Spending on information and communications technology (ICT) across the Middle East, Türkiye, and Africa (Meta) will exceed $238 billion this year, an increase of 4.5 per cent over 2023, the International Data Corporation (IDC) said on Monday.

IDC expects the region’s telecommunications services spending to increase five per cent year on year (YoY) in 2024 to reach $133 billion, with IT spending set to grow 3.9 per cent YoY to $105 billion. “As Meta’s digital economy increasingly takes shape, digital transformation spending in the region will top $59 billion in 2024 and accelerate at a compound annual growth rate (CAGR) of 15 per cent over the coming years to cross the $88 billion mark in 2027,” IDC said in its regional forecasts for the year ahead.

However, according to Gartner, IT spending in the Middle East and North Africa (Mena) region would accelerate in 2024, increasing four per cent from 2023. The region’s IT spending is projected to total $183.8 billion in 2024, up from $176.8 billion in 2023. In comparison, global IT spending is projected to total $5.1 trillion in 2024.

The Gartner report said Mena IT spending is increasing because organisations, particularly in the GCC region, continue to focus on digitalising their IT infrastructure. “This is required to support regional governments’ push to implement their country visions for economic diversification, enhance public-private collaboration as well as bolster sustainability efforts towards net-zero targets.”

IDC predicted in its report that spending on AI in the region will top $3.0 billion this year, up 32 per cent in 2023. Hosting a panel discussion in alongside Srinivasan Sampath, acting group CTO at First Abu Dhabi Bank; Vinay Ramesh Kumar, CTO at Landmark Group; and Ahmed AlZarooni, vice president of IT at a leading government entity; IDC’s group vice president and managing director for the Meta region, Jyoti Lalchandani, explained that the AI investment priorities of end-user organizations will likely evolve over the coming years as they move beyond their initial focus on reducing costs.

“Across the Meta region, there is a clear appetite for AI in general and generative AI (GenAI) in particular, with spending on AI forecast to reach $6.9 billion by 2027,” revealed Lalchandani. “However, many organisations are already questioning whether they are over-pivoting on cost reduction and not focusing enough on how AI can help them to grow their revenues. We expect revenue growth outcomes to take center stage in the next 3-5 years and providers must track this shift carefully with their core buyers to ensure that their AI-related offerings continue to align with the evolving business goals of their customers,” Lalchandani said.

Gartner predicts that by 2024, 40 per cent of enterprise applications will have embedded conversational AI, up from less than 5.0 per cent in 2020. Despite economic challenges, business executives in the Mena region are primarily investing in generative GenAI to enhance customer experience. GenAI promises to revolutionise public and private sector engagement with customers/citizens by delivering personalized, real-time solutions to complex inquiries, Gartner said.

IDC’s global president, Crawford Del Prete, described GenAI’s emergence as a golden era of innovation. “The impact of GenAI’s emergence will reshape the IT landscape as companies strive to not only boost productivity, but also create new ways of meeting the needs of customers,” said Del Prete. “We are increasingly seeing companies invest aggressively in GenAI to capture an advantage and ensure they are not left behind. Indeed, by 2027, we expect global spending on GenAI to top $150 billion, accounting for around 30 per cent of all AI-related investments.”

Thomas Meyer, IDC’s group vice president of research for the Emea region, explained the support mechanisms that tech vendors must put in place for their customers. “As GenAI adoption grows in the Meta region, tech providers must develop a responsible AI strategy,” said Meyer. “As part of this strategy, they need to support their customers in unlocking funding for investments and delivering ROI and significant business outcomes for prioritized use cases,” he said.

Other notable predictions revealed by IDC include that spending on public cloud in the Meta region will top $13 billion in 2024, representing year-on-year growth of 21 per cent. It said software as a service (SaaS) will account 59 per cent of this public cloud spending, followed by infrastructure as a service (IaaS) at 23 per cent and platform as a service (PaaS) at 18 per cent. Some 77 per cent of CISOs in the region expect their cybersecurity budgets to increase by 10 per cent or more in 2024.

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