IT sector growth to far outstrip SA’s GDP

Growth in South Africa’s IT sector will far outperform the rest of the economy, driven by the shift to cloud computing, according to new research from International Data Corp (IDC).

In a presentation at Microsoft in Johannesburg on Monday, IDC associate vice president for sub-Saharan Africa Mark Walker said IT spend in South Africa increased by 4.2% in 2017, compared to GDP growth of less than 1.5%.

IDC data shows total IT employment in South Africa is currently about 522 000 people. Over the next five years, the IT sector is expected to create as many as 119 000 new job opportunities.

The IT sector will also generate faster jobs growth than the rest of the economy, according to the IDC research.

South Africa’s total workforce is expected to grow at a compound annual rate of 1.6% between 2017 and 2022, while in IT that figure is forecast to be 4.2%, driven by new types of jobs in cloud computing and especially in data science. Much of this growth will come in the broader IT ecosystem, such as end-user organisations, than in the industry itself.

Cloud computing will drive a big chunk of this growth, Walker said. Public cloud services will represent 6.6% of the overall IT market by 2022, up from 3% in 2017, according to the IDC research. The cloud space is expected to grow at a compound annual rate of 21.9% to reach R11.5bn by 2022. That compares to 2.9% in the software space.

“There will be 112 000 net new job opportunities that will be created through the use of cloud technology across the entire ecosystem…,” Walker said. Contrary to some expectations, cloud computing it not a net job destroyer, he added. While some disciplines will become obsolete, new types of jobs will be created.

Turning to Microsoft’s impact on the local IT sector, Walker said that for every R1 that Microsoft makes, the hardware sector generates about R3 in revenue, the broader software space R1.90 and the technology services space R4. In 2017, for every R1 of Microsoft revenue, there was downstream revenue of R8.84, according to IDC estimates.

The total IT sector in SA is expected to reach R175bn in sales by 2022, the company said.  — © 2018 NewsCentral Media