Saudi Arabia - Commercial Guide
Information and Communications Technology

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2019-10-13

Overview

With over 27 million consumers and a sizable number of global enterprises, Saudi Arabia is the largest Information and Communications Technology (ICT) market in the Middle East.  The Saudi Arabian telecommunications and information technology industries represent more than 55 percent and 51 percent, respectively, of the total Middle East market. 

The ICT strategy of the Ministry of Communications and Information Technology 2019-23 is targeting a goal of 50 percent growth of the IT sector and raising the Saudi IT workforce to 50 percent by 2023. It also aims to attract foreign investments and support empowerment and more participation of women in the sector. The strategy is part of the Government’s efforts to establish a robust and cutting-edge digital architecture so digital transformation accelerates and supports the Vision 2030 goal of promoting the sector’s role to build a digital society, a digital government, a thriving digital economy, and innovation. 

E-commerce, digital education, digital health, industry for smart cities, national data, and e-government are the major beneficiary sectors of the ICT Strategy.

The Kingdom is said to be investing $1 billion  to support the artificial intelligence sector while focusing on startups, research and development, and the development of higher skills.

Saudi Arabia’s digital transformation continues to grow with reports showing that the Kingdom’s ICT spending grew six percent in 2018 to $36 billion and is predicted to finish in 2019 at the value of $40 billion.  This growth is led by Government, Telecom, Finance and Oil/Gas sectors.  Aggressive IT projects to modernize the Saudi Arabian Government’s (SAG) IT infrastructure, including an e-government initiative and the liberalization of the telecom industry, are increasing competition, service levels, and usage. 

Because the Saudi society is young and growing rapidly, its consumer market is weighted heavily toward technologically literate early adopters.  Arabization (digital content, software) activities show growth prospects due to this emerging market and the increasing supply of qualified software engineers coming available in the public and private sectors.

Rising personal wealth and the growing number of experts with commitment to achieving leadership in connectivity and information technology are the drivers of Saudi ICT growth.  Saudi Arabia has embarked on a 20-year ICT plan that will support widespread technology and telecommunications adoption across its households and enterprises.  A combination of deregulation and substantial public investments should create investment opportunities for the private sector.

Leading Sub-Sectors

Cyber Security:

Cyber threats in KSA continue to be a major challenge. Demand for cybersecurity services is expected to grow as companies move further into the digital space.  Global ransomware threat incidences stood at 1.6 billion and 8,800,000 of these threats were seen in the Kingdom. The education sector was most affected by malware, followed by government, then telecommunications. Other sectors were healthcare, manufacturing, and oil & gas. Increasing cyber-attacks have spurred the government to launch significant initiatives to fight cyber crimes. These efforts are led by the Saudi Information Technology Company (SITCO), a government-owned firm, the Communications and Information Technology Commission (CITC), the Ministry of Interior (MOI), and the King Abdul Aziz City for Science and Technology (KACST).  In October 2017, the SAG established the Saudi Cyber Security Authority and Saudi Federation for Cyber Security, Programming, and Drones.  SAG spending on these initiatives is expected to reach $500 million by 2020.

Aramco and the local subsidiary of U.S.-based Raytheon Company have established a joint venture company to develop, market, and provide cybersecurity services in Saudi Arabia and the Middle East. The JV entails the development and provision of integrated defensive cybersecurity software and hardware capabilities and the performance of research and development activities. It should be noted that the Saudi Federation for Cyber Security, Programming, and Drones has signed a memorandum of understanding with the U.S. consultancy Booz Allen Hamilton for a program that covers knowledge exchange, technology transfer, and localization. The program entails the provision of cybersecurity professional certifications, advanced courses, and the organization of competitions in order to strengthen the  cybersecurity stance.

IT Services Sector:

The Saudi IT services market is growing rapidly due to the large-scale, infrastructure-driven projects across the government, healthcare, education, and transportation verticals.  Spending will be focused on infrastructure development, e-government initiatives, digitization, and modernization. The current transformation of telcos into integrated ICT providers will also drive market maturity and facilitate investments in managed and data center-delivered services.

Cloud Computing:

While Saudi Arabia is still in the early stages of adopting cloud computing, an increasing number of IT decision makers are seeking a deeper understanding of how the cloud will fit within their organizations. However, according to a recent report by IDC, while the cloud continues to generate a tremendous amount of attention, primarily due to the benefits it offers, only a handful of providers in the Kingdom currently offer cloud services. It is projected that in 2020, cloud spending in Saudi Arabia will reach $140 million.

As per IDC’s projections, there should be a higher acceptance of cloud technologies despite an inherent desire among Saudi organizations to retain full control over their IT functions.   According to a United Nations survey, Saudi Arabia is ranked 52 of 193 in the e-government development index. 

Smartphones:

Saudi Arabia retained its position as the GCC.’s largest mobile market, accounting for 54 percent of the total units shipped in 2018. However, annual shipments to the kingdom declined by 8.2 per cent. Samsung and Apple still retained the top two overall spots, accounting for 32.3 per cent and 23.7 percent shares, respectively.

IDC stated that Samsung’s share was down four percentage points year-on-year while Huawei’s share increased by eight points over the same period. It is noted that the arrival of 5G and foldable devices may bring some movement to the market.

Opportunities

Saudi Arabia is the region’s largest ICT market with growth in consumer and enterprise end markets, which are driven by the following:

•Deregulation, privatization, and WTO accession promoting private-sector opportunities.

•Public-private funding partnerships such as KACST’s (King Abdul Aziz City for Science and Technology) R&D co-funding initiatives and Technia’s cluster of companies like Technia Defense, Technia Energy, Technia Aviation, Technia Space, and the Elm Company.

•Public-private partnerships (PPP) supporting venture capital funding such as recent collaboration between the Saudi General Investment Authority (SAGIA) and Intel. Cisco participated in the launch of Riyadh Smart City in 2018, after a nine-month trial period as part of the Country Digital Acceleration (CDA) program. There are smart-city technologies that have been tested in Riyadh’s Al-Olaya district that include parking, smart lighting, and water management.

•Strong commitment to e-commerce and e-governance initiatives (including IP protection.)

•Significant yet unmet demands for web-based and mobile services. Increased enterprise and government usage of web-based services could provide large-scale opportunities for contractors and service providers.

•Public investment in connectivity for Economic Cities to provide unique opportunities for green-field projects.

•Public investment in IT knowledge and Internet-based services literacy programs.

•5G - given the growing taste consumers have for enriched connectivity, the demand for premium offerings based on 5G capabilities is growing. With speeds up to 100 times faster than existing networks, customers in 5G-connected homes will have access to features such as gigabit fixed wireless and high-bandwidth uploads. These uploads can enable applications such as cloud-based security cameras and result in smoother virtual and augmented reality experiences to allow for myriad other internet usages.

• The Kingdom’s investment of $1 billion  to support the artificial intelligence sector while focusing on startups, research and development, and development of skills.

• Software and other content providers secure environment for commercialization, thanks to significant progress on intellectual property rights (IPR) laws by the Ministry of Commerce and the CITC and the Saudi Authority for Intellectual Property (SAIP).

Web Resources:

Saudi Information Technology Company

www.sit.com.sa

Ministry of Communications and Information Technology

www.mcit.gov.sa 

Communications and information technology Commission

www.citc.gov.sa

Ministry of Commerce and Investment

www.mci.gov.sa

Saudi federation for Cybersecurity, Programming and Drones

 https://safcsp.org.sa/en.html

Trade shows:

Saudi Mobile Show, Riyadh, 19-21 Nov. 2019

GITEX Technology Week, Dubai, 6-10 Oct. 2020

Consumer Electronics Show (CES) Las Vegas, NV – 7-10 Jan. 2020

National Association of Broadcasters (NAB) Las Vegas, NV 18-22 April 2020