Projects driving the information and communication technology sector

05 March 2012

Qatar’s investment in new information and communication technologies is booming, driven by the country’s World Cup infrastructure plans

Key fact

Qatar’s IT sector was worth $1.15bn in 2011 and is expected to increase 10.5 per cent in value in 2012

Source: IDC

Qatar boasts the Middle East’s fastest-growing information and communication technology (ICT) sector. The country’s ambitious investment plan, booming economy and active projects market are fuelling its rapid expansion.

According to data from US-based market research firm International Data Corporation (IDC), Qatar’s information technology (IT) sector was worth $1.15bn in 2011, with this figure expected to increase 10.5 per cent this year.

IDC has projected a compound annual growth rate (CAGR) of 11.5 per cent in IT spending in Qatar between 2010 and 2015. This figure includes anticipated investment in PCs, servers, storage, network equipment, media tablets, mobile devices, IT peripherals and services.

Rapid pace of economic development

“This growth is being fuelled by the rapid pace of economic development and government-led diversification initiatives,” says Ranjit Rajan, research director for software at IDC Middle East, Africa and Turkey. “There has also been a significant increase in the adoption of IT within the government and commercial sectors, as well as by consumers.”

PC penetration
Percentage of businesses
Qatar 200867
Qatar 201076
Saudi Arabia78
Source: ICTQatar

Spending in Qatar’s computer hardware market is set to reach $264m in 2012 and is forecast to grow at a CAGR of 6 per cent until 2016. Greater investment in the hydrocarbons and education sectors will drive demand for PCs, notebooks and accessories.

The value of the software market is expected to reach $104m this year and is projected to grow at a CAGR of 11 per cent in the next five years, the highest in the GCC.

Numerous infrastructure projects tied to Qatar’s staging of the 2022 Fifa World Cup have also driven IT investments.

Internet penetration rate by business size
Percentage of businesses
Small (1-9 Employees)46
Medium-sized (10-99 employees)89
Large (100-499 employees)97
Very large (500+ employees)100
Source: ICTQatar

“New industries are likely to emerge in the build-up to the event, specifically those relating to leisure, retail and events activities,” says Rajan.

Growth and development in vertical markets have been achieved with a strong technology focus. Infrastructure projects currently under way, such as the Doha metro, Energy City and various liquefied natural gas initiatives are being constructed with IT as a backbone, which is further fuelling demand in the sector.

Cloud computing in Qatar

Qatar Science and Technology Park, Qatar University and Education City are just some of the projects helping to drive the uptake of cloud computing services in the country. Cloud computing is still in the early stages of development in Qatar, but several government bodies have established private clouds where they share information with one another and with members. 

New industries are likely to emerge in the build up to the [Fifa World Cup]

Ranjit Ranjan, IDC Middle East, Africa and Turkey

Industry regulator ICTQatar is spearheading the government’s $1.6bn ICT-2015 strategy. It is overseeing initiatives in infrastructure, e-education, e-health, and development of Arabic content online while also encouraging IT penetration in the small and medium enterprise sector.

“ICTQatar has been very active in terms of driving policies and plans to enable the environment to develop,” says Hadi Raad, principal at US-based management consultancy Booz & Co.

One of the most significant initiatives is a $550m five-year investment to build a national fibre-to-the-home network, which supplies high-speed broadband services to all households.

The key aim is to connect at least 95 per cent of the population to broadband services in the hope that will help drive economic development.

Another project aimed at boosting internet penetration is iPark, which was created in conjunction with the Municipality and Urban Planning Ministry to provide free wireless internet access in Doha’s public parks.

The government’s online portal, Hukoomi, which was launched in 2008, is another important ICTQatar initiative.

“The government continues to develop its e-government programme, bringing more services online that the public can utilise to increase the efficiency of their procedures with various public sector institutions,” says Rajan.

In July 2011, Qatari citizens were issued with electronic ID cards that enable them to sign official forms and documents online, helping to reduce bureaucracy.

Qatar now ranks 48th in the UN’s e-government readiness survey after the UAE, Bahrain and Saudi Arabia. These developments are a result of the exponential growth in telecommunications and broadband access. Mobile penetration currently exceeds 180 per cent. More than 70 per cent of households now have broadband access, 84 per cent have an internet connection, and 89 per cent have a computer at home.

Knowledge-based economy

Telecommunications is the largest market segment in Qatar’s IT sector, accounting for 65 per cent of total ICT spending. Two main operators currently serve the cellular market: incumbent Qatar Telecom (Qtel) and the UK’s Vodafone Qatar.

The two operators are now in the process of upgrading their networks to long-term evolution-based mobile broadband services. Qtel has allocated $55m for the upgrade, which it claims will meet customer demand for more data capacity and support Qatar’s broader ambitions to establish a knowledge-based economy.

Qatar’s commitment to developing its IT sector is an indication of the country’s desire to become the region’s hub, not just for technology, but also in the vertical markets as it continues to develop its diversification plans.

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