|
Forecast
Period
|
2024-2028
|
|
Market
Size (2022)
|
USD
5807.17 Million
|
|
CAGR
(2023-2028)
|
8.06%
|
|
Fastest
Growing Segment
|
Cloud-Based
|
|
Largest
Market
|
Riyadh
|
|
Market
Size (2028)
|
USD
9183.25 million
|
Market Overview
Saudi
Arabia IT Services Market has valued at USD 5807.17 Million in 2022 and is
anticipated to project robust growth in the forecast period with a CAGR of 8.06%
through 2028. The booming e-commerce sector is driving growth in the Saudi
Arabian IT market. The government launched a development program in 2016 called
the NTP, which is part of the Vision 2030 program. The plan sets out strategies
for the diversification of the economy and the creation of new employment
opportunities. The use of IT is rapidly growing in Saudi Arabia as the
government intends to enable all sectors of the economy digitally, including
manufacturing, government, healthcare, and BFSI, under the NTP. Owing to which
the market is expected to grow in the future.
Key Market Drivers
Increasing
Government Initiatives to Diversify Economy
The
Saudi government has launched Vision 2030 with the objective of diversifying
the economy and reducing reliance on oil. The goal is to increase the
contribution of the digital economy to GDP from its current level of less than
2% to over 10% by 2030. Several initiatives, including the National
Transformation Program and Digital Saudi program, are driving IT adoption
across various sectors. As organizations strive for digital transformation,
this is fueling significant growth in the IT services market. Consequently, the
demand for the Saudi Arabia IT services market is expected to grow during the
forecast period.
Growing
Demand from Private Sector & Rising Young, Tech-savvy Population
The
rapid expansion of Saudi Arabia's private sector is fueling the demand for
digital transformation. Key sectors such as banking, healthcare, and
manufacturing are making significant investments in technologies to optimize
operations and enhance customer experiences. In particular, the manufacturing
industry is leveraging cutting-edge solutions like IoT, 3D printing, and
robotics to drive Industry 4.0. Transportation and logistics sectors are also
adopting advanced technologies for fleet management and warehouse automation.
In the face of intensifying competition, companies are increasingly recognizing
the efficiency and cost-saving benefits of digital tools. As a result, larger
IT budgets are being allocated for modernization and digital strategies.
Saudi
Arabia boasts a sizable, youthful population, with over 60% below the age of
30. This demographic exhibits a high level of technological literacy and
readily embraces innovative solutions. Their increasing demand for digital
services spans across various sectors such as education, entertainment, and
healthcare. Notably, government data reveals that internet usage in Saudi
Arabia surged by over 20% in 2021, with 95% of the population now connected
online. This burgeoning digital lifestyle among citizens is fueling the
adoption of IT services.
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Key Market Challenges
Shortage of Local Digital
Talent
One
of the significant challenges faced by the IT services industry in Saudi Arabia
is the scarcity of local digital talent. As organizations across various
sectors actively pursue digital transformation initiatives, there has been a
surge in demand for skilled professionals. However, the availability of Saudi
nationals with expertise in emerging technologies remains limited. According to
a 2022 study conducted by Saudi Aramco, the Kingdom is grappling with a
shortage of over 100,000 skilled technology workers. The areas most affected by
this talent crunch include AI, cloud, cybersecurity, and blockchain. To meet
the increasing talent requirements, more than 80% of IT jobs in the country are
currently filled by expatriates. However, relying on foreign talent also brings
about additional costs and risks for companies. The National Transformation
Program aims to address this issue by developing local skills through
initiatives like the Digital Training Centers program. Nonetheless, bridging
the significant digital talent gap remains an ongoing endeavor that hinders
faster industry growth.
Lack
of Advanced Digital Infrastructure
One
of the challenges faced is the limited availability of advanced digital
infrastructure in certain regions of the country. According to a study
conducted in 2022, only 82% of households in Saudi Arabia have access to
broadband internet. This poses a hindrance for IT service providers seeking to
expand their operations beyond major urban centers. To address this issue, the
government has initiated the Digital Saudi program, with a planned investment
of USD33 billion by 2023, aimed at establishing a robust nationwide digital
infrastructure. However, the existing connectivity and infrastructure gaps in
certain regions currently restrict the potential market reach for IT companies.
It is crucial to enhance the last mile connectivity across the Kingdom to promote
more inclusive and sustainable growth in the industry in the long term.
Key Market Trends
Cloud
Adoption on the Rise
The
widespread adoption of cloud computing is being driven by both public and
private sector entities seeking operational efficiency and cost reduction by
moving away from traditional on-premise servers and data centers. The
pay-as-you-go model of cloud services offers compelling cost savings and the
flexibility to scale resources as needed. Moreover, it enables IT departments
to shift their focus from infrastructure management to innovation. Across
industries, organizations are leveraging cloud-based platforms such as IaaS,
PaaS, and SaaS to enhance agility, improve collaboration, and gain rapid access
to advanced technologies. As cloud computing becomes increasingly prevalent in
Saudi Arabia, there is a growing demand for specialized IT services in areas
such as cloud consulting, architecture, migration, security, and support. Local
service providers are well-positioned to seize this opportunity by developing
their expertise in cloud solutions. They are witnessing a rise in projects
involving the implementation of ERPs, CRMs, and other core systems on the
cloud. This increasing reliance on scalable cloud infrastructure represents a
significant trend for the thriving IT services industry in the Kingdom.
Cyber
threats have witnessed a rapid escalation in both sophistication and frequency
in recent years. With the increasing digitization of enterprises and public
infrastructure, the risks associated with cyber-attacks have multiplied
significantly. As cybercriminals continually innovate new techniques,
organizations across industries are increasingly recognizing the critical
importance of implementing robust security measures and strategies. This
recognition has translated into a substantial increase in budgets allocated to
cybersecurity solutions and services in Saudi Arabia. Several studies indicate
a significant rise in cybersecurity spending by both government and private
entities in the past year alone. The growing expenditures are driven by the
urgent need to establish stronger access controls, deploy advanced endpoint
protection, and enable robust identity and access management capabilities.
Furthermore, there is a rising demand for managed security services that can
provide round-the-clock network monitoring and swift threat detection and
response. These trends clearly indicate that cybersecurity will play a pivotal
role in boosting the IT services market in Saudi Arabia during the forecast
period.
Accelerating
Digital Transformation
Saudi
Arabia has undertaken an ambitious national agenda for digital transformation
through the Vision 2030 program. A key objective of this initiative is to
increase the contribution of the digital economy to over 10% of GDP.
Consequently, public and private entities throughout the Kingdom have expedited
their digitalization efforts to align with the nation's strategic priorities.
As a result, there has been a significant rise in investment in digital
transformation projects and enabling technologies. Many organizations are
conducting comprehensive assessments of legacy systems and processes to
identify opportunities for modernization. The demand for consulting and
advisory services to develop robust transformation roadmaps is also growing.
Additionally, there is a high demand for implementation capabilities in areas
such as cloud, AI, blockchain, cybersecurity, and customer experience. The
prioritization of digital transformation at the highest levels of government is
a major driving force behind the IT services industry. Leading local service
providers are capitalizing on this momentum by expanding their digital
capabilities and solutions. The intensified focus on transformation ensures
that demand will remain strong in both the public and private sectors. Saudi Arabia has been actively fostering
its startup ecosystem through initiatives such as the Vision 2030 reform
program. This has created a thriving environment for entrepreneurship and
innovation. Major cities like Riyadh and Jeddah have emerged as tech startup
hubs, with growing support from venture funds, tech startups, and government
agencies. Investments in local startups have seen a significant surge in recent
years, with funding reaching USD400 million in 2022 alone. With increased
capital availability, there is a growing number of innovative ideas being
tested and developed into new companies. This, in turn, has stimulated job
creation, particularly among the youth, and contributed to the development of
local tech talent. The flourishing startup ecosystem is generating substantial
demand for specialized IT services, including app development, cloud
infrastructure setup, cybersecurity implementation, and digital marketing.
Additionally, there is a need for consulting, prototyping, and scaling support.
These factors present lucrative opportunities for domestic service providers to
leverage their contextual knowledge and offer customized packages. The
continued policy support for nurturing entrepreneurship holds promising
prospects for the long-term growth of Saudi Arabia's IT sector, as it
encourages the adoption of new technologies across industries.
Segmental Insights
By
Deployment Type Insights
The
on-premises deployment type dominates the Saudi Arabia IT services market,
accounting for over 76.87% of market share in 2023. This dominance is expected
to continue in the coming years, as many organizations in Saudi Arabia are
still reluctant to move their IT infrastructure to the cloud.
There
are a number of reasons why on-premises deployment is so popular in Saudi
Arabia. First, many organizations have already invested heavily in on-premises
IT infrastructure, and they are reluctant to switch to a new deployment model.
Second, some organizations have concerns about security and compliance when it
comes to moving their data to the cloud. Third, the cloud market in Saudi
Arabia is still relatively immature, and many organizations are not yet
comfortable with the idea of moving their IT infrastructure to a third-party
provider.
However,
the cloud market in Saudi Arabia is growing rapidly, and it is expected to
overtake the on-premises market in the next few years. This growth is being
driven by a number of factors, including the increasing adoption of cloud-based
applications, the growing awareness of the benefits of cloud computing, and the
government's support for cloud adoption. Despite
the growing popularity of the cloud, on-premises deployment is expected to
remain a significant part of the Saudi Arabia IT services market for the
foreseeable future.
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Regional Insights
Riyadh
IT Services Market stood at USD 2,312.57 million in 2022 and is projected to
register a CAGR of 8.24% during 2023-2028. The capital city of Saudi Arabia,
has seen tremendous growth over the past decade, driven by large-scale
government investment and modernization initiatives across sectors. As the
political and economic center of the country, Riyadh represents the single
largest regional market for IT services in the Middle East.
Major
technology giants, including IBM Middle East - FZ LLC, Microsoft Arabia, Oracle
Systems Limited Saudi Arabia, etc., have established significant presence in
the city, undertaking diverse outsourcing and smart infrastructure projects
commissioned by public agencies. Concurrently, local Saudi firms have emerged
as notable players, with companies like STS, Ajeeb, and Hala Systems generating
substantial combined revenue last year.
All
indicators point towards continued expansion as the Saudi government endeavors
to diversify the economy and accelerate digital transformation under Vision
2030. Key ongoing programs reshaping Riyadh encompass the smart city
initiative, expansion of e-government services, and a growing emphasis on
sectors such as education technology, digital healthcare, and FinTech. The
thriving startup ecosystem in Riyadh, which is now home to several local
unicorn companies, has also created fresh opportunities for specialized IT
consultancies and system integrators. Overall, the IT services industry in
Riyadh is poised for well sustained growth in the next decade.
The
Makkah IT Services Market stood at USD2,071.54 million in 2022 and is projected
to register a CAGR of 8.68% from 2023-2028. The IT services market in Makkah,
Saudi Arabia has seen significant growth over the past five years and is poised
for further expansion. Makkah is the holiest city in Islam and a major
religious destination, welcoming millions of pilgrims each year for Hajj and
Umrah. With a population of over 2 million in the city itself and millions more
visiting annually, Makkah represents an important market for IT services.
Recent estimates value the total IT services spending in Makkah at over USD500
million annually. This marks a 25% increase from 2020 levels and reflects
rising demand across both public and private sectors. Major areas driving
growth include cloud computing, cybersecurity, software development, and IT
infrastructure projects. The Saudi government has undertaken massive digital
transformation initiatives and invested heavily in smart city technologies in
Makkah, creating opportunities for local and international IT firms.
Leading
the market are large integrators such as Saudi Telecom Company, which earned a
significant revenue in Makkah last year. However, small and medium-sized
enterprises also make up an increasing share and have benefited from support
programs run by the Makkah Chamber of Commerce. Notable local SMEs include
Makkah IT Solutions, SEC Technologies, and Digital World, each specialized in
different verticals like healthcare, education, and finance, boosted by
continued government spending as well as Hajj/Umrah digitalization efforts. The
future remains bright for IT providers operating in this important hub.
Recent Developments
- The
National Transformation Program and Vision 2030 have played a crucial role in
driving investments in priority technologies and expanding internet
accessibility nationwide, creating a substantial demand for services related to
cloud computing, cybersecurity, artificial intelligence, and blockchain
implementation.
Key Market Players
- Accenture
Saudi Arabia Limited
- Cisco
Saudi Arabia Limited Company
- Ejada
Systems Ltd
- IBM
Middle East - FZ LLC
- Microsoft
Arabia
- SAP
Saudi Arabia Software Services Co. Ltd.
- Oracle
Systems Limited Saudi Arabia
- Infosys
Arabia Ltd.
- Saudi
Ericsson Communication Co. Ltd.
- Saudi
Telecom Company
|
By Service Type
|
By Organization Size
|
By Deployment Type
|
By Business Functions
|
By End-User Industry
|
By Region
|
- Managed
Services
- Professional
Services
|
- Small and Medium Enterprise
- Large Enterprise
|
|
- Finance & Accounting,
Operations & Support
- Human Resources
- Sales & Marketing
- Supply Chain Management
- Others
|
- BFSI
- IT & Telecom
- Government & Defense
- Healthcare
- Manufacturing, Retail
- Others
|
- Riyadh
- Makkah
- Eastern Province
- Rest of Saudi Arabia
|
Report Scope:
In this report, the Saudi Arabia IT
Services Market has
been segmented into the following categories, in addition to the industry
trends which have also been detailed below:
- Saudi Arabia IT Services Market,
By Service Type:
o Managed Services
o Professional Services
- Saudi Arabia IT Services Market,
By Organization Size:
o Small and Medium Enterprise
o Large Enterprise
- Saudi Arabia IT Services Market, By Deployment Type:
o On-Premises
o Cloud-Based
- Saudi Arabia IT Services Market, By Business Functions:
o Finance & Accounting, Operations & Support
o Human Resources
o Sales & Marketing
o Supply Chain Management
o Others
- Saudi Arabia IT Services Market, By End-User Industry:
o BFSI
o IT & Telecom
o Government & Defense
o Healthcare
o Manufacturing, Retail
o Others
- Saudi Arabia IT Services Market,
By Region:
o Riyadh
o Makkah
o Eastern Province
o Rest of Saudi Arabia
Competitive Landscape
Company Profiles: Detailed analysis of the major companies present in the Saudi
Arabia IT Services Market.
Available Customizations:
Saudi Arabia IT Services Market report with
the given market data, Tech Sci Research offers customizations according to a
company's specific needs. The following customization options are available for
the report:
Company Information
- Detailed analysis and profiling of additional
market players (up to five).
Saudi Arabia IT
Services Market is an upcoming report to be released soon. If you wish an early
delivery of this report or want to confirm the date of release, please contact
us at
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