Saudi Arabia Information Technology Report Q1 2016
BMI View: The steep decline in the oil price in 2014 and 2015 has put Saudi Arabia's economy on a lower growth trajectory and as a result we have downgraded our IT market outlook in the Q116 update.
We now forecast total spending will grow at a CAGR of 1.8% over 2015-2019 to reach SAR42.8bn in 2019.
The hardware segment is forecast to underperform over the medium term as a combination of economic uncertainty and market maturity sees spending contract, though volume growth is expected to return in the final years of the forecast.
The services market is the bright spot in our outlook, with cost efficiency and flexibility generating solutions expected to see the strongest demand from local enterprises looking for manoeuvrability in an uncertain economic environment.
This is even true for the oil and gas segment, where low prices could actually prove a catalyst for a new generation of investment in smart services to increase efficiency and ensure margin maintenance in a depressed global market.
Latest Updates & Industry Developments
Computer Hardware Sales: SAR18.3bn in 2016 to SAR18.1bn in 2019.
A weak economic backdrop will combine with market maturity and a dynamic of price erosion to see the hardware segment underperform over the medium term.
Software Sales: SAR8.6bn in 2016 to SAR10.0bn in 2019.
While projects face being deferred or scaled back in the oil sector, enterprise software adoption will continue to deepen among small- and mediumsized enterprises.
IT Services Sales: SAR11.9bn in 2016 to SAR14.6bn in 2019.
Solutions offering cost savings and flexibility to enterprises in an uncertain environment such as outsourcing, cloud computing and smart services expected to underpin outperformance.
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