Africa set to become leading outsourcing destinations for IT services, says Technavio

AA – According to the latest market study released by Technavio, the IT outsourcing market in Africa is expected to grow at a CAGR of more than 7% during the forecast period.

This research report titled ‘IT Outsourcing Market in Africa 2016-2020’ provides an in-depth analysis of the market in terms of revenue and emerging market trends. This market research report also includes an up to date analysis and forecasts for various market segments and all geographical regions.

Africa continues to remain one of the prominent destinations for outsourcing of IT services. Africa’s distinctive business environment encourages organizations to outsource their IT function to the IT service providers in African countries. Government organizations and BFSI organizations are the early adopters of IT outsourcing services in Africa.

The report categorizes the IT outsourcing market in Africa into four major end-user segments. They are:

Government
BFSI
Telecommunications
Healthcare
Government

Government spending on technology is increasing to attract investors from numerous countries across the globe. Public sector IT outsourcing contracts are grabbed by many players in the market to provide IT services for government offices. Investors from numerous countries are looking for investment opportunities in Africa to explore the emerging and untapped market.

“Ease of doing business in Africa will improve owing to government support and IT investments that will provide a suitable business environment. Consequently, the number of IT outsourcing deals will also increase. The government’s effort to enhance urbanization and increased demand from various industry verticals are acting as a catalyst to boost the growth of IT outsourcing market,” says Amit Sharma, a lead analyst at Technavio for ITO and BPO research.

BFSI

The banking and financial services sector are the early adopters of IT outsourcing services in African countries. IT outsourcing services are implemented in the banking services to enhance the bank database management systems. The banking sector struggles with financial turmoil and non-performing assets. Implementation of IT in the banking sector is helping banking organizations to cut their IT cost and increase cash reserves.

Banking services are also facing challenges to manage the enormous amount of customer data, financial data, and other bank-related data. Outsourcing of IT function to the third-party service provider helps to reduce the complexities of database management system and thus is an increasing practice in the BFSI sector. Ghana’s Fidelity Bank, one of the largest banks in Ghana, has partnered with IBM to manage its technology infrastructure and services. This five-year deal will help the bank to deliver advanced customer services and secure its reputation in West Africa.

Similarly, Ingenico, the payment solutions provider, bagged a contract with local value added reseller African Resonance and Standard Bank, a major Pan-African banking group and one of the four major acquiring banks in South Africa. This partnership will help in implementing an innovative outsourcing business model for the group. Ingenico and African Resonance together will provide an end-to-end secure management of services to Standard Bank. With this contract Standard Bank will optimize the management of their payment services like hardware, software, installation, remote management, device swap, warranty, and repairs.

Telecommunications

The increasing ICT spending in the region for the revamping of communication systems will extensively increase the IT outsourcing activities. The growth in the telecom industry in the African market is in a transitional phase and set to increase IT spending in the upcoming years. The telecom operators in the region are targeting to increase their subscriber base with the adoption of innovative telecom systems and enhanced support services. This will lead to more IT outsourcing contracts to the service providers for the implementation of technologies such as WiMAX at a reasonable price, so as to control the cost.

Healthcare

The healthcare sector in Africa requires technology support for the advanced patient care system and accordingly technology spending in the healthcare sector will increase. IT services such as data center services, healthcare information systems, and supply chain and logistics will attract more investment and outsourcing deals.

Hospitals and super-specialty clinics usually outsource their IT function to services providers to reduce the cost of the in-house IT department. “Recently, some major hospitals in Africa have adopted advanced healthcare IT systems such as electronic health record and radiology information system,” says Amit.

The top vendors highlighted by Technavio’s ICT research analysts in this report are:

Accenture
CSC
HP
IBM

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