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IT-Intensive Future Steers MEA’s Manufacturing Sector along Growth Curve

IT-Intensive Future Steers MEA’s Manufacturing Sector along Growth Curve

IT spending by manufacturers in the three core manufacturing countries of the Middle East and Africa (MEA) – Turkey, Saudi Arabia, and South Africa – is set to grow almost 40% over the next five years, according to newly released data from IDC Manufacturing Insights.

The growth will be highest in 2015, at 8.0% year on year, with a very solid compound annual growth rate (CAGR) of 6.8% forecast for the 2013–2018 period. Lower IT spending growth in the hardware segment will be offset by accelerated growth in IT services and software segments, which will expand at CAGRs of 9.4% and 9.3%, respectively, over the same five-year period.

The key factors shaping this forecast were a favorable outlook for GDP growth, the pace and pattern of adoption for 3rd Platform technologies, Increasing awareness of IT security threats and a shortage of skilled IT professionals in the MEA region.

“These three MEA countries continue to exhibit mostly positive trends in their manufacturing sectors,” says Martin Kuban, lead analyst at IDC Manufacturing Insights, CEMA. “A steady flow of IT spending will be delivered by a core group of large process-oriented manufacturing industries. However, the more interesting part of the market to watch will be the range of smaller and younger sub-industries that are in pursuit of progressive manufacturing and IT strategies. These will represent fresh spirits and deliver additional dynamics to the overall manufacturing IT market.”

The traditionally strong base of process manufacturing in the region is going to deliver the decisive volume of IT expenditure. However, higher IT spending growth rates will generally be found in the discrete manufacturing industries, most visibly in South Africa. Automotive hubs in Turkey and South Africa are forecast to prosper and significantly increase their IT investments, while the strategically important aerospace and defense industry is seeing dynamic growth across all three countries. Also, pharmaceutical industries, including life science, are experiencing boom in the MEA region, despite being relatively small in size.

3rd Platform technologies are becoming increasingly popular in the MEA manufacturing sector and are shifting the spending patterns of local companies. Mobility and Big Data/analytics will be the two IT forces having the most decisive impact on MEA manufacturers over the coming five years. The adoption of mobility will help most in improving workforce productivity and flexibility, and will become a major factor in gaining competitive advantage.

In South Africa, meanwhile, a number of issues have impacted the country’s primary manufacturing sector, which is strongly focused on the processing of natural resources. This has led to reduced IT investment over the past few quarters and has also contributed to slower GDP growth. On the other hand, this situation has helped stimulate initiatives that should accelerate transformation of the local manufacturing sector and bring about a new wave of technology investments in the future.

Image Courtesy of Shutterstock

 

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