Abu Dhabi is one of the few regions in the Gulf that will help lead the region's IT services market over the next year, said the head of Gulf Business Machines.
IT services soar in Abu Dhabi
Abu Dhabi will be one of the few areas in the Gulf to achieve double-digit growth in the IT services market over the next year, says the head of Gulf Business Machines (GBM).
The sector's revenues in the capital are expected to increase by more than 20 per cent this year, reflecting the investments made in infrastructure, banking, energy and retail projects, said Cesare Cardone, the chief executive of GBM, based in Dubai.
The company was spun off from the US giant IBM in 1990 to provide a greater focus on the Gulf market and is now one of the largest IT service companies in the region. The IT sector is often seen as serving as an economic indicator because it shows by how much companies are investing in cost-effective programmes to generate greater revenues.
"This year, we will grow in every country but we are planning higher growth in Kuwait, Qatar and Abu Dhabi because of the … budgets for big government projects that were previously delayed," Mr Cardone said.
Companies in the Middle East and Africa spent about US$49.77 billion (Dh182.8bn) on IT last year, with the Gulf region accounting for about 25 per cent, according to IDC, a technology consultancy.
Aside from Abu Dhabi, only Qatar and Kuwait are expected to post significant growth among Gulf states to their IT services sector, Mr Cardone said.
"Abu Dhabi is a new frontier for us," he said. "While the growth in Dubai was down in 2009, the growth in Abu Dhabi continued without any problem. It was very sizeable.
"We have significant projects that we closed at the end of last year so we are planning growth around 20 per cent in 2011."
Revenues from companies that GBM works with in Abu Dhabi increased by about 15 per cent over 2009 and last year, Mr Cardone said.
GBM, which helps companies manage technology infrastructure, such as designing computer networks and buying specialised software applications, bounced back last year after a "tough" 2009 with revenues increasing by 5 per cent to about $400 million. Its revenues were down by about 4 per cent in 2009, he said.
"To be honest, we expected to be down more in 2009 and to do a little bit better in 2010," Mr Cardone said.
Difficulties in the economy in 2009 forced GBM to shift its strategy from attracting new business from a customer's increased spending in capital expenditures to maintaining existing accounts.
While new spending may be beginning to rise again, the company is exploring various ways of providing additional support to its customers.
"Compared to the West, [capital expenditures] here is a dream," Mr Cardone said. "Nevertheless, when you compare [capital expenditure] from the glory days to the future in the next five years … the market is maturing towards increased [operating expenses]."
One of the ways of providing additional support is through GBM's new "network operating centre" that is able to manage and monitor a company's computer network from its home offices in Dubai.
The office is able to remotely track a company's network and warn officials if usage exceeds capacity, saving potential headaches for its workers.
Mr Cardone said "cloud computing",a technology that is based on the cloud drawing used to depict the internet in computer network diagrams, would be a major trend that the region's IT sector would shift to over the next few years.
GBM is the region's largest provider of Salesforce software, a cloud computing application that distributes business software by subscription and hosts the programs offline.
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