Mideast IT spending may soar

IT spending in the Middle East is expected to reach $21.5 billion (Dh78.9 billion) in 2012 as companies invest in "game changing" technologies such as cloud services and social networking. The figures, released by International Data Corporation (IDC), represent a growth rate of 11 per cent year-on-year and highlight the growing importance of the region in the global IT landscape. IDC predicts the UAE and Saudi Arabia will constitute 55 per cent of overall IT spending in the Middle East in 2012 with the six-member GCC accounting for 70 per cent. "We see the Middle East as a strategic market with super high growth rates; it is critically important for the IT industry and IT trends in general," said Kirk Campbell, IDC's president and chief executive officer. "We are investing a lot into the region; it is a big focus area for IDC. The IT industry has really taken off here over the last few years and we expect that to continue. In relevant terms, this is where all the action is." Campbell says IDC, which provides intelligence for the IT and telecommunications markets, has done well to bounce back from a difficult year in 2009, adding the company saw 11 per cent employee growth in 2011, mostly in the Middle East amid a slowdown in more mature markets. "The area of most concern in 2012 is western Europe and it could see the slowest IT growth in 2012. We are fairly optimistic about the United States, which is picking up, and Japan will also do better than last year," Campbell said. "At present, 60 per cent of IDC's revenues are generated outside of the US and that percentage is increasing gradually every year. Furthermore, half of our employees are working in emerging markets; that is where the growth is." Political uncertainty Despite the optimistic outlook for the Middle East, however, IT executives remain cautious with growth rates susceptible to ongoing political uncertainty in many parts of the region including Egypt, Syria and Iran. "Some governments in the region have been slow to react but they are starting to consider the importance of IT structures," said Mohammad Ameen, EMC's vice-president and general manager for Turkey, emerging Africa and the Middle East. "In 2011, we saw huge IT revenues generated in the public sector, which is an indication that things will move faster in the next two to three years." IDC says Egypt experienced a contraction in IT spending levels last year amid protests that ousted Hosni Mubarak, the former president. Iran, another key IT market, is also expected to see a decline in spending this year as tensions grow over Tehran's nuclear programme. "The Middle East has always been a dynamic region but you have to be agile and able to adjust your investment resources," said Eyad Shihabi, managing director of Hewlett-Packard Middle East.