South Africa’s IT Services market maintains momentum: Cloud Services and automation lead the charge
BMIT’s latest South African IT Services Market Report demonstrates the remarkable resilience and growth of the sector, which reached a value of R84.7 billion in 2022, reflecting a year-on-year growth of 11.8%. BMIT’s preliminary estimates for 2023 size the market at R95.9 billion, indicating a further growth of 13.2%.
According to Chris Geerdts, Managing Director of BMIT, “this growth is a testament to the robustness of the local IT sector and the increasing reliance on technology in all aspects of business and daily life.” Looking forward to the end of 2027, he believes that whilst most traditional IT Service areas will experience low growth, selected services will more than compensate, driving an overall compound annual growth rate of 13.6% and taking the IT Services market to a projected R160 billion total annual revenue.
BMIT’s forecast for each of the various business areas can be seen in the chart above.Cloud services growth will clearly dominate, with a CAGR of 27%, whilst other areas receiving a lot of customer attention are Cloud Enablement and Managed Services, with a CAGR of 17%, and Managed Hosting, with a CAGR of 13%.
Geerdts notes that the growth in AI continues to gain pace rapidly and he also sees a number of other key market drivers in place, including Digital Transformation, Cyber Security, Cloud Computing and Automation, underpinning the next growth phase of the market.
However, there are also challenges to be faced. As companies undergo digital transformation, they encounter the many complexities of cloud migration & integration, which they must address with appropriate planning and execution to avoid disruption whilst their businesses continue to operate. Geerdts likens this to “building a plane while you are flying it”.
The fundamental importance of customer experience to business represents a challenge and an opportunity. BMIT attributes many of the successes of the largest players in the IT services market right now to their ability to adapt to changing market conditions, and their commitment to innovation and customer service.
Specialised IT services are also coming to the fore, with businesses focusing on value co-creation and increasingly having to deliver on sustainable business imperatives. This trend is expected to continue, with more businesses seeking specialised IT services to help them navigate the increasingly complex digital landscape.
“The ever-present skills shortages are a challenge, but they also present an opportunity for growth and innovation in the IT services sector,” concludes Geerdts. “As the demand for skilled IT professionals continues to outstrip supply, there is a growing need for innovative solutions to bridge this gap. This presents another exciting opportunity for companies who understand this.”