IT spending in the UAE is expected to grow by a compound annual growth rate (CAGR) of 8% to reach AED 23.1 billion by the end of 2019, new analysis from Dubai Chamber of Commerce and Industry has revealed.
The analysis, based on recent data from Fitch Solutions, was released on the sidelines of GITEX Technology Week 2019. The data showed IT spending in the UAE increasing at a CAGR of 2.3% between 2014 and 2018, with this value forecast to grow by 7.2% annually over the next five years.
Key findings and growth drivers
Digitisation of the UAE economy, growing adoption of Internet of Things (IoT) technologies and Expo 2020 Dubai were identified as key factors supporting the robust outlook for the sector. According to the findings, the IT sector accounted for AED 21.4 billion or 1.4% of the UAE’s GDP in 2018.
IT services sales in UAE reached a record AED 11.4 billion in 2018 and recorded double-digit year-over-year (y-o-y) growth of 10.2%. Computer hardware sales in the UAE registered a 6.7% y-o-y uptick last year to hit AED 6.9 billion, while software sales grew by 9.7%, reaching a value of AED 3 billion.
Market trends and investments
Hardware sales, which include personal computers and servers, were mainly driven by strong demand from businesses and consumers, as well as economic diversification plans. Personal computers (PCs) and server sales are the major components of computer hardware.
According to the findings, the UAE has one of the highest household PC penetration rates in the region. Purchases of PCs by consumers are expected to maintain momentum as Smartphones are seen as complementary products to computers rather than substitutes.
Several global companies like Amazon Web Services and Alibaba have invested in the UAE’s IT market in recent years which have strengthened business confidence in the market. As a result, the supply of IT services has increased in line with consumer demand in the region.
The UAE remains the most attractive IT market in the region and the country continues to attract industry leaders from around the world. Companies will likely continue to invest in IT infrastructure, especially in network systems, hardware and software over the next few years.
New market opportunities
The UAE’s IT market offers a wealth of business opportunities for vendors and investors. Demand for cybersecurity software and services is projected to increase as public and private sector players look to reduce the risk of cyberattacks and adopt cloud computing and Internet of Things solutions.
Companies operating in key economic sectors such as energy and financial services are expected to maintain high levels of spending on IT products. Financial firms are mainly focused on buying IT products related to banking, mobile banking, payment solutions, customer data analysis, stock trading and asset management platforms. On the other hand, oil and gas companies will likely to spend on smart mining solutions as part of their aims to enhance operational efficiency.
More businesses are purchasing IT products which monitor production and employee performance as there is strong demand for data collection, analysis and automation services. In addition, the UAE is expected to scale up investments in artificial intelligence and blockchain solutions – a trend that should lead to more growth opportunities for businesses.