Saudi Arabia's focus on boosting its technology capabilities is positioning the kingdom as a model for economic diversification, according to analysts.
With hundreds of billions earmarked for its tech ambitions, the kingdom is signalling a fundamental transition towards a knowledge-based economy, focusing on local tech talent development, attracting global expertise and creating high-skilled jobs, they say.
Among the initiatives announced in 2024 were the Alat programme launched by the kingdom's sovereign wealth fund, the Public Investment Fund, and a plan to create an artificial intelligence hub – each reported to be backed by $100 billion in investments – which would help to ultimately reduce reliance on oil and secure a more sustainable economic future.
“These investments are leading to the creation of new industries, development of local expertise in high-growth sectors like AI and sustainable technology, and attracting international tech investments and partnerships,” Uzair Mujtaba, senior manager for software and cloud research at the International Data Corporation, told The National.
“These investments indicate that future economic growth in Saudi Arabia is closely tied to technological innovation and positions it among the leading global economies. As these initiatives progress, they could set an example for other resource-dependent nations adapting to a shifting economic landscape.”
The progress of the kingdom's innovation sectors will be in the spotlight at next week's Leap technology summit, which is expected to once again encourage more investments in the Arab world's largest economy.
Unmissable opportunity
Saudi Arabia's economy returned to growth in 2024, as real gross domestic product climbed 1.3 per cent annually, and 4.4 per cent in the fourth quarter, as non-oil activity surged 4.6 per cent last year, the General Authority for Statistics announced last month.
The kingdom's non-oil private sector economy in January recorded the strongest expansion in more than a decade, as it continues to diversify away from hydrocarbons, the headline Riyad Bank purchasing managers' index showed this week.
Technology has played a vital role: the kingdom's information and communications technology sector was the largest and fastest growing in the Middle East and North Africa, valued at over $40.94 billion as of 2023 and accounting for 4.1 per cent of GDP, data from the US International Trade Administration shows.
In the same year, Saudi Arabia ranked second among G20 countries on the UN International Telecommunication Union’s ICT Development Index. The kingdom has invested more than $24.8 billion in digital infrastructure over the past six years, government data shows.
AI is a particular focus: the technology is expected to contribute $135 billion to the Saudi economy by 2030, making it the largest beneficiary of AI technology in the Middle East, according to PwC.
“Put simply, it’s an unmissable business opportunity … importantly, being a part of [the kingdom's tech] projects yields not just short-term, but long-term benefit,” David Boast, general manager for the UAE Saudi Arabia at London-based IT consultancy Endava, told The National.
Furthermore, to fully capitalise on this opportunity, “continued investment in skills development, regulatory advancements and cross-sector collaboration will be essential”, Andreas Hassellof, chief executive of Dubai-based technology firm Ombori, told The National.
Why are tech firms investing in the kingdom?
Saudi Arabia has emerged as one of the most dynamic digital markets in the Middle East, with high digital adoption rates and a strong demand for AI-driven solutions.
This makes it a “natural destination for global tech firms, [as] the business environment is highly supportive of innovation, making it easier for companies to scale AI solutions across industries”, said Sid Bhatia, a vice president at New York-based AI company Dataiku.
Among the biggest technology names operating in Saudi Arabia are Google, Oracle, Microsoft, Amazon, IBM and Cisco. Apple had announced that it will be opening online and retail stores in the kingdom, starting with the former this year.
From a regulatory standpoint, Riyadh has enacted sweeping changes to foster a business-friendly environment that is highly attractive to multinational tech companies, said Hany Mosbeh, a senior vice president at US software developer Jaggaer.
“Saudi organisations are largely unburdened by legacy tech, which serves two benefits – they are hungry for the latest innovations and are able to rapidly embrace these without integration or migration constraints,” he told The National.
Talent search
Saudi Arabia is expected to recruit more people specifically suited for tech-oriented jobs, particularly for AI and related roles, which in turn would help the country's digital transformation.
This is providing an opportunity for the kingdom to develop its local talent, part of its efforts to promote Saudisation and export those talents globally. The kingdom’s National Technology Development Programme aims to create 25,000 high-skilled tech jobs by 2030, with a strong focus on AI, cyber security and data science.
“Saudi Arabia is building a homegrown tech workforce capable of leading AI-driven transformations … the rise of local experts in these fields has enabled companies to develop customised solutions tailored to Saudi Arabia’s evolving landscape,” Louise Bou Rached, regional director for the Middle East, Turkey and Africa at Danish software developer Milestone Systems, told The National.
Meanwhile, organisations built to help develop Saudi talent, such as the Misk Academy and the Apple Developer Academy, are key to ramping up capabilities in fields such as software development and engineering.
“Saudi-based talent is prevalent in technology suppliers, customers and associations, and those with technical experience can offer a variety of skills in key areas such as AI-driven analytics, cyber security and cloud-native application development,” Ahmad Issa, Riyadh-based regional vice president at California software developer Cloudera, told The National.
Room for improvement?
While the kingdom has made significant strides in attracting investments, Mr Mujtaba and Mr Boast agree that continuing to streamline and governance are key to maintaining the inflows, in addition to enhancing transparency and providing robust legal protection for investors and consumers.
Other necessary improvements include “increased R&D investment and international collaboration, expanded support for tech start-ups and SMEs, nationwide digital literacy programmes, and continued infrastructure development, especially in rural areas”, Joseph Dahrieh, managing principal at brokerage Tickmill, told The National.
