South Africa’s Cloud, Hosted, Managed, and Outsourced Services Market to Grow in 2014, Says IDC 

The value of the combined IS outsourcing, managed services, and hosted services market in South Africa is expected to increase 10.9% year on year in 2014 to total $2.8 billion, according to the latest insights from global IT market intelligence firm International Data Corporation (IDC). Drawing on the findings of its recently released'South Africa Cloud, Hosted, Managed, and Outsourced Services Market 2012 Analysis and 2013–2017 Forecast' report, IDC believes the rapidly increasing maturity of the IT market will continue to drive demand for such third-party support, with datacenter services in general and hosting infrastructure services in particular gaining considerable momentum over the coming years.

"The evolving role of telecom operators in South Africa will continue to be a critical factor in the local growth of datacenter and cloud services," says Lise Hagen, software and IT services manager at IDC South Africa. "Telcos that have invested in new datacenters and aggressively marketed their services to a wider market over the past few years have drastically changed the overall IT services landscape, in particular by increasing the level of competition with pure-play managed and datacenter services providers. While there was an initial focus on infrastructure as a service (IaaS), these providers are expected to expand their software as a service (SaaS) offerings, creating an even more competitive market in the near term."

The value of the cloud services market in South Africa is set to grow to $229.69 million in 2014, with a continued focus on public cloud software as a service (SaaS) spending. Although public cloud services will account for the majority (65%) of overall cloud spending, IDC expects the market to see an increase in spending on private cloud services in 2014 and beyond, while hybrid solutions will likely become the preferred cloud option for many organizations. And while solid growth is forecast for cloud, hosted, managed, and outsourced services, the shifting the rand/USD exchange rate will continue to have a significant impact on local cloud purchasing and consumption patterns.

"The South African IT market will continue to shift from IS outsourcing to managed and datacenter services as budgets remain under pressure and projects become smaller and more specific," says Hagen. "End-user organizations will look to cost-effective IT delivery solutions such as cloud computing to help stay within budget. The cloud market in South Africa is expanding, with a number of international and new local providers entering the market, and it is maturing fast due to increasing competition with established vendors."