Big technology companies such as Business Connexion, Dimension Data and T-Systems dominate the IT services landscape in South Africa, according to research by the International Data Corp.

Business Connexion (BCX) has overtaken long-time incumbent Dimension Data to become the top IT company in South Africa as measured by its share of the market’s value, according to new research by International Data Corp (IDC).

BCX’s performance is due to strong annuity-based revenues and an expansion its service offerings through acquisitions, according to the IDC report, entitled “Competitive Profiles and Analysis of Leading IT Service Players in South Africa, 2013”. BCX increased its share of the market’s value to 14,2% in 2012.

“The vendor also benefited from its ability to execute a range of IT services, from software and hardware support installation to systems integration and information system outsourcing,” the research firm says.

Dimension Data was second in the rankings, vacating the top spot it held in the previous year, while T-Systems maintained its position as the third leading IT services provider in South Africa, it says.

“Large providers are responsible for a major portion of South African IT services market revenues. In 2012, for example, the top two providers accounted for 28,1% of the total IT services market revenue, with the top 10 together accounting for 64,5%.”

The IDC says the “market supremacy” of the big providers has increased in recent years and this “top-end dominance” will continue over the next few years.

“In an effort to meet increasingly complex customer requirements, service providers have had to expand their portfolios, often through acquisitions,” it says.

In light of the rapidly maturing South African IT services market, the IDC says this acquisition trend will continue for the foreseeable future.

An increasing number of providers in adjacent sectors are also entering the IT services market, it says. Telecommunications operators are aggressively targeting network-related services and providing cloud and data centre services, while hardware providers are pushing the benefits of integrated systems and offering specialised implementation services.

“IT services providers that demonstrate an ability to offer hardware, software, and service solutions, either through internal delivery capabilities or through a wider partnership ecosystem, will present themselves as strong candidates in what is a busy and increasingly crowded market,” according to the IDC.

“Local providers, which often have a multinational presence, are increasingly capturing the lead in the market, with six of the top ten providers in 2012 being local firms, compared to five in 2011,” says 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. However, the ability of a firm to provide specialised services could also lead to acquisitions by larger players looking to expand their service offerings. Acquisitions, in fact, will continue to play a large part in the South African IT services landscape.”  — (c) 2014 NewsCentral Media