Managed Services Set to Take Off in Nigeria and Kenya States Frost & Sullivan

    

Notwithstanding the many benefits provided by managed services and hosting services, these models have traditionally failed to gain traction in Nigeria and Kenya. The most significant barrier to adoption of these services has been the limited bandwidth unavailability, and associated high costs, which effectively renders the model unviable. However, due to the increased proliferation in connectivity experienced in recent years, there has been significant increase in the availability of affordable bandwidth, thus driving the demand for hosting and managed services.

New analysis from Frost & Sullivan (ipcommunications.frost.com), Managed Services Market in Nigeria and Kenya, finds that the market earned $332.5 million in 2011 and estimates this to reach $753.7 million in 2016.

"The need for businesses to control costs and gain access to the latest technologies cost-efficiently is driving the uptake of managed services in Nigeria and Kenya," noted Frost & Sullivan's Information & Communication Technologies Industry Analyst, Ishe Zingoni. "Underpinning this need is a lack of in-house capacity to provide these services internally, hence the evolving trend towards outsourcing."

The growth of the managed services industry has been enabled by developments in the telecommunications space. Most notably, the advent of undersea cables and terrestrial fibre networks has given rise to availability of affordable bandwidth which, in turn, has spurred the growth of data centre-related services.

The launch of undersea cables in the past two years has significantly improved Nigeria and Kenya's international connectivity. The resultant increase in bandwidth capacity has led to a reduction in costs, which is expected to continue supporting the growth of managed services. Furthermore, increasing Internet speeds will allow service providers to improve the quality and value of their managed services offerings.

The challenge for Nigerian and Kenyan service providers will stem from the entrenched competition posed by foreign-based hosting companies.

"Intensified competition from foreign-based hosting companies will constrain local competitors as the latter currently does not have access to a sufficient scale of the market to support continued growth," cautioned Zingoni. "The market is currently small, and has not yet reached sufficient critical mass to enable considerable growth. Therefore, the continued loss of market share to off-shore hosting companies threatens the development of local capabilities."

If you are interested in more information on this study, please send an email with your contact details to Samantha James, Corporate Communications, at samantha.james[.]frost.com.

Managed Services Market in Nigeria and Kenya is part of the Telecom Services Growth Partnership Service programme, which also includes research in the following markets: Managed Services Market in South Africa, Data Centre Market in East Africa, Data Centre Market in West Africa and Network Management Market in South Africa. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

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