2013-12-13 14:08:16 - Fast Market Research recommends "South Africa Information Technology Report Q1 2014" from Business Monitor International, now available
BMI expects the uptake of cloud-based services, strong growth on the business process outsourcing (BPO) sector and market consolidation to dominate South Africa's IT landscape in 2014. Local businesses are becoming more comfortable with the idea of virtualisation as security concerns are addressed and the need to improve cost efficiency increases. The currency weakness experienced in 2013 has made the local BPO industry more price-competitive compared to other global BPO centres. 2013 saw a flurry of mergers and acquisitions in the IT sector, a trend we expect to continue as firms seek to develop new capabilities and grow their scale to take advantage of new opportunities in the market. We revised our YE13 estimates and growth forecast, to 2017, to
reflect the impact of sluggish computer hardware sales and changes in the demand pattern for software products and IT services.
Full Report Details at
- www.fastmr.com/prod/752076_south_africa_information_technology_r ..
Headline Expenditure Projections
Computer hardware sales: ZAR36.261bn in 2013 to ZAR38.636bn in 2014, +6.6% in local currency terms. We believe investments in datacentre facilities will drive growth in the server market. Software Sales: ZAR22.604bn in 2013 to ZAR24.402bn in 2014, +8.0% in local currency terms. We believe the uptake of cloud-based software, which is less susceptible to piracy, would drive growth in software sales.
IT Services Sales: ZAR35.319bn in 2013 to ZAR38.636bn in 2014, +9.4% in local currency terms. We expect cloud computing and BPO services to drive the uptake of managed services and outsourcing. Risk/Reward Ratings: South Africa is in sixth position in our Q114 MEA IT RRR table. South Africa's aggregate score of 57.6 is unchanged from our last update and is slightly higher than the regional average score of 54.3.
Key Trends And Developments
Fujitsu has appointed Westcon, a subsidiary of South Africa's Datatec, as a Select Partner to distribute Fujitsu products across Africa. The appointment will see Westcon distributing the full Fujitsu product portfolio with a particular focus on datacentre products. Some of the products in the Fujitsu portfolio include workplace systems, servers and storage facilities. BMI believes the deal is mutually beneficial to both parties. It will facilitate Fujitsu's expansion plans across Africa, where the positive growth outlook for the IT sector is already attracting significant interest from major global and regional players. The cloud computing segment is expected to perform particularly well in the future considering the volume of investments in datacentre facilities in key markets such as South Africa, Kenya and Nigeria. BMI notes Westcon has a footprint in more than 40 countries in Africa, providing a solid platform for regional distribution of Fujitsu products. We also believe Westcon and parent company Datatec will welcome the prospect of diversifying their services and taking advantage of emerging opportunities in a fast growing segment of the IT sector.
Internet service provider (ISP) XDSL extended its data centre with an additional area of 600m2. The expansion, which is fully functional, will help the service provider spread out its service offering in the network and infrastructure space. This will enable it to provide a carrier-neutral co-location service, along with hosting, wholesale products for other ISPs, disaster recovery, hosted services and super-fast broadband fibre internet connectivity. Additionally, XDSL will provide value added services such as competitive internet pricing on the WACS and SEACOM cables for ISPs and wholesalers via its data centre. Market consolidation remains a key theme in the South African IT sector, with companies seeking scale and/or efficiency improvement opportunities to cope with new market dynamics. In addition to the deals highlighted in our previous update, H213 saw Summit Garnishee Solutions (SGS) acquire Business Connexion's (BCX) stake in Q Link for ZAR187.5mn, while Altech teamed up with Huawei to form a new business unit, Altech Collab, to support future growth initiatives in the enterprise market.
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