The ICT sector is a playing a vital role in the development of the Palestinian economy. It was characterized by its fast development and growth of around 45% in the number of ICT firms during the last 3 years, and 25% annual growth in local IT market, currently estimated at more than US$ 300 million -20-30% of which is Software (does not include the telecom sector). In the last decade, an immense development was also noticed in the fixed and mobile telecommunications where a new entrant in the mobile telecommunications was licensed to operate beginning of 2008 “Al Wataniya Telecommunications company”.

There are approximately 150 major ICT companies, one telecom operator and one active cellular phone company “Jawwal” ( Al Wataniya is still waiting for the assignment of frequencies to start operations), more than 2500 employee work for the private IT Sector, and 2400 work for the telecom sector. Approximately 32% of households own computers, rate of internet access is estimated at 15 % of households, while internet use and penetration is around 12%.

Exports of Palestinian ICT are limited to software, R&D and outsourcing services but few companies have started software development projects with regional and international partners. Other companies depend solely on their international clients. With the current focus on software exports and outsourcing, multiple trade missions and exhibitions have been geared to this purpose. ICT companies break down into categories such as hardware sales (direct agents or PC assemblers), software development, consultancy, Internet services, office automation equipment.  A number of international companies opened offices or established direct R&D operations in Palestine such as HP, IDS, Timex, and Siemens. However, most of these companies withdrew at the beginning of 2001.

Software development, consulting and online services collectively makes up more than 50% of current activities of companies, with annual exports estimated at US$ 10 million. The software houses have produced a wide range of solutions and products in areas such as human resources management, projects and sales management, finance and accounting, education, children education, management information systems and entertainment. Further; many solutions were designed to address specific public, NGO, and private enterprises needs.

The potential is high in this sector especially with the liberalization of the Telecommunications market and opening it for new entrants.  The ICT outsourcing sub-sector has a huge potential, yet development is needed in the areas of outsourcing management and technical/ delivery dynamics

Source: Palestinian Association of IT companies, 2007.