New Market Research Report: Kuwait Information Technology Report Q2 2011

May 12, 2011 - PRLog -- Market Overview

Kuwait, the third-largest computer market in the Gulf, made a recovery in 2010 from the economic slowdown, and local IT spending is expected by BMI to reach around US$854mn in 2011. The market should continue to provide opportunities for IT vendors over our five-year forecast period, with drivers including government projects, population growth, and strong demand from the oil and gas sector.

Kuwait's IT spending is forecast to record high single-digit growth in 2011 as the market consolidates its recovery from the impact of the economic crisis, which hit Kuwait particularly hard. In 2010/11, Kuwait government spending was expected to increase by 10%, following a 38% decrease the previous year. Kuwait's Development Plan, announced in 2010, will boost economic growth through a gradual pick-up in the non-hydrocarbon sector over the coming years.

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Full Report Details at
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BMI projects a 2011-2015 IT spending compound annual growth rate (CAGR) of 7%. Kuwait's IT market has a number of enduring strengths, including its relatively small but tech-literate and wealthy population, which make the country an important regional testing ground for new products. Per-capita IT spending is forecast to reach US$338 in 2015 from US$260 in 2011.

Industry Developments

Despite the economic downturn, the last two years have seen continued e-project implementation by various Kuwaiti state organisations. The social welfare ministry now allows online submission of forms and email notifications. The defence and finance ministries are also recognised as particularly advanced, while the finance minister has called on the ministry's IT staff to redouble their efforts in this area.

In Q410, the Kuwaiti Ministry of Education announced the launch of a New Technology Infrastructure Project (NTIP), aimed at raising the level of IT utilisation in schools. The NTIP project has been billed as just one of the first in a series of planned projects to raise the standard of IT systems in schools. Another related project announced by the MoE is the establishment of a cloud computing centre to serve students and teachers.

Company News

In January 2011, Kuwait Oil Company (KOC) became one of the first major companies in the regional oil and gas sector to deploy Windows 7. KOC installed Windows 7 across its whole infrastructure, claiming significant benefits from increased flexibility and security. Microsoft hopes that migrations to its Windows 7 operating system, launched in October 2009, will continue to boost its sales in the Kuwaiti market.

Growing regional opportunities led French IT Services giant Atos Origin to announce in 2010 that it will return to Kuwait. The company plans to serve the GCC region from an office in Riyadh, Saudi Arabia, and a services centre in Egypt which will employ around 100 people. Atos Origin had sold its previous Middle East organisation in 2006, to local management, and the organisation was subsequently acquired by HP.

Investors are also looking to take advantage of the regional IT services opportunity. In April 2010, Capinnova Investment Bank announced a minority investment of US$20mn in Kuwait IT services vendor EBLA Computer Consultancy. The investment was one of the largest technology investments in the GCC in 2010.

Computer Sales

In 2011, the Kuwaiti computer hardware market is expected to reach a value of US$359mn. Overall computer hardware sales were estimated at around US$341mn in 2010, making Kuwait the third largest market in the region after Saudi Arabia and the UAE.

The public sector and e-government projects will continue to be a mainstay of the market, with sizeable budgets allocated. Privatisation initiatives will boost spending, as will retail channel evolution and more foreign investment. Small and medium-sized enterprises (SMEs) will be a key segment, as growth in regional trade encourages many to invest in information systems.

Software

In 2011, total spending on software is forecast at US$230mn, up from US$208mn the previous year. The oil, gas and utility industries in Kuwait will remain a major source of spending and the government's plans to expand oil production to 4.0mn barrels/day in the next 10 years will necessitate additional investment. With trade liberalisation and growing regional competition continuing to fuel enterprise spending on software and systems, however, there should be growth potential across many sectors.

Facing change and seeking efficiencies, SMEs are likely to generate opportunities. Manufacturing and trading firms are both seeking to transition from manual environments to full automation of back-office systems.

Services

The Kuwaiti IT services market is projected to be worth around US$265mn in 2011 and is forecast to grow at a 9% CAGR to a value of US$368mn by 2015. The economic situation and credit tightening have had an impact on projects in some key verticals that have been driving IT spending. These include not only oil and gas but the financial, government, education, construction and healthcare sectors.

There has been a trend towards larger deals, particularly from government, which is often keen to act as an agent of new technology adoption in Kuwait's industry sectors. A more volatile environment for the oil industry has encouraged companies to look for solutions that will increase operational efficiency and boost overall business agility.

E-Readiness

Kuwait is one of the most advanced technological markets in the Gulf, but high subscription costs continue to restrict internet penetration. Growth in the numbers of broadband subscribers has been stronger, but numbers are still very low. Competition is limited in the supply of broadband services and thus prices have remained high, deterring many potential subscribers.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.