IT Outsourcing - Eastern Africa

Eastern Africa

Revenue in the IT Outsourcing market is projected to reach US$1.44bn in 2024.
Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 12.89%, resulting in a market volume of US$2.64bn by 2029.
The average Spend per Employee in the IT Outsourcing market is projected to reach US$6.42 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

The IT Outsourcing market in Eastern Africa has been experiencing significant growth in recent years.

Customer preferences: One of the main reasons for this growth is the increasing demand for cost-effective IT solutions among businesses in the region. Many companies in Eastern Africa are looking for ways to cut costs while still maintaining high-quality services, and outsourcing IT services has become a popular option. Additionally, the region has a large pool of skilled IT professionals who are able to provide these services at a competitive price.

Trends in the market: Kenya has emerged as a key player in the IT Outsourcing market in Eastern Africa. The country has a well-developed IT infrastructure and a strong pool of skilled professionals, making it an attractive destination for outsourcing services. Additionally, the government has been actively promoting the country as a hub for IT services, which has helped to attract more foreign investment.Uganda is also experiencing growth in the IT Outsourcing market, with a particular focus on the development of mobile applications. The country has a large and growing mobile market, and many businesses are looking to capitalize on this by developing mobile applications to reach their customers.

Local special circumstances: One of the challenges facing the IT Outsourcing market in Eastern Africa is the lack of reliable and affordable internet connectivity. This can make it difficult for businesses to outsource IT services, particularly those that require a high-speed internet connection. Additionally, there is a shortage of skilled IT professionals in some areas, which can make it difficult for businesses to find the right talent for their needs.

Underlying macroeconomic factors: The growth of the IT Outsourcing market in Eastern Africa is being driven by a number of underlying macroeconomic factors. These include the increasing adoption of technology by businesses in the region, as well as the growing number of startups and small businesses that are looking for cost-effective IT solutions. Additionally, the region has a young and growing population, which is driving demand for digital services. Finally, the increasing focus on economic diversification is leading to a greater emphasis on developing the IT sector as a key driver of growth.

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.