Cyprus ICT Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Cyprus ICT Market Trends and Insights

Government-Backed Cyprus Digital Agenda 2030 Funding Commitments

The EUR 988.4 million Digital Agenda represents 2.96% of national GDP and lifts public demand for cloud-based e-government services. Annual allocations to the Deputy Ministry rise to EUR 172.8 million in 2026, encouraging procurement of single-sign-on platforms, open-data portals, and network upgrades. Connectivity receives 60% of the budget, ensuring gigabit targets advance even as rural builds slip into 2028 because of right-of-way disputes. Skills funding captures only 15% of the envelope, implying network capacity could outstrip workforce readiness in the short run. As infrastructure rolls out faster than talent upskilling, managed-service providers gain an opening to bridge skills gaps for the Cyprus ICT market.

Accelerated Fibre-to-the-Home Roll-out and 5G Spectrum Auctions

Cyta reached 100% 5G population coverage in 2024 and extended fibre to 77.1% of premises, backed by more than USD 238 million annual capital outlays^{[1]Source: Cyta, “Annual Report 2022,” cyta.com.cy}. PrimeTel’s HAWK cable adds 4 Tbps of external capacity that positions Cyprus as a Mediterranean transit node^{[2] Source: PrimeTel, “HAWK Submarine Cable,” primetel.com.cy} . Nonetheless, 76% of fibre coverage is still concentrated in major cities, leaving rural municipalities on legacy co-axial networks. The Cyprus ICT market benefits from superior urban bandwidth, yet the rural lag restrains use cases that rely on symmetrical uploads such as cloud back-ups and real-time collaboration.

EU eIDAS-Driven Demand for Trust and Cyber-Security Services

Notification of the national eID at High assurance level catalyzes spending on hardware security modules, ISO 27001 data centers, and managed SOC offerings. Digital Identity Wallets mandated for 2026 accelerate integration work for mobile credentials and biometric modules. Enterprises unable to staff 24/7 detection teams contract MSSPs, expanding the security pie inside the Cyprus ICT market while tightening compliance deadlines under NIS2.

Near-Shoring of Mediterranean Disaster-Recovery Data Centers

Sixteen colocation sites now operate on the island, many marketed as secondary sites for European banks and fintechs seeking seismic diversification. New submarine paths and modest corporate tax rates improve the value proposition, although electricity costs stay among the highest in the EU and lift total ownership costs. Data-center investment therefore skews toward low-duty-cycle disaster recovery instead of compute-intensive AI workloads, a nuance that tempers long-term upside yet still contributes incremental growth for the Cyprus ICT market.

Constrained Domestic Talent Pool in Advanced Cloud DevOps

Only 49.5% of citizens had basic digital skills in 2024, and 89% of firms cited staff shortages as the top barrier to digital adoption. Government training grants remain fragmented across agencies, so private programs like Wargaming Forge fill gaps only within the gaming vertical. Enterprises in the Cyprus ICT market backfill shortages with remote contractors, yet higher wage bids from distributed teams inflate project costs. The scarcity also nudges firms toward low-code platforms, potentially reducing long-term flexibility as vendor lock-in rises.

Fragmented SME Base with Low ICT Budgets

SMEs represent the numeric majority of Cypriot businesses yet spend unevenly on technology. Although 94% invested in digital tools during 2024, budgets remain modest and episodic^{[3]Source: Eurostat, “Electricity Prices for Non-household Consumers H1 2025,” ec.europa.eu} . Many rely on manual workflows and view cloud subscriptions as operating expenses rather than strategic investments. Voucher schemes and EU co-funded grants have begun to shift perceptions, but uptake is slow outside tourism and retail. Limited pooled demand keeps average deal sizes small, lowering the near-term revenue ceiling for vendors targeting the Cyprus ICT market.

Segment Analysis

By Product Type: Services and Security Take Divergent Paths

IT services held the largest 31.10% Cyprus ICT market share in 2025 as public digitalization and tourism upgrades fueled system-integration contracts. IT security is forecast to record a 3.50% CAGR through 2031, underlining rising compliance outlays for eIDAS and NIS2. Hardware demand stays muted because cloud uptake reduces on-premise server refreshes, while software subscriptions in ERP and CRM sustain mid-single-digit growth. Fibre and 5G roll-outs keep communication services revenue flat as legacy voice declines offset data gains.

Enterprises continue reallocating budgets away from capital purchases toward outcomes-based managed services. Gaming studios in Limassol and Nicosia need specialized support for multiplayer orchestration and anti-cheat analytics, spawning niche consultancies. As public-sector contracts bundle connectivity, cloud access, and SOC monitoring, integrators with multi-disciplinary skill sets consolidate share inside the Cyprus ICT market.

Note: Segment shares of all individual segments available upon report purchase

By End-User Enterprise Size: SME Digitalization Accelerates from a Low Base

Large enterprises controlled 63.20% of 2025 spending, but SME outlays will climb faster at a 2.10% CAGR. Voucher incentives and simplified cloud on-boarding schemes reduce barriers, yet 70% of smaller firms still grapple with network-quality issues and 87% cite energy costs as restraints. Low-code SaaS remains the preferred entry point because it minimizes upfront cash. 

A bifurcated pattern persists. Big organizations negotiate volume discounts and deploy hybrid architectures, whereas SMEs depend on turnkey cloud packages that trade customizability for speed. As skills initiatives scale, broader SME adoption could unlock a sizeable incremental pool, positioning the Cyprus ICT market for steadier gains beyond 2028.

By Deployment Model: Cloud Extends Lead Despite Data-Sovereignty Concerns

Cloud models already account for 45.39% of spending and will rise at a 2.88% CAGR. High electricity tariffs dilute on-premise economics, tipping cost calculus toward pay-as-you-go resources even for conservative sectors. Hybrid remains attractive for latency-sensitive or regulated workloads, yet EU Data Act portability rules lower switching costs and embolden multi-cloud strategies.

Gaming companies rely on overseas hyperscale regions for real-time servers, so lower submarine-cable latency could spur local edge-deployment opportunities. As fibre routes diversify and direct southern-Europe links improve, the Cyprus ICT market may evolve into an edge node for ultralow-latency workloads.

Note: Segment shares of all individual segments available upon report purchase

By End-User Industry Vertical: Government Anchors Demand, Gaming Drives Growth

Government and public administration contributed 24.30% of 2025 value through large digital-identity, broadband, and open-data projects. Gaming and esports is projected as the fastest climber with a 4.20% CAGR, supported by Wargaming, GDEV, and other studios scaling headcount and revenue. BFSI invests heavily in core banking refreshes and PSD2 compliance, while retail modernizes omnichannel stacks and logistics analytics.

Energy utilities channel outlays into smart-grid telemetry and advanced metering to absorb renewable generation. Healthcare slowly advances electronic records integration, limited by legacy system fragmentation. Maritime digital twins in Limassol port remain pilot-scale but indicate a future vertical upswing for the Cyprus ICT market once smart-port mandates mature.

Geography Analysis

ICT spending is heavily concentrated in the Nicosia-Limassol-Larnaca corridor, which accounted for roughly 85% of 2025 outlays. Nicosia hosts most government agencies and data centers, while Limassol has become the gaming and fintech nexus thanks to deep talent pools and port logistics. Larnaca positions itself as a disaster-recovery hub with new submarine-cable landing stations and lower real-estate prices.

Peripheral regions struggle with connectivity gaps. Rural SMEs in Troodos and the Paphos hinterland endure upload speeds below 30 Mbps, undermining cloud adoption and remote work. The EUR 72.5 million National Broadband Plan aims to extend fibre nationally by 2027, but timeline slippage could widen the digital divide. 

Tourism zones along Ayia Napa and Protaras already deploy IoT guest-experience platforms that demand robust Wi-Fi back-haul, reinforcing the connectivity imperative. High power tariffs further complicate rural data-center economics, explaining why colocation clusters remain near urban fiber POPs. Over time, improved renewable integration and grid interconnections could balance regional disparities in the Cyprus ICT market.