South African IT distributors remain resilient

South African IT distributors remain resilient

South African IT distributors remain resilient

Despite South Africa's current political, economic and societal problems, the IT industry in general and the distribution channel in particular have held up remarkably well. Although the growth of sales revenues in the second quarter of 2023 was about 10% less than in Q2 2021, this fall was less precipitous than that experienced in Europe.

While cloud revenues have been declining steadily over the past two years, those for the security software and services market in Q2 2023 outpaced revenue growth for the same period in 2021, according to the latest CONTEXT market data.

What happened in Q2?

South Africa is currently being buffeted by blackouts, social unrest, political instability and rising unemployment. Yet, at a time when businesses are tightening the purse strings, the IT industry continues to perform relatively well thanks to digitalisation projects. Sales through IT distributors generate higher revenues than those made through corporate resellers or directly by vendors.

The cloud is at the front and centre of efforts to drive digital transformation in South Africa and so has been the focus of much discussion. Q2 2023 distributor revenues from this market were down on the same period in 2022 and less than in Q2 2021. This fall may be the result of recent changes in key vendors' cost models and a slump in demand from SMBs battling to rein in spending.

However, security software and services are faring much better. Total revenue from this category in Q2 2023 was around $12.2m; down -8.8% from Q2 2022 but up by over 30% from the same period in 2021. As security breaches continue to make the headlines, it seems local businesses are keen to spend on products that will protect their digital assets.

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