Here’s why Saudi’s IT services growth is fastest in MEA – IDC

Mega projects in Saudi Arabia, together with renewed digitisation efforts, are propelling the country into being the fastest growing IT services growth region in the Middle East and Africa.

This is according to the latest Worldwide Semiannual Services Tracker from global market intelligence firm, IDC.  This tracker provides vendor revenue share and annual forecast data on a semiannual basis across 53 geographies and 14 market segments.

And the IDC forecasts that the Saudi Arabian IT services market will grow at a compound annual growth rate (CAGR) of 9% over the 2022–2027 period, reaching $6.4bn in 2027.

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“Saudi Arabia’s substantial investments in mega projects and digitisation initiatives have catalysed significant demand for emerging technologies. This has resulted in widespread implementation of digital transformation initiatives across both the public and private sectors, thereby accelerating the adoption of IT services throughout the country,” Suraj Godse — Senior Research Analyst for IT Services, Trackers and Data Products at IDC – told Gulf Business in emailed answers.

Godse went further to tell Gulf Business that other factors driving the IT services market in Saudi Arabia include stringent regulations governing data privacy and data sovereignty, the entry of hyperscalers into the market, government initiatives actively promoting the adoption of innovative technologies, IT transformation efforts aimed at creating new business models, and the limitations of traditional infrastructure in meeting the evolving needs of customers.

Sub-sectors that are set to benefit the most from this accelerated growth are government, BFSI (Banking, Financial services and Insurance), and telecommunications, said Godse.

“These verticals are increasingly investing in technologies such as cloud, AI, data analytics, IoT and advanced security which is also driving the growth of overall IT services spending in the market,” Godse said. 

“IDC classifies the IT Services market into three sub categories namely project oriented services, managed services and support services, out of which managed services is the fastest growing market,” Godse further noted. 

Further cloud growth

Just last month, technology giant Google opened its first cloud region in Saudi Arabia, making the kingdom part of its 39 regions around the world.

READ MORE: Google switches on cloud region in Saudi Arabia

Research commissioned by Google has indicated that the impact of the cloud economy will be $109bn in Saudi Arabia and that the sector has the potential to add 148,600 jobs by 2030.

Godse said there is an expectation that more big players will enter KSA and establish more data centres there.

“This includes not only cloud providers but also significant interest from large Independent Software Vendors (ISVs) looking to set up data centres and store their data within the country. The recent announcement of Saudi Arabia hosting Riyadh Expo 2030 has further positioned the country as a central focus for investments in the Middle East region,” Godse added.

“Notably, in the past year, several major players have already made significant announcements in this regard. Huawei disclosed plans for a cloud region in Riyadh, Oracle launched its cloud region in NEOM, and Alibaba established its cloud presence in Saudi Arabia. Additionally, large ISVs like Salesforce have expressed intentions to launch cloud regions, indicating a sustained momentum in this direction,” Godse said.