Market Report I. T. Industry in Middle East

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Market Report  I. T. Industry  in Middle East Powered By Docstoc
					Market Analysis of GCC IT Industry

By: - Zia Ahmed


To summarize my research I have selected a number of companies from the GCC region to make a cluster and bring the best combination in providing specialized IT services My research is thoroughly based on special software for banking solutions & products, networking infrastructure and consultancy The idea of choosing the best companies in GCC is to make a perfect combination and to take advantage of the active IT business environment in these regions IT industry in UAE, Kuwait, Lebanon, KSA and Oman is booming and it is the right time for KGL Investment to be an active participant in the market


Countries of Focus
Kuwait Kingdom of Saudi Arabia KSA UAE Lebanon Egypt Oman


Kuwait IT Sector SWOT
Strengths Kuwait boasts a relatively high PC penetration One of the most advanced states in Gulf region, with high income due to oil revenues Liberal market access policies with low tariffs Weaknesses Small domestic market Relative lack of liberalization in key sectors such as telecoms Opportunities Economic boost due to high oil prices, encouraging new wave of hardware spending Government informatisation and e-government drives Increasing expenditure currently by Kuwait corporate sector Kuwait stands to benefit as logistics point for emerging Iraq market Threats Regional instability, and renewed concerns about terrorism Slowdown in US or global economy 4

Kuwait Software Industry
Total spending on Software in 2005 was US$88mn and previous year US$70mn One of the mature market in the region Software enjoys a higher share of Kuwait IT spending than in many other countries Recent boost in oil wealth encouraging banks to support a new wave of infrastructure investment Expecting the total size of the Kuwaiti IT market to increase from US$338mn in 2005 to around US$830mn in 2010 IT services market is expected to be worth around US$118mn in 2006 Market CAGR is forecast at 21% for 2005 - 2010 Source: BMI Q2 2006 5

Strengths: Regional hub, at crossroads of Asia and the Middle East serving a potential market of almost 2bn people One of the highest GDP per capita in the world, due to oil wealth Excellent telecommunications and information technology infrastructure Good market access, with no significant trade barriers to the presence of foreign competitors Government support, for example with Dubai Internet City project, and other free trade zones Large expatriate business community helps drive sector development Weaknesses: The cost of internet access is still very high Price sensitive market, due to intense competition Opportunities Outsourcing, with scheduled launch of Dubai Outsourcing Zone in 2006 CRM, storage and security products E-learning market, as well as tourism and travel sector Threats Competition from other emerging countries in the region such as Egypt Global or US economic slowdown


UAE Software Industry
Estimated UAE software spending will boom from US$236mn in 2005 to US$471mn in 2010 Central geographic areas for the software industry are Dubai, Abu Dhabi, and Sharjah UAE market will have a CAGR of 15% in 2005-2010 Source: BMI Q2 2006


Lebanon IT Sector SWOT
Strengths IT literate, cosmopolitan and linguistically skilled workforce a draw for global vendors Largest Levant market, well positioned for regional hub status Market far from saturated, and one of fastest growing in Middle East Weaknesses Lack of overall government plan for ICT sector High telecommunications costs, lack of high speed internet connections Opportunities Retail, education, distribution and especially banking sectors fastest growing during forecast period Economic reform and privatization, attracting more FDI Going into 2005 large companies and government departments should be looking to upgrade and replace existing PCs Threats Political instability Lack of political will to develop a national ICT strategy or tackle high levels of piracy 8

Lebanon Software Industry
Predicted software value of US$37mn in 2006, and a 20052010 CAGR of 11% Lebanon Market is expected to grow significantly with the Implementation of large government and projects The domestic software industry is highly export focused, with 1/3 of firms, according to a recent survey, getting 75% of all receipts from regional and Western markets Leading Lebanese software companies tend to have a focus on banking, retail, education and trade Source: BMI Q2 2006


Saudi Arabia IT Sector SWOT
Largest regional IT market, with spending of US$2.3bn in 2005 Maturing market, with growing demand of more sophisticated IT services including outsourcing

Absence of competition in fixed line telecommunications is a constraint on the business environment, especially because it retards the growth of the internet. Political inertia is an inhibitor of economic liberalization and reform that would unleash IT spending

Strong economic growth and the high price of oil is fuelling spending in the non-oil private sector economy, as well as public sector organizations and enterprises The CITC ‘Home Computing Initiative’ will make it easier for up to 1mn Saudi families to own a PC Increasing focus on software spending. According to a recent survey of 160 companies, over 75% of manufacturing, services and trading companies in Saudi Arabia are considering new deployments or upgrades of ERP solutions

Vested interests will continue to block economic reforms and initiatives in key areas Current high oil prices will further delay drive to develop non-oil private economy 10

KSA Software Industry
Predicted software market value of US$460mn in 2006, up from US$441mn in 2005 The domestic software market is therefore expected to grow significantly, driven by an increased focus by Saudi enterprises on more sophisticated solutions that still offer value for money. The CAGR for software revenues is expected to be in the region of 11% Saudi IT services market is expected to reach US$1bn in 2006, up from US$719mn in 2005 Support and maintenance accounted for more than 1/3 (US$252mn) of the 2005 figure Growth is expected to be at a CAGR of 12% for the 20052010 period Source: BMI Q2 2006 11

Overview of IT Spending
IT Spending in 2006

2.3 Bn KSA

88 Mn Kuwait

Kuwait 88 Mn UAE 236 Mn Lebanon 37 Mn KSA 2.3 Bn

37 Mn Lebanon 236 Mn UAE


Overview of CAGR
CAGR 2006

KSA, 12% Kuwait, 21% Kuwait UAE Lebanon, 11% Lebanon KSA UAE, 15%


List of Potential Companies
Path solutions & Al Faris Information Technology Company from Kuwait Eastern Solutions & Zajil Telecom Emirates Technology Company & Eastern Network from UAE BML Istisharat & Comium Group from Lebanon National Technology group & Ejada from Saudi Arabia Industrial management technology and contracting & Bahwan Cybertek from Oman Computer and Communication System & Future Applied Computer Technology from Jordan 14

Acquisition Targets
Path solution Kuwait Zajil Telecom Kuwait Emirates Technology Company UAE BML Istisharat Lebanon Comium Group Lebanon National Technology group KSA Industrial Management Technology and Contracting Company Oman


Short profile
Path solutions Kuwait
Kuwaiti Private company established in 1992 Strong set-up of Islamic commercial & investment banking software and products solutions Dealing with one of the largest Islamic banks in the country and outside the country Ranked the world’s number one dedicated Islamic banking system vendor for 2005 in the influential international banking systems annual sales league table.


Short profile
Zajil Telecom
Kuwaiti private company, established in 1991 Employees 110 Strong set-up of Local and International data communication infrastructure Providing Networking, internet services and mobile services Strong cliental profile


Short profile
Emirates Technology Company
Established in 1974 with the total employees of 250 Strong network of branches in UAE Wide range of software solutions to the IT industry Strong Banking cliental portfolio in the country The company is using a world leading core banking software (Flexcube).


Short profile
BML Istisharat Lebanon
BML has a strong presence in IT and telecom industry in the country and worldwide The company has more 300 clients worldwide including fortune of 500 companies BML has strong cliental portfolio with one of the leading banking, investment and financial institutions


Short profile
Comium Group Lebanon
Lebanon base Joint stock privately owns company Established in 1992 600 Staff One of the major player in the country in telecom services Strong network of branches including Europe and America BML has strong cliental portfolio in the country and outside the country


Short profile
National Technology Group KSA
Established 1984 and the total number of employees are 500 NTG has a strong presence in the market for a long time The company is enjoying a strong business relationship with a leading Saudi Arabia banking and other companies NTG have more then 10 subsidiaries in the Kingdom NTG is the leading IT services provider in the kingdom


Short profile
Industrial Management Technology and Contracting Company
Established in 1984 and total number of employees are 200 Industrial management technology and contracting company is mature IT Company in Omani market The company has a strong cliental profile with outstanding IT solutions The company is specialized for Banking, transportation and financial software solutions.


Why These Companies
Consumer oriented companies Corporate governance of these companies would be easy to change Strong presence in the market for a very long time Mature in IT industry Strong cliental portfolio private and government Comprehensive range of software and products Specialized in commercial, investment and Islamic banking software Know how of the market and good reputation Lead by high Professional teams


Operation Strategy
One stop IT Services and Banking solutions All the companies will work independently in their regions under KGL Investment Supervision and Management Head office or Controlling from Kuwait Provide high quality of banking and other software in GCC Bringing more professionals to the companies if required for improvement


Your Corporate Finance Needs
“We are a Click Away” For all your need Development of Private Placement Memorandum Fund Document Shariah Compliant Structuring of Fund Shariah Compliant Acquisition Structures Feasibility Studies All Your Corporate Finance Needs 25

Description: Market Research and Industry analysis of Information Technology in GCC, IT and ITES Industry in GCC, Market Research on ITES and Services and Pontential of industry in GCC
Zia Ahmed Khan Zia Ahmed Khan C E O
About I have over 15 years of experience with reputed companies in the Finance sector complimented by a B.Tech (Engineering from India), an MBA (Finance) from Pune University, India, Post Graduate Diploma in Strategic Finance and Control from Institute of Chartered Financial Analyst of India. Over the years my experience has covered areas including Mergers and Acquisition, Deal Sourcing and Execution, Feasibility Study, Strategy Planning, Private Equity Fund Management, Project Finance and Budgeting. Currently working with Al Razzi Holding Company as Head Corporate Finance and Private Equity, a Kuwait-based investment Company invests in companies in a variety of industries as Healthcare, Environment and Infrastructure. Highlights of experience and demonstrated talent I would bring to your organization include: • Hold the distinction of sourcing, evaluating, negotiating, structuring and executing principal transactions, and influencing portfolio company performance. • An astute manager with proven abilities in extensive LBO and cash flow modeling skills, substantial strategic analysis experience and an in-depth knowledge of corporate finance products and associated transaction documentation. At Al Faisal Holding, Qatar. Strong analytical, reasoning and critical-thinking skills; ability to interpret market intelligence data collected through primary and secondary sources. In addition, my experience in has provided me with superior knowledge of accounting and the ability to conduct effective due-diligence on potential investment opportunities.