Frost and Sullivan- Managed Services -GCC 2011

Middle Eastern Managed Services MarketEmerging Opportunities in the Managed Services Market

P695-72October 2012

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Contents

Section Slide Numbers

Executive Summary 16

Market Overview 21

External Challenges: Drivers and Restraints— Total Market 25

Forecasts and Trends— Total Managed Services Market 35

Market Share and Competitive Analysis—Total Managed Services Market 44

Competitor Profiles of Selected Industry Participants 51

Segment Analysis: Cloud Services 62

Saudi Arabia Breakdown 89

• Economic outlook 91

• Regulatory Framework 95

• Total Managed Service Market 96

• Competitive Environment & Analysis 98

• Drivers & Restrains 113

UAE Breakdown 122


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Contents






Qatar Breakdown 156






Kuwait Breakdown 187





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Contents



Oman Breakdown 218






Bahrain Breakdown 249






Strategic Recommendation for Service Providers 278

Last Word 285

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List of Figures


Total Managed Services Market: GCC, 2011 36

Total Managed Services Market: Competitive Structure: GCC, 2011 39

Cloud Services Market: Per cent Contribution by Cloud Type: GCC, 2011 77

Total Managed Services Market: Saudi Arabia, 2011 90

Total Managed Services Market: Competitive Structure: Saudi Arabia, 2011 96

Saudi Arabia Competitive Landscape Overview 103

Managed Services Market: Company Market Share Analysis of Top Five Participants:Saudi Arabia, 2011

105

Total Managed Services Market: UAE, 2011 123

Total Managed Services Market: Competitive Structure: UAE, 2011 131

UAE Competitive Landscape Overview 137

Managed Services Market: Company Market Share Analysis of Top Five Participants: UAE, 2011

139

Total Managed Services Market: Qatar, 2011 157

Total Managed Services Market: Competitive Structure: Qatar, 2011 165

Qatar Competitive Landscape Overview 170

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List of Figures (continued)


Managed Services Market: Company Market Share Analysis of Top Five Participants: Qatar, 2011

172

Total Managed Services Market: Kuwait, 2011 188

Total Managed Services Market: Competitive Structure Kuwait, 2011 196

Kuwait Competitive Landscape Overview 201

Managed Services Market: Company Market Share Analysis of Top Five Participants: Kuwait, 2011

203

Total Managed Services Market: Oman, 2011 219

Total Managed Services Market: Competitive Structure: Oman, 2011 227

Oman Competitive Landscape Overview 232

Managed Services Market: Company Market Share Analysis of Top Five Participants: Oman, 2011

234

Total Managed Services Market: Bahrain, 2011 250

Total Managed Services Market: Competitive Structure Bahrain, 2011 258

Bahrain Competitive Landscape Overview 263

Managed Services Market: Company Market Share Analysis of Top Five Participants: Bahrain, 2011

265

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List of Charts


Total Managed Services Market Revenue Forecast: GCC, 2008-2018 37

Managed Services Market Breakdown by Country: GCC, 2011 38

Managed Service Market Revenue Structure by Verticals: GCC, 2011 40

Managed Services Market Split by Service Type: GCC, 2011 42

Managed Services Market Split by Client Size: GCC, 2011 43

Managed Service Market Revenue Structure by type of companies: GCC, 2011 45

Managed Services Market Revenue Structure Managed Services Market: GCC, 2011 49

Segregation of Top 20 Competitors Managed Services Market: GCC, 2011 49

2011 Revenues of Top 20 Managed Service Providers in GCC (US$ million) 50

Cloud Service development scenarios: GCC, 2011 80

Cloud Service End user adoption metrics: GCC, 2011 81

Cloud Services Market: Key Success Factors (GCC), 2011 82

Cloud Services Market: End-user Requirements – Security: GCC, 2011 83

Cloud Services Market: End-user Requirements – Reliability: GCC, 2011 84

Cloud Services Market: End-user Requirements – Ease of Use: GCC, 2011 85

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List of Charts (continued)


Cloud Services Market: End-user Requirements – Standartisation: GCC, 2011 86

Cloud Services Market: End-user Requirements – Price Models: GCC, 2011 87

Cloud Services Market: End-user Requirements – SLAs: GCC, 2011 88

Gross Domestic Product ( GDP) and real GDP Growth forecast: Saudi Arabia, 2008-201 91

Inflation forecast: Saudi Arabia, 2008-2018 92

Composition of GDP: Saudi Arabia, 2011 92

ICT market indicators: Saudi Arabia, 2011 93

IT Spending: Saudi Arabia, 2008-2018 94

Total Managed Services Market Revenue Forecast: Saudi Arabia, 2008-2018 96

Managed Service Market Revenue Structure by Verticals: Saudi Arabia, 2011 99

Managed Services Market Split by Service Type: Saudi Arabia, 2011 101

Managed Services Market Split by Client Size: Saudi Arabia, 2011 102

Managed Service Market Revenue Structure: Saudi Arabia, 2011 104

2011 Revenues of Managed Service Providers in Saudi Arabia (US$ million) 106

Gross Domestic Product ( GDP) and real GDP Growth forecast: UAE, 2008-2018 124

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Inflation forecast: UAE, 2008-2018 125

Composition of GDP: UAE, 2011 125

ICT market indicators: UAE, 2011 126

IT Spending: UAE, 2008-2018 127

Total Managed Services Market Revenue Forecast: UAE, 2008-2018 129

Managed Service Market Revenue Structure by Verticals: UAE, 2011 132

Managed Services Market Split by Service Type: UAE, 2011 134

Managed Services Market Split by Client Size: UAE, 2011 135

Managed Services Market Engagement Model: UAE, 2011 136

Managed Service Market Revenue Structure : UAE 2011 138

2011 Revenues of Managed Service Providers in UAE (US$ million) 140

Gross Domestic Product ( GDP) and real GDP Growth forecast: Qatar, 2008-2018 158

Inflation forecast: Qatar, 2008-2018 159

Composition of GDP: Qatar, 2011 159

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ICT market indicators: Qatar, 2011 160

IT Spending: Qatar, 2008-2018 161

Total Managed Services Market Revenue Forecast: Qatar, 2008-2018 163

Managed Service Market Revenue Structure by Verticals: Qatar, 2011 166

Managed Services Market Split by Service Type: Qatar, 2011 168

Managed Services Market Split by Client Size: Qatar, 2011 169

Managed Service Market Revenue Structure: Qatar, 2011 171

2011 Revenues of Managed Service Providers in Qatar (US$ million) 173

Gross Domestic Product ( GDP) and real GDP Growth forecast: Kuwait, 2008-2018 189

Inflation forecast: Kuwait, 2008-2018 190

Composition of GDP: Kuwait, 2011 190

ICT market indicators: Kuwait, 2011 191

IT Spending: Kuwait, 2008-2018 192

Total Managed Services Market Revenue Forecast: Kuwait, 2008-2018 194

Managed Service Market Revenue Structure by Verticals: Kuwait, 2011 197

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Managed Services Market Split by Service Type: Kuwait, 2011 199

Managed Services Market Split by Client Size: Kuwait, 2011 200

Managed Service Market Revenue Structure: Kuwait, 2011 202

2011 Revenues of Managed Service Providers in Kuwait (US$ million) 204

Gross Domestic Product ( GDP) and real GDP Growth forecast: Oman, 2008-2018 220

Inflation forecast: Oman, 2008-2018 221

Composition of GDP: Oman, 2011 221

ICT market indicators: Oman, 2011 222

IT Spending: Oman, 2008-2018 223

Total Managed Services Market Revenue Forecast: Oman, 2008-2018 225

Managed Service Market Revenue Structure by Verticals: Oman, 2011 228

Managed Services Market Split by Service Type: Oman, 2011 230

Managed Services Market Split by Client Size: Oman, 2011 231

Managed Service Market Revenue Structure: Oman, 2011 233

2011 Revenues of Managed Service Providers in Oman (US$ million) 235

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Gross Domestic Product ( GDP) and real GDP Growth forecast: Bahrain, 2008-2018 251

Inflation forecast: Bahrain, 2008-2018 252

Composition of GDP: Bahrain, 2011 252

ICT market indicators: Bahrain, 2011 253

IT Spending: Bahrain, 2008-2018 254

Total Managed Services Market Revenue Forecast: Bahrain , 2008-2018 256

Managed Service Market Revenue Structure by Verticals: Bahrain, 2011 259

Managed Services Market Split by Service Type: Bahrain, 2011 261

Managed Services Market Split by Client Size: Bahrain, 2011 262

Managed Service Market Revenue Structure: Bahrain, 2011 264

2011 Revenues of Managed Service Providers in Bahrain (US$ million) 266

Managed Services Market Strategic Recommendations: GCC, 2011 - 2018 279

15

Study Objectives and Research Scope

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Aim and Objective

Source: Frost & Sullivan analysis.

The aim of this research is to provide a full analysis of the managed services market in the GCC.

Objective 1

• To identify and analyse key industry challenges, drivers, and restraints affecting the managed services market

Objective 2

• To determine the current revenues and provide forecasts for the total market, and identify key managed services segments

Objective 3

• To analyse the industry’s competitive environment and trends, identify key industry participants, and benchmark their product offerings

Objective 4

• To identify the managed services market differences across the GCC states.

Objective 5

• To analyse GCC market readiness for the cloud computing uptake and identify current challenges in the region.

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Geographic Scope

The project will focus on the Gulf Cooperation Council (GCC) Region:

• Saudi Arabia

• UAE

• Qatar

• Kuwait

• Oman

• Bahrain

Gulf Cooperation Council

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The competitor scope will include the following companies:• Injazat• Saudi Telecom Company (STC)• Gulf Business Machines (GBM)• IBM• Wipro• Etisalat• HP• TCS• Jerraisy JCCS• Mobily• Arabic Computer Systems ACS• Qtel• Batelco• MEEZA• Diyar United Company• CNS• MDS

The product scope will include the following managed services:• Infrastructure Support

• Managed Desktop• Managed Router• Managed Network

• Network Security• Disaster Recovery & Business

Continuity Services• Data Center Hosting• Cloud Computing

Research Scope


Competitor Scope Product Scope

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Market Overview— Key Questions This Study Will Answer

How is the market for managed services changing in the GCC? What are the key trends in the manage services markets?

What is the level of adoption of managed services offerings and cloud-based services in the different GCC states?

What customer needs and demand trends are pertinent in the key verticals in the GCC?

Which companies are leading managed services providers in the GCC? What type of companies dominate GCC markets?

What are key differences in the managed service market adoption across GCC countries?

Are the products/services offered presently meeting customers’ needs or are there opportunities to develop tailored offerings that could address these needs?


20

Executive Summary

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Drivers and RestraintsM

ark

et

Dri

vers

Mark

et

Restr

ain

ts

1-2 years 3-5 years 6-10 years

Local workforce quota requirement increase price for managed services

Regional connectivity issues, high bandwidth costs and no SLA between MS providers and ISPs

Data Security Concerns remains a major hurdle in the GCC region

Impact: High Medium Low

Managed Services Market: Key Market Drivers and Restraints (GCC), 2011–2018


Budget limitations on IT expenditure reduces uptake in the managed services market

Increasing need to focus on core business processes is driving the demand for outsourced services

Shortage of in-house skills is driving the demand for third-party services

Government support for infrastructural

developments which also affect the IT market

Increasing competition is driving the price of managed services down

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Executive Summary— Market Engineering Measurements

Market Stage

Growth

Market Revenues

$932 M

(2011)

Market Size at End of Forecast Period

$3.11 B

(2018)

X-year Forecast Market Growth Rate

18.8%

(CAGR)

Customer Price Sensitivity

7

(scale:1 [Low] to 10 [High])

Market Concentration

18%

Degree of Technical Change

7

(scale:1 [Low] to 10 [High])

Market OverviewManaged Services Market: GCC, 2011

For a tabular version click here.Stable IncreasingDecreasing

(% of market share held by top 3 companies)

Note: All figures are rounded. The base year is 2011. Source: Frost & Sullivan analysis.

Base Year Market Growth Rate

11.6%

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Total Market Revenue Forecast

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Revenue 682 739 824 932 1,07 1,25 1,47 1,75 2,11 2,56 3,11

Growth Rate 7.7 10.2 11.6 13.2 14.1 15.1 16.0 17.2 17.4 17.6

0

2

4

6

8

10

12

14

16

18

20

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Re

ve

nu

e (

US

$ M

illi

on

)

Total Managed Services Market Revenue Forecast:GCC, 2008-2018CAGR = 18.8% • The managed service market in the

GCC region experienced a 11.6 per centgrowth. It is projected that the market willgrow at 18.8 per cent CAGR during theforecast period and the market will reachUS$ 3,116 in 2018. The majority of thisgrowth is accounted for the three leadingcountries in the region- KSA, UAE andQatar.

• The businesses in the region still limittheir spending on non core operations. Itwas a common trend across the Gulf ascompanies started seeking efficiency. Itforced a shift from Capex to Opex,reducing total cost of ownership on ITequipment.

• Infrastructure support is expected toremain the most demanded type ofmanaged services, while data hostingservices and DR &BCs will also lead thegrowth.

KSA39.3%

UAE35.7%

Qatar10.0%

Oman3.7%

Kuwait7.2%

Bahrain4.0%

Managed Services Market Breakdown by Country:GCC, 2011

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Government21.6%

BFSI18.2%

Gas & Oil13.2%

IT & Telecom12.6%

Health5.9%

Media4.8%

Education4.5%

Manufacturing4.5%

Other14.7%

Managed Services Market Splits

Managed Service Market Revenue Structure by Verticals:GCC, 2011

• The governmental entities and BFSIorganisations in the Gulf were the keyclients for the MS providers; the oil & gasvertical, the biggest contributor tocountries economy, generated only 13.2per cent. The future MS market growth isexpected to be led by orders from oil &gas vertical, IT & Telecom, health, mediaand manufacturing.

• Companies in the Gulf have a shortage ofskilled IT personnel and the red tapisminvolved in bringing an expat staff is timeconsuming, hence MS providers comehandy with their experience andinfrastructure.

• Data centre hosting services was thesecond largest segment; it is projected togrow faster than the whole MS market dueto significant demand for data hosting inthe KSA.

Infrastructure Support49.6%

Data Centre Hosting21.5%DR & BCs

8.5%

Network Security

7.6%

Application Hosting5.9%

Web Hosting5.4%

Other1.5%

Managed Services Market Split by Service Type:GCC, 2011


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Vertical Analysis

Managed Services Market Split by Client Size:GCC, 2011

• The large enterprises in the Gulf usually signup for infrastructure support services, DR &BCs and network security services. Whiledemand for data hosting solutions is on therise, a big share of large enterprises stillchoose to keep their data on their proprietaryservers on site.

• SMBs generated more than a third ofregions MS revenue. It is expected that theirmarket share will increase in the future dueto dropping service price, increasedcompetition, decreasing broadband cost,and new developments, especially cloudcomputing.

• Four types of companies– telecomoperators, International and local systemintegrators and data hosting serviceproviders dominate the managed servicesmarket in the GCC region.

Managed Services Market Split by Service Type:GCC, 2011


Small Companies

9%

Medium Companies

26%

Large Enterprises

65%

Small Companies have 1- 50employees

Medium Companies have 50-500 employees

Large Enterprises have atleast 500 employees

Telecom Operators

22.3%

ISP4.1%

HSP15.6%

Local SI29.6%

International SI28.4%

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Competitive Analysis—Market Share

Note: All figures are rounded. Source: Frost & Sullivan analysis.

Injazat8%

STC 5%

GBM5%

IBM5%

Wipro4%

Etisalat4%

HP4%

TCS4%JCCS

4%

Mobily4%ACS

3%

Other 50%

Other: % Qtel 3.3 MDS 2.2Mahindras 2.9 Infosys 2.1EHDF 2.8 MEEZA 2.1Diyar United 2.6 Ejada 2Ebttikar 2.2 Other 30

Managed Services Market Revenue StructureManaged Services Market: GCC, 2011

Segregation of Top 20 CompetitorsManaged Services Market: GCC, 2011

Telecom Operators

25%

Local SI25%

International SI

43%

Hosting Service

Providers7%

International players have successfully penetrated the GCC managed services market, particularly KSA and UAE which are the largest markets. Out of the 20 top MS service providers 7 were international SI’s, 6 local SIs, while there were 4 telecom operators and 3 hosting service providers.

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Further Sections

• Country Overviews includes Economic outlook with core segments: GDP, Inflation, compositionof GDP, Key ICT indicators and IT spend forecast.

• Explicit presentation of drivers and restrains of managed services market per country.

• Regulatory Framework per country.

• Managed Service market revenue per country with subdivisions similar to the ones provided inthis executive summary document i.e. Managed Services revenue by Vertical, by Service Typeand by Client size.

• Competitive Analysis of the key market players per country

• Company profiles of selected managed service providers including their core product lines, list ofkey clients in the region, growth levels, revenues and market shares.

• Section overviewing cloud computing stance in the GCC, which includes Cloud Servicedevelopment scenarios, Cloud Service End user adoption metrics and Key Success Factorsfor Cloud Service Providers.

• Finally strategic recommendations for better market penetration for the managed serviceproviders

28

About Frost & Sullivan

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