Digitization of govt services spurs MENA IT spending

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Sharjah Police unveiled an interactive platform to raise awareness of fraud and electronic blackmail on Thursday. (WAM)
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  • Sixty-six percent of total IT spending in 2022 will go toward communication services, which will remain the largest segment
  • Global government IT spending is estimated to reach US$565.7 billion this year, up 5 percent from 2021

The governments in the MENA region are using technology to streamline digital services, advance automation, and improve residents’ experiences, according to a forecast released by Gartner, Inc.

IT spending in the MENA countries will reach US$ 1.7 bn in 2022, an increase of 2.6 percent over 2021.

Sixty-six percent of total IT spending in 2022 will go toward communication services, which will remain the largest segment. IT services are expected to grow at an 8.6 percent annual rate in MENA by 2022, overtaking software, which is projected to grow at an 8.2 percent yearly rate.

The recovery of the IT sector in MENA is expected to continue in 2022. But compared to 2021, digital transformation projects will progress moderately by 2022, primarily because of the GCC countries’ rapid shift from an oil-exporting economy to a knowledge-based economy.

Global IT spending

Global government IT spending is estimated to reach US$565.7 billion this year, up 5 percent from 2021.

A report from Gartner, Inc. says that software will grow faster than any other market segment in 2022. However, the data center systems segment’s growth is expected to slow over the forecast period as government organizations continue to modernize their legacy systems.

Average Data Center System spending by governments worldwide is expected to rise by 4.2 percent in 2022 and 1.9 percent in 2023. 

In 2022, global spending on devices will rise by 0.9 percent, followed by 1.1 percent decline in 2023. In 2022 and 2023, software spending will increase by 10.4 percent and 12.8 percent, respectively. IT services spending is predicted to grow by 6.5 percent and 8.2 percent accordingly.

End-user interface application software continues to see significant government investment, fueling the strong growth of this market. However, governments might cut their spending on expensive legacy systems in favor of digital service delivery models starting in 2022, resulting in lower telecom services costs.

IT sector’s future

The concept of Anything-as-a-Service (XaaS) is gaining traction in government agencies because it offers a higher return on investment, normalizes IT spending over time, and makes IT budgeting more predictable.

According to Gartner, most new IT investments in government agencies will be made in XaaS solutions by 2026.

XaaS operating models make it easier for government organizations to find the right talent in the face of ongoing talent challenges. In addition, there is less of a need for an organization to develop or acquire new IT skills, which are often scarce and expensive for government agencies to achieve, with XaaS delivery models.

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