2009 saw an increase in ICT contract values, as confidence began to return in the market.
The telecoms sector has proven the most agile, making up 83% of all contract values. At $1.9bn, the estimated value of telecoms projects awarded in the first half of 2010 has exceeded the value of similar projects announced during the first half of 2009 by more than 250%, and the entire year by more than 18%. In total, an estimated $3.5bn telecoms contracts have been signed since 2009. The spending underlines the growing importance of the sector and, conversely, the relative instability that still hampers IT spending.
In 2009, IT contract values saw two quarters of steep decline, before recovering in the final quarter. The values of contracts signed in the fourth quarter were below the level signed in the first quarter of 2009, at $122.5m, compared with $173m at the start of the year. The first quarter of 2010 again saw a sharp fall in spending, but rapid growth of almost 174% followed in the second quarter to $283m. Spending in the first six months of 2010 has outstripped the value of deals signed in the first half of 2009 by 10%.
Communications and networking contracts account for a 84.4% share of the ICT market by value, followed by IT software and services on 7%, managed services on 7%, and computer equipment with just 1.6% of the total project values.
However, when those sectors are compared by volume of contracts, the picture changes, with IT services and software becoming the dominant segment, accounting for 60% of all contracts signed. This is followed by communications and networking on 19.6%; computer equipment on 11.7%; and managed services on 8.4%. If the ICT investment is analysed on an industry basis, the companies operating in IT and telecoms are the highest spenders, accounting for 16.4% of contracts; banking and finance on 13.4%; and education and training on 10.9%.
State investment
The combined pressure to retain customers by introducing more innovative and affordable services and to keep profits from falling is the main driver behind telecoms operators' decisions to upgrade their fixed and mobile telephone infrastructures.
Staff
