IDC: managed and datacenter services continue to gain traction in UAE and Saudi Arabia

Referencing its 2012 report, IDC says that managed and datacenter services, in particular, have gained significant traction in both countries over recent years.

In order to increase operational efficiency and achieve better results, end-user organizations are gradually adopting managed network infrastructure services and managed application services.

Datacenter services are also attracting a lot of interest, especially hosting infrastructure services, which includes co-location, dedicated server hosting, and shared Web hosting.

IDC's latest figures show overall managed and datacenter services markets in the UAE and Saudi Arabia growing 16% and 20% year on year, respectively, in 2011, to total $257.5m and $266.5m.

"This region has traditionally not been very pro outsourcing," said Saurabh Verma, programme manager for IT services at IDC Middle East, Africa, and Turkey. "However, prevailing macroeconomic conditions, changing customer priorities, dynamic market conditions, and a variety of other factors have created a strong value proposition for managed services. Organizations are being pushed to reduce their operating expenses and increase efficiency at the same time, and many are finding it very difficult to improve their processes with in-house IT resources. In addition, intensifying competition and increasingly demanding customers are driving them to outsource their 'peripheral' activities and focus more on their core business," he added.

The key advantage of managed services is the discrete outsourcing concept, whereby clients have the freedom to pick and choose what to outsource and what to keep in house. This also gives them the flexibility to employ a multi-vendor strategy and engage best-of-breed services providers to manage their IT portfolios.

Shorter contract durations and more competitive pricing are also attractive to clients. Last and most important, with managed services, clients have the freedom to keep their human and IT resources with them (i.e., they do not have to transfer them to the services provider, as is typical under a long-term holistic outsourcing contract).

"Discrete outsourcing, shorter contract durations, smaller contract sizes, and the flexibility that comes with not having to transfer resources are combining to make managed services a strong value proposition for the region's businesses," said Verma.

"All of these attributes enable customers to 'test the water' before opting to evaluate a larger outsourcing contract with their supplier. As such, we believe that both managed and datacenter services will continue to witness strong growth in the UAE and Saudi Arabia over the coming years. However, suppliers will have to be proactive in educating customers on the value of managed and datacenter services, gaining client confidence on the perceived security-related issues and offering improved service-level agreements," he added.