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News » South Africa’s IT market thrives on digital transformation, GenAI: BMIT

South Africa’s IT market thrives on digital transformation, GenAI: BMIT

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CAPE TOWN, SOUTH AFRICA — South Africa’s IT services market is on a growth trajectory, projected to expand from ZAR104.9 billion (US$5.6 billion) in 2024 to ZAR182 billion (US$9.8 billion) by 2028, according to BMIT’s latest SA IT Services Market Report. 

This equates to a compound annual growth rate (CAGR) of 14.8%, driven primarily by the increasing adoption of cloud services.

The report emphasized the importance of cloud-native development, which enables businesses to use cloud-based tools for greater agility and efficiency. 

“Digital transformation is essential for companies to remain competitive and grow in a digital world,” said BMIT MD Chris Geerdts. “Cloud-based applications and services help them manage costs, scale effectively, and develop innovative services.”

GenAI: Transforming South Africa’s digital landscape

Generative artificial intelligence (GenAI) is emerging as a transformative force in South Africa’s IT sector. Geerdts highlights its potential to revolutionize content creation, customer service, and other business processes, further accelerating cloud adoption. 

“A key driver which is emerging and likely to dominate in future, is the growth in the use and capability of GenAI, which is highly-impactful at a national, business and personal level, and is particularly cloud-intensive, due to the need to process substantial volumes of data,” he explained.

While local organizations are gradually adopting GenAI, hyper-automation remains a more immediate focus. By integrating AI, machine learning, and robotic process automation, businesses are automating complex workflows end-to-end, achieving enhanced accuracy and efficiency.

XaaS evolution and industry challenges

The rise of everything-as-a-service (XaaS) presents significant opportunities for IT service providers. Key growth areas include managed hosting, full outsourcing, managed services, and IT training—services that are outpacing South Africa’s overall economic growth.

However, the industry faces notable challenges. Cybersecurity threats are becoming increasingly sophisticated, prompting businesses to allocate higher budgets for protection. Additionally, companies migrating to the cloud often encounter unexpected costs due to fluctuating forex rates. A critical shortage of skilled professionals further complicates digital transformation efforts.

“This is both an opportunity and a threat for IT service providers,” noted Geerdts, adding that companies “can offer managed services that leverage their capability, provided they themselves can skill-up effectively.”

A promising yet challenging road ahead

South Africa’s IT services market is poised for dynamic growth fueled by digital transformation and GenAI innovation. 

Despite hurdles such as cybersecurity risks and skills shortages, the sector offers immense potential for providers willing to evolve into value co-creators by fostering collaboration and trust with businesses.

Read more here.

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