IT Outsourcing - Africa

Africa

Revenue in the IT Outsourcing market is projected to reach US$7.69bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 10.99%, resulting in a market volume of US$12.95bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$14.89 in 2024.
In global comparison, most revenue will be generated in the United States (US$197.30bn in 2024).

Key regions: Netherlands, United States, Japan, Germany, Italy

Definition:
The IT Outsourcing market refers to the external contracting of IT functions, services, or projects instead of relying on company-owned resources. By outsourcing IT tasks (e.g., to IT suppliers or software developers), enterprises are able to focus on their core functions and save internal resources and costs (e.g., office space, maintenance, and utilities). Thus, outsourcing teams becomes a viable cost resilience strategy in an environment where companies are looking to save money more than ever.

In an IT context, these activities include IT administration, IT application, and web hosting services. Non-IT-related outsourcing services are excluded.

Structure:

IT Outsourcing contains four distinct markets that are based on different services:

Administration Outsourcing refers to the market for services associated with the external sourcing of typical IT administration tasks such as hardware supply, setup, configuration, maintenance, security, and support.
Application Outsourcing refers to the market for all IT application services in a software production context, spanning from requirement assessments to concept and design of software applications.
Web Hosting includes all types of internet hosting services that allow companies or individuals to provide access to their web page via the World Wide Web.
Other IT Outsourcing refers to aggregated revenues of the types of IT outsourcing that are not specifically mentioned in the other IT Outsourcing markets, such as infrastructure outsourcing, network outsourcing, and managed services.

Additional Information:

The IT Outsourcing market comprises revenues, revenue change, average spend per employee, and revenues of the outsourcing types. Market values represent revenues that are generated by primary vendors either directly or through distribution channels at the manufacturer price level (excluding VAT). Reported market revenues include spending by enterprises (B2B) and governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed. Key players in the market include IBM, Accenture, Capgemini, NTT, and Hewlett Packard Enterprise.

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Market

Region

Region comparison

Currency

Analyst Opinion

IT outsourcing has been on the rise in Africa over the past few years, with more and more companies looking to outsource their IT services to third-party providers. This trend has been driven by a number of factors, including cost savings, access to specialized skills, and the need to focus on core business activities.

Customer preferences: Many companies in Africa are looking to outsource their IT services to providers who can offer high-quality services at a lower cost. This is particularly true for small and medium-sized enterprises (SMEs) that may not have the resources to build and maintain their own IT infrastructure. In addition, many companies are looking for providers who can offer specialized skills and expertise that they may not have in-house.

Trends in the market: One of the key trends in the IT outsourcing market in Africa is the growing demand for cloud-based services. This is driven by the need for companies to access their data and applications from anywhere, as well as the cost savings that can be achieved through the use of cloud services. Another trend is the increasing use of artificial intelligence (AI) and machine learning (ML) in IT outsourcing services, particularly in areas such as data analytics and cybersecurity.

Local special circumstances: One of the challenges facing the IT outsourcing market in Africa is the lack of infrastructure in some countries. This can make it difficult for providers to offer reliable and high-quality services, particularly in areas such as internet connectivity and power supply. In addition, there is a shortage of skilled IT professionals in some countries, which can make it difficult for providers to find the talent they need to deliver their services.

Underlying macroeconomic factors: The growth of the IT outsourcing market in Africa is being driven by a number of macroeconomic factors, including the growth of the digital economy and the increasing adoption of technology by businesses across the continent. In addition, the growing middle class in many African countries is driving demand for IT services, particularly in areas such as e-commerce and mobile payments. Finally, the increasing globalization of business is also driving demand for IT outsourcing services, as companies look to expand their operations across borders.

Methodology

Data coverage:

The data encompasses B2G, B2B, and B2C enterprises. Figures are based on enterprises' technology spending on products, consulting, and outsourcing services.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players in the industry, Statista's primary research and surveys, and IT associations. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, internet users, and telecommunication. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the exponential trend smoothing method is used based on the market data characteristics. The main drivers are the GDP and its sector composition, internet penetration, the level of digitization, and the attitude toward IT security.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.