Valued at over $40.9 billion and constituting 4.1 percent of the Kingdom’s GDP, Saudi Arabia’s Information and Communications Technology (ICT) market is the largest and fastest-growing in the Middle East and North Africa region, and is well-positioned to become a technology service and cloud hub with access to international connectivity through the Red Sea and the Gulf, and with the potential to serve the European, Asian, and African markets.
Key Players in the Saudi Arabia ICT Sector:
- Ministry of Communications and Information Technology (MCIT): MCIT is responsible for the development of policies that govern the communication and information technology sector.
- Communications, Space, and Technology Commission (CST): Under the MCIT, CST is responsible for regulating the ICT and space sectors in Saudi Arabia.
- Saudi Data and AI Authority (SDAIA): Under the MCIT, SDAIA and its subagencies – the National Centre for Artificial Intelligence (NCAI), the National Data Management Office (NDMO), and the National Information Center (NIC) – are responsible for Saudi Arabia’s national data and AI agenda.
- National Cybersecurity Authority (NCA): Reporting directly to the Royal Court, the NCA has both regulatory and operational functions related to cybersecurity, and it works closely with public and private entities to improve the cybersecurity posture of the country in order to safeguard its vital interests, national security, critical infrastructure, high-priority sectors, and government services and activities in alignment with Vision 2030.
Doing Business in the Saudi Arabian ICT Sector
Although U.S. exporters are not required to appoint a local Saudi agent or distributor to sell to Saudi companies, it is strongly recommended that companies consider partnering with a local company to best monitor business opportunities, navigate import and standard testing regulations, and identify public sector sales and contract opportunities.
Saudi Arabia’s Procurement Law regulates all government procurement – including MCIT tenders. The Ministry of Finance is the overarching authority for the law and its implementation, and administers the procurement portal, Etimad, which serves as a centralized repository for all government tenders.
Since ICT is a cross-cutting sector, U.S. companies might also find ICT-related tenders on a number of other government and non-government procurement portals and websites including those of:
- Saudi Telecom Company
- National Unified Procurement Company (NUPCO)
- Ministry of Energy
- Saudi Power Procurement Company
- Saudi Electric Company
- Saudi Aramco
- General Authority for Military Industries
MCIT aims to establish a robust and cutting-edge digital architecture that supports Vision 2030’s goal of digital transformation through e-commerce, digital education, digital health, smart cities, national data, and e-government. Saudi Arabia’s 2023 ICT Strategy outlines the creation of more than 25,000 jobs in the sector, increasing the size of the IT market and emerging technologies by 50 percent, and raising the sector’s contribution to GDP by $13.3 billion. It also aims to attract foreign investments and to support the participation of women in this sector.
According to the International Data Corporation (IDC), ICT spending in Saudi Arabia is poised to reach $34.5 bn in 2023, with spending on software (including cloud) and IT services set to increase at a CAGR of 11.4 percent and 8.7 percent, respectively, over the 2022–2026 period. . Growth is primarily being driven by digital transformation efforts in the government, telecom, finance, and oil and gas sectors, with an increased focus on giga-projects, smart cities and e-governance, in addition to foreign investment in the ICT sector, notably including $9 billion in investments announced during the 2023 LEAP conference. Key opportunities include cybersecurity, cloud, artificial intelligence, and internet of things (IoT).
Cybersecurity: In 2023, Saudi Arabia ranked second in the Swiss-based International Institute for Management Development (IMD)’s Global Cybersecurity Index and ranked 17th overall in competitiveness ranking. According to the International Telecommunication Union (ITU), Saudi Arabia currently has the largest cybersecurity industry in the Middle East. The Saudi Arabian cybersecurity market was valued at $3.6 billion in 2020 and is expected to grow at a CAGR of 17.98 percent to reach $9.8 billion by 2026 Cyber threats in Saudi Arabia continue to be a major challenge. Sectors that are most heavily targeted include government, education, finance, energy, and healthcare. The most common attacks involve ransomware, DdoS, and malware. Key areas of opportunity include application security, cloud security, consumer security software, data security, identity access management, infrastructure protection, integrated risk management, network security equipment, and security services.
Internet of Things (IoT) & Smart Cities: Saudi Arabia is currently building several smart cities (including NEOM, Red Sea, Qiddiya, Waad Alshamal, and SPARK), and aims to be the world’s most connected and digitized nation by 2030. According to the International Data Corporation (IDC), Saudi Arabia’s IoT market is estimated to reach $2.9 billion by 2025 with an annual growth rate of 12.8 percent. Specific areas of focus include industrialized IoT, AI, cloud computing, and data centers. In addition, Saudi Arabia aims to equip five existing cities with smart infrastructure to rank among the top 100 cities worldwide. Opportunities also exist for international companies to develop industrial IoT solutions tailored to local business specifications and higher levels of operational effectiveness. Specific opportunities include predictive maintenance, asset tracking, fleet management, and warehouse optimization.
Cloud Computing: Saudi Arabia is actively promoting the adoption of cloud computing, with annual spending on public cloud services projected to reach $2.5 billion by 2026 [by whom?], at a CAGR of 25 percent. In May 2023, the Economic Cities and Special Zones Authority announced the launch of a new Cloud Computing Special Economic Zone. This special zone is one of the first in the region, offering cloud service providers the flexibility to establish data centers across the Kingdom, and the ability to provide various cloud computing services from the zone. Additionally, Saudi Arabia requires government entities to prioritize cloud-based solutions. The introduction of its Cloud First Policy in 2019 signaled the government’s intent to push widespread cloud adoption across its public and private sectors. In July 2021, MCIT launched an $18 billion plan to build a network of large-scale data centers across Saudi Arabia. The purpose of the initiative is to transform Saudi Arabia into the main data center hub for the region, by working closely with the private sector, including local and international investors, to achieve this goal. Saudi Arabia’s strategic location allows global cloud service providers (CSPs) to serve the MENA region.
Artificial Intelligence (AI): Saudi Arabia ranked first globally in Tortoise Media’s Government Strategy Index for Artificial Intelligence. According to a report from global consultancy firm PwC, AI is set to contribute $135 billion to the Saudi economy in 2030, making the Kingdom the biggest beneficiary of technology in the Middle East. Opportunities exist for cutting-edge AI companies specialized in manufacturing oil and gas to tailor their solutions to fit the local market. These include truck hauling optimization, equipment lifetime analytics, supplier delivery date prediction and asset tracking, shipping optimization, satellite/aerial image analytics, and asset failure predictors.
5G: Saudi Arabia was among the first countries in the MENA region to launch 5G networks in 2019. According to Saudi Arabia’s Communications, Space, and Technology Commission, 5G coverage rate has reached 53 percent, more than double the global average, with the capital city, Riyadh, becoming a leading global capital with 5G coverage now exceeding 94 percent. The country’s total capital investment in digital infrastructure exceeded $24.8 billion over the past six years, resulting in a significant improvement in the quality of services, including mobile internet speed, which has doubled to 181 Mbps, nearly double the global average, making the Kingdom one of the top 10 countries for mobile internet speed. Additionally, mobile subscription rates have increased to 172% of the population and exceeded the global average by 36 percent, which also implies that most people have multiple subscriptions under their name.
E-Commerce: The Saudi e-commerce market is valued at $5.15 billion, representing 6 percent of the country’s $92.6 billion retail market. Current estimates by Statista show over 50 percent of the population shops online, versus only 37 percent in 2016. According to the Saudi Central Bank (SAMA), the share of electronic payments in retail business was almost 57 percent of total transactions in 2021, exceeding the 55 percent target set out by the Financial Sector Development Programme (FSDP), one of the main objectives under Vision 2030. With Vision 2030 aiming to achieve 70 percent cashless transactions by 2030, the market is expected to see more investment by start-ups and telecoms service providers in the digital payments sector.
- Saudi Information Technology Company
- Ministry of Communications and Information Technology
- Communications, Space, and Technology Commission (CST)
- Saudi Data and AI Authority
- National Cybersecurity Authority
- GITEX Technology Week
- Consumer Electronics Show
For more information, contact: Tareq.Ghazal@trade.gov