Oil volatility to hit regional IT spending

Oil price volatility and the related impact on consumer sentiment are expected to slow Middle East IT spending this year to the low single digits.

In a press conference today, IDC group vice president and regional managing director for the Middle East, Africa, and Turkey Jyoti Lalchandani said the IT spending of businesses and consumers would be hit by the current period of economic instability.

“This is slowing down our initial market growth estimates for the region, which was around 4-5 per cent but is now down to about 3 per cent,” he said. “We expect to see a number of projects in a couple of sectors being delayed in terms of overall ICT investment.”

Total ICT spending in the region this year is expected to total $103bn, split between IT and telecoms.

Lalchandani said the IT market would be “somewhat” flat this year but expected growth in software and services.

IDC expects regional IT spending to total $44.5bn in 2016, compared to about $43bn last year. Of this, software and services will account for 27.5 per cent, compared to 25.7 per cent last year.

Mobile (45.1 per cent), storage (1 per cent), other hardware (11.5 per cent) and systems (15 per cent) are expected to account for the remainder.

“On the IT side the market in the past five or six years has almost doubled in size but as you can see somewhat a slowdown in terms of growth, but growth nevertheless,” Lalchandani said.

Answering questions from the media, HP Enterprise regional managing director Eyad Shihabi said IT spending by regional oil and gas players would be affected in the short term. “But I don’t think it’s the dark picture some people are saying,” he argued, stressing the need for IT players in the region to offer more flexible payment models.