IT Sector in Saudi Arabia: What Are the Opportunities in 2024?
Discover the reasons why Saudi Arabia is rising as a premier tech hub for companies in the IT sector looking to expand their global reach.
Across the region, Saudi Arabia’s IT sector is the largest and fastest-growing, with a market size projected to reach $50.60 billion in 2024 and $76.05 billion by 2029. Last year, the sector contributed 4% to the country’s GDP, making it a significant contributor to the Saudi economy.
These figures signify massive market opportunities available for global tech businesses as well as promising talents, establishing Saudi Arabia as an attractive haven for expansion in line with Vision 2030, the blueprint for digital transformation in the Kingdom.
IT Forms the Ideal Launchpad for Companies Entering Saudi Arabia
The IT industry offers an ideal entry point for companies looking to establish a presence in the Kingdom thanks to a range of initiatives designed to strengthen the sector. Primary among these is the National Digital Transformation Program (NDTP), launched in 2016, which focuses on digitizing public services, fostering e-commerce, and developing innovation ecosystems in key cities.
The development of Special Economic Zones (SEZs), focused on innovation and development-led initiatives, holds tremendous significance when it comes to advancing the IT sector.
These zones offer numerous benefits, including tax incentives, simplified business regulations, and state-of-the-art infrastructure, which makes them attractive to international IT firms. Key SEZs such as the King Abdullah Economic City (KAEC) and the Cloud Computing Zone in King Abdulaziz City for Science and Technology (KACST) provide tailored environments that foster innovation and growth in IT and related industries.
In such an environment, 100% foreign-owned businesses that want to set up operations within the Kingdom can tap into a pool of unparalleled advantages, including access to national talent.
The SEZs are increasingly used as the ideal springboard for global tech companies such as Apple Inc., which established its regional distribution center region in the Special Integrated Logistics Zone.
With the Kingdom being the premier center for global expansion, a rising roster of companies have already successfully established themselves in Saudi Arabia, leveraging the country's favorable business environment and strategic initiatives.
For instance, Zenda, a fintech company specializing in innovative payment solutions, has benefited from Saudi Arabia’s advanced digital infrastructure and supportive regulatory environment. The company has effectively tapped into the growing demand for cashless transactions, which is expected to hit 70% by 2025.
Artefact, another global innovator operating in the fields of AI and data, has capitalized on Saudi Arabia’s expanding e-commerce and digital advertising spaces. The company’s solutions support local businesses in optimizing their digital presence and customer engagement.
At the forefront of promoting digital transformation across various industries is Systems Limited, which provides cutting-edge IT and business solutions to key ministries, large telecom operators, and various entities in the energy and utilities sectors.
The Saudi market expansion of these global innovators has been largely assisted by AstroLabs’ on-ground team, offering multiple services leveraging its deep understanding of the Saudi market and a strong network of partners from the private and public sectors.
Future Opportunities for Global Tech Companies in Saudi Arabia
Looking ahead, the IT sector is slated to grow to new heights as the Kingdom prioritizes the digital transformation of its public services in pursuit of a knowledge-based, digitally-enabled economic transformation.
The thrust of this vision is to propel the technology sector forward by prioritizing investment in tech companies with the greatest multiplier effect, as outlined in Vision 2030. As a result, Saudi Arabia has solidified its position as the largest ecosystem in the region while securing the 12th rank globally in venture capital availability.
In the first six months of the year, Saudi Arabia-based startups secured $412 million in the first six months of 2024, accounting for more than 54% of the region’s VC investments, up from 38% last year. With that growth, the Kingdom is averting a broader trend of a slowdown in funding, establishing itself as the go-to place for tech companies seeking long-term scalability prospects and business expansion opportunities.
Moreover, Saudi Arabia has secured second place among G20 countries in the UN ICT Development Index, highlighting the solidity of the Kingdom’s digital infrastructure. This comes as part of its Vision 2030, which aims to increase small businesses’ contribution to GDP from 20% to 35%.
Saudi Arabia's proactive stance in fostering international collaborations and partnerships further improves its attractiveness as a business destination. Zenda, Holo, Artefact, Bespin Global, and Systems Limited are some of the success stories that show the immense potential the country has to offer to global businesses.
