Acquisitions are playing a large part in the South African IT services landscape, and local companies that provide specialized IT services are attractive to larger players
looking to expand their service offerings, BusinessTech reports.
The top South African IT companies battle for dominance as the competitive landscape heats up, according to International Data Corp., a U.S. market research company specializing in IT, telecommunications, and consumer technology.
As South Africa’s information technology market matures, Business Connexion has displaced long-time incumbent, Dimension Data, as the country’s leading IT service provider, BusinessTech reports.
Business Connexion increased market share by 14.2 percent in 2012 thanks to strong annuity-based revenues and an expansion of its service offerings through several strategic acquisitions, IDC reports.
The company also benefited from its ability to provide a range of IT services, from software and hardware support installation, to systems integration and information system outsourcing, IDC said in its report, “Competitive Profiles and Analysis of Leading IT Services Players in South Africa, 2013.”
Dimension Data was No. 2 in IDC’s rankings of the leading service providers in South Africa, losing the top spot it held in 2012. T-Systems maintains its position as the third leading IT services provider in South Africa.
Large providers are responsible for a major portion of South African IT services market revenue. In 2012, the top two providers accounted for 28.1 percent of the total IT services market revenue, with the top 10 accounting for 64.5 percent, BusinessTech reports.
Large providers have increased their share of the market in recent years and this top-end
dominance will likely continue for the next few years, IDC reports.
To meet increasingly complex customer requirements, South Africa’s largest IT service providers have expanded their portfolios, often through acquisitions. Providers are also expanding to access opportunities in untapped markets, IDC said.
A growing number of providers in adjacent sectors are also entering the South African IT services market, IDC notes. Telecommunications companies are aggressively targeting network-related services and providing cloud and data center services.
Hardware providers are pushing the benefits of integrated systems and offering specialized
IT services providers that offer hardware, software, and service solutions, either through internal delivery capabilities or through a wider partnership ecosystem, are strong candidates in a busy and increasingly crowded market, BusinessTech reports.
“Local providers, which often have a multinational presence, are increasingly capturing the lead in the market, with six of top 10 providers in 2012 being local firms, compared to five in 2011,” said Lise Hagen, research manager for software and IT services at IDC South Africa. “There is also an increase in the number of smaller IT services players, especially those focused on niche markets.”