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Mena IT spending to grow 5% this year

Generative AI is not expected to have significant impact on Mena IT spending levels

IT spending in the Middle East and North Africa (Mena) region is forecast to total $193.7 billion in 2024, an increase of 5.2 per cent from 2023, a study showed on Wednesday.

According to the latest forecast by Gartner, Inc, the annual growth is down from 6.6 per cent growth in 2023.

Despite experiencing growth in 2023, spending on data center systems is projected to decline 0.3 in 2024.

“While inflation in the region has eased, organisations in the Middle East continue to face challenges due to ongoing uncertainty caused by oil production cuts, downside economic risks linked to regional geopolitical tensions as well as supply chain disruptions in key shipping routes. As a result, local organisations are becoming more cautious with their IT expenditures,” said Miriam Burt, Managing VP Analyst at Gartner.

The systems in data centres consist of servers, external controller-based (ECB) storage, and enterprise network equipment. The forecasted decline can be attributed to a decrease in regional spending on ECB storage. “This is due to the rise in demand of alternative options such as software-defined storage (SDS), hyperconverged infrastructure software (HCIS), and the ‘storage as a service’ model,” said Burt.

Mena IT services spending is expected to record an increase of 9.6 per cent in 2024. “IT leaders in the Mena region are, in the first instance, spending more on professional and consulting services to prepare their businesses for cloud migration, AI, generative AI (GenAI), and IoT implementations, and secondly, taking advantage of the data monetisation opportunities resulting from the convergence of these technologies,” said Burt. “Security remains a key area for IT services spending, as well as the increasing purchase of products, services, and tools through ‘XaaS’ (Anything as a Service) consumption models – both contributing to the overall growth of this segment.”

Devices spending is expected to further decline 4.5 per cent in 2024. This is due to uneven demand for newer devices, such as mobile phones, in different countries within the Mena region.

“CIOs in the Mena region are expected to increase their spending on cloud services. While AI/GenAI has some influence on cloud services spending, it is not expected to have an immediate and significant impact on IT spending levels in Mena in 2024,” said Eyad Tachwali, Senior Director Advisory at Gartner. “Regional CIOs’ focus today is primarily on everyday lower cost use cases, rather than on costly game-changing AI.”

Furthermore, global hyperscalers, with the ability to offer extensive infrastructure for storage and computing facilities for AI and GenAI, are accelerating investments in in-country data centers, particularly world-class green data centers. “Some have launched sovereign cloud services tailored to the unique needs of specific Gulf Cooperation Council (GCC) markets,” said Burt.