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Middle East's IT spending forecast above global rate

Technology spending is forecast to rise by up to 8 per cent in the Middle East this year - double the global average - according to EMC Corporation. 

According to Gartner, IT spending in the Middle East and Africa should grow by 14.3 per cent this year, in contrast to flat or declining budgets in North America and Europe. Reuters
According to Gartner, IT spending in the Middle East and Africa should grow by 14.3 per cent this year, in contrast to flat or declining budgets in North America and Europe. Reuters

Technology spending in the Middle East is forecast to grow at double the global average, according to EMC, the world's largest data-storage firm.

Strong oil prices and international expansion by local companies are cited as factors behind above-average spending on information technology this year, the US company said.

David Goulden, the chief financial officer at EMC, forecasts that the global IT industry will grow at 3 to 4 per cent this year. But spending in the Middle East would outpace that, he said.

"The Middle East has been a very high-growth market," he said.

"We think IT spending in the Middle East will bounce back at maybe as much as twice [the 3 to 4 per cent]."

Factors behind this include strong oil prices and the lack of legacy IT systems weighing down Middle Eastern companies, said Mr Goulden.

He added that overseas expansion was also fuelling spending on technology. "Companies here are looking to develop outside their home countries in the region, and in some cases internationally."

EMC's forecast is more cautious than previous estimates of growth in technology spending in the wider region.

According to Gartner, IT spending in the Middle East and Africa should grow by 14.3 per cent this year, in contrast to flat or declining budgets in North America and Europe.

A separate report by the research firm IDC said IT spending in the Middle East, Africa, and Turkey was expected to surpass US$65 billion (Dh238.7bn) this year, an increase of 12 per cent on last year.

Mr Goulden said that EMC's forecasts for this year's global IT sales were less optimistic than those for last year.

"We think that IT spending grew last year in the 7 to 8 per cent range," he said. "Globally, with the economic worries, we are expecting a slowdown. But we are still expecting to see real IT-spending growth on a global basis."

Last year's floods in Thailand marked a setback for the data-storage industry because of disruption to the supply of hard-disk drives.

Mr Goulden said this problem was easing. "Drive availability is coming back online.

"But we do expect there to be selective shortages, certainly for the first half of the year, with things getting a little better in the second half of the year," he said.

EMC, which is listed on the New York Stock Exchange, is the world's biggest maker of corporate data storage equipment. The company claims "several hundred" customers in the Middle East, including governments, telecommunications operators, and the energy and financial-services industries.

Cloud computing - which allows companies to store data remotely - is one of the EMC's fastest-growing business lines.

"In the last year, we had very strong double-digit growth here in the Middle East," said Mr Goulden. "We expect to grow globally our revenues at 10 per cent this year. And we would expect to do better than that in the Middle East."

EMC expects to increase its regional staffing, which includes employees at a large facility in Egypt.

"We have over 750 people in the Middle East. So it's a big commitment for us, and one that we continue to expect to grow," said Mr Goulden.

bflanagan@thenational.ae