IT Outsourcing - Nigeria

  • Nigeria
  • Revenue in the IT Outsourcing market is projected to reach US$0.82bn in 2024.
  • Revenue is expected to show an annual growth rate (CAGR 2024-2029) of 15.97%, resulting in a market volume of US$1.72bn by 2029.
  • The average Spend per Employee in the IT Outsourcing market is projected to reach US$10.55 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

 
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Analyst Opinion

Amidst the growing technology and innovation, the IT outsourcing market in Nigeria has witnessed a significant boost in recent years.

Customer preferences:
Nigeria, being the largest economy in Africa, has a large pool of IT talent and a growing number of tech startups. As a result, many businesses both within and outside the country have turned towards outsourcing their IT needs to Nigerian firms. Additionally, the cost-effectiveness of outsourcing IT services to Nigeria has been a major attraction for businesses, especially those from developed countries where labor costs are significantly higher.

Trends in the market:
One of the major trends in the IT outsourcing market in Nigeria is the growth of cloud-based services. Many Nigerian IT firms have shifted their focus towards providing cloud-based services such as software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS). This trend has been driven by the increasing demand for cloud-based solutions from businesses across the world. Another trend that has emerged in the Nigerian IT outsourcing market is the rise of artificial intelligence (AI) and machine learning (ML). Many Nigerian IT firms have started offering AI and ML services to businesses looking to automate their operations and improve efficiency.

Local special circumstances:
One of the major challenges facing the IT outsourcing market in Nigeria is the lack of adequate infrastructure. The country has a poor power supply, which makes it difficult for IT firms to operate efficiently. Additionally, the internet connectivity in Nigeria is not very reliable, which can cause disruptions in outsourcing services. Another challenge facing the Nigerian IT outsourcing market is the lack of a well-defined legal framework. This has led to issues such as contract disputes and intellectual property theft, which can be a major deterrent for businesses looking to outsource their IT needs to Nigerian firms.

Underlying macroeconomic factors:
The Nigerian economy has been growing steadily over the past few years, driven by the oil and gas sector. However, the government has recognized the need to diversify the economy and has been investing in the technology sector. This has led to the growth of the IT outsourcing market in Nigeria, as more businesses are turning towards Nigerian IT firms for their services. Additionally, the government has implemented policies aimed at improving the ease of doing business in Nigeria, which has made it easier for foreign businesses to outsource their IT needs to Nigerian firms.

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.

Overview

  • Revenue
  • Key Players
  • Analyst Opinion
  • Global Comparison
  • Methodology
  • Key Market Indicators
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