“In its latest IT services market sizing and forecast (2010-2015)report published in December 2011, BMI-T recognised that Dimension Data was still the largest provider of IT services in SA in 2010, accounting for 15.4% of the total IT services market, up from 14.8% in 2009,” the company said on Tuesday.
Business Connexion‘s share of the IT services market declined to 9.1%, excluding the UCS deal (from 10.8% in 2009), while T-Systems accounted for 7.1% of the market, the company added.
According to BMI-T, the South African IT services market was valued at R33.8 billion in 2010, reflecting a year-on-year growth of 8.5%. The market was expected to grow at a CAGR [compound annual growth rate] of 9.5% over the five-year forecast period, reaching a total of R53.3 billion by 2015.
“The reason we have grown is because of the quality of our people and their desire to deliver exceptional services to our clients,” Brent Flint, services executive for Dimension Data Middle East and Africa said.
The outsourcing market segment accounted for the largest percentage of the total IT services market. This could be attributed to the increase in the demand for managed services as well as for hosted application management and hosting infrastructure services.
With the move towards managed services, clients now have the choice of outsourcing only selected areas of their IT environment, with the flexibility of simultaneously signing smaller outsourcing services contracts with different service providers, for different IT areas.
“While some players in the South African IT services and outsourcing market struggled to compete, with some placing big bets on signing government contracts, Dimension Data displayed the best non-acquisitive growth out of all the regional players in this space,” Clinton Jacobs, BMI-T senior analyst and report author noted.
In addition, he pointed out that networked managed services proved to be a stand out area for Dimension Data, with strong growth in the IT outsourcing sector and Systems Integration project work. At 15%, Dimension Data had the largest share of the systems integration activity area, accounting for approximately R958 million of total revenue.
Dimension Data was able to draw on the synergies between itself, Internet Solutions and Plessey to enable cross-collaboration across many solutions and services, all to the ultimate benefit of its clients.
BMI-T reported that the maintenance, support and upgrade service segment was expected to account for the largest portion of the total IT services market, while hosting was expected to reflect the fastest growth rate over the five-year forecast period, with a CAGR of 18.1%.
Managed services were also expected to reflect a significant growth over the forecast period, with a CAGR of 14.6%.
“As more companies realise the importance of focusing on their core business processes and the internal skills needed to support them, this will help them evaluate what should be run internally and what should be outsourced or run as a managed service. Dimension Data accounted for 23% of managed services revenue in SA, with an estimated amount of R1.5 billion for 2010,” Jacobs said.
Another segment that reflected a good year-on-year increase was hosting, which grew by 19.5%, reaching a total of R2.5 billion in 2010. Dimension Data accounted for 41% of the total hosting revenues, with an estimated amount of R1 billion for 2010. The full outsourcing segment accounted for 18% of the IT services market, reflecting a decline of 2.5% from 2009.
“Growth in the managed services market can be attributed to an increasing demand from organisations to gain access to the best IT skills in the market, without the cost and administration of employing them directly,” Flint said.
“With the Dimension Data service models and significant investments we have made in our systems, we’re able to replicate and provide services to organisations that were traditionally only available to very large companies,” he added.
This came on the back of the recent announcement by Gartner that Dimension Data had been positioned in the leaders quadrant of the magic quadrant for communications outsourcing and professional services global report.