IT Outsourcing - Nigeria

Nigeria

The IT Outsourcing market in Nigeria is anticipated to witness a significant growth in revenue, with projections indicating that it will reach a staggering US$0.82bn by the year 2024.
Moreover, this sector is expected to exhibit a promising annual growth rate of 15.97% (CAGR 2024-2029), resulting in a substantial market volume of US$1.72bn by 2029.
Additionally, it is worth mentioning that the average Spend per Employee in the IT Outsourcing market is estimated to reach US$10.55 by 2024.
This highlights the potential for substantial investments in the industry, indicating a positive outlook for employment and economic development within the sector.
On a global scale, United States is projected to generate the highest revenue in the IT Outsourcing market, with an impressive US$197.30bn expected in 2024.
This reiterates the country's dominance in the industry and its position as a key player in the global market.
Overall, these figures emphasize the immense potential and growth opportunities that the IT Outsourcing market holds for Nigeria, positioning it as a significant player in the global IT industry.
Nigeria's IT outsourcing market is rapidly growing, fueled by a talented pool of English-speaking professionals and a favorable business environment.

Key regions: Brazil, Italy, United States, China, Germany

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

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.