IT spending in the Middle East and North Africa (MENA) region is projected to reach $193.7 billion in 2024, marking a 5.2% increase from 2023, according to the latest forecast by Gartner. This growth rate shows a decrease from the 6.6% growth recorded in 2023.
“Despite easing inflation, organizations in the Middle East are still navigating challenges due to ongoing uncertainties caused by oil production cuts, economic risks linked to regional geopolitical tensions, and supply chain disruptions in key shipping routes. Consequently, local organizations are becoming more cautious with their IT expenditures,” said Miriam Burt, Managing VP Analyst at Gartner.
Declining Investments in Data Centre Systems
Data centre systems, which include servers, external controller-based (ECB) storage, and enterprise network equipment, are expected to see a decline in regional spending. The reduction is mainly due to a decrease in spending on ECB storage, driven by the rising demand for alternatives such as software-defined storage (SDS), hyperconverged infrastructure software (HCIS), and the ‘storage as a service’ model, according to Burt.
Growth in IT Services Spending
IT services spending in the MENA region is forecasted to increase by 9.6% in 2024. Burt noted that IT leaders are prioritizing investments in professional and consulting services to prepare for cloud migration, AI, generative AI (GenAI), and IoT implementations. Additionally, these leaders are capitalizing on data monetization opportunities arising from the convergence of these technologies.
“Security remains a significant area for IT services spending. There is also an increasing trend toward purchasing products, services, and tools through ‘XaaS’ (Anything as a Service) consumption models, both of which are contributing to the growth of this segment,” Burt added.
Decline in Devices Spending
Spending on devices is expected to decline by 4.5% in 2024, due to uneven demand for new devices, such as mobile phones, across different countries within the MENA region.
Limited Immediate Impact of GenAI
Eyad Tachwali, Senior Director Advisory at Gartner, mentioned that CIOs in the MENA region are expected to boost their spending on cloud services. While AI and GenAI influence cloud services spending, their immediate impact on overall IT spending levels in 2024 is not anticipated to be significant. “Regional CIOs are currently focusing on cost-effective everyday use cases rather than expensive, transformative AI applications,” Tachwali said.
Investments in In-Country Data Centres
Global hyperscalers are accelerating investments in in-country data centres, particularly world-class green data centres, to offer extensive infrastructure for AI and GenAI storage and computing needs. Some have introduced sovereign cloud services tailored to specific Gulf Cooperation Council (GCC) markets, according to Burt.
Gartner’s IT spending forecast methodology involves rigorous analysis of sales data from over a thousand vendors across the entire range of IT products and services, using primary research techniques complemented by secondary research sources to build a comprehensive market size database for its forecasts.
