The Gulf Cooperation Council (GCC) international locations, a gaggle of Arab states within the Persian Gulf area, have held a singular place within the world division of labor for a lot of many years. Leveraging their pure benefit in vitality assets, these Gulf nations have been pivotal gamers within the world vitality market.
Despite the continued significance of oil and gasoline revenues within the economies of GCC international locations within the close to future, these nations have clearly set a course for diversification and the event of a digital financial system and different technological sectors. In this area, there are all of the stipulations for attaining management within the fields of knowledge expertise (IT) and digitization, together with substantial funding assets, strong infrastructure, and thriving startup ecosystems.
In phrases of web penetration, 5 out of the six GCC international locations (with Oman being the exception) rank among the many prime 5 on the earth. In Saudi Arabia, Qatar, Bahrain, the UAE, and Kuwait, web utilization is at 100% among the many inhabitants. This robust digital basis gives a strong foundation for his or her digital transformation and innovation efforts.
Figure 1. Internet penetration in GCC international locations (% of inhabitants)
Source: World Bank
The whole ICT (Information and Communication Technology) spending in GCC international locations is projected to achieve $73.3 billion in 2023, which is almost corresponding to the ICT market in Russia (roughly 80 billion USD when transformed on the common alternate price of the ruble in 2022). However, it is essential to notice that the mixed inhabitants of the six GCC international locations is about 2.5 occasions smaller than that of Russia, with 59.4 million in GCC in comparison with 146.4 million in Russia. The foremost drivers of ICT market progress within the GCC are Saudi Arabia and the UAE, accounting for 74% of all expenditures amongst GCC international locations.
Figure 2. ICT expenses forecast, 2023, $ billion
Source: IDC, open sources, author’s analysis
Approximately 10% of your entire ICT (Information and Communication Technology) market consists of IT companies, with the biggest portion being IT outsourcing. The IT companies market is in a complicated stage of maturity, and in response to Statista, the projected progress price is anticipated to be round 8% per 12 months over the subsequent 5-6 years.
Figure 3. IT Services Market in GCC Countries, $ Billion
Source: Statista Market Insights
The software program market in GCC international locations is projected to achieve $4 billion in 2023. Corporate software program, together with ERP techniques, CRM, BI, and extra, dominates the market construction, accounting for over 40%. The market is anticipated to develop at a price of three% to five% over the subsequent 5 years.
Figure 4. Software Market in GCC Countries, 2023
Source: Statista Market Insights, author’s analysis
The growth of the IT sector and digitization in recent times have been a focus of the federal government insurance policies in GCC international locations. Each nation is implementing initiatives and packages to advertise IT growth consistent with their long-term methods:
- In the UAE, there are state-level methods for the event of AI and blockchain applied sciences. They are implementing a challenge to create a hub for technological innovation and appeal to IT corporations in Dubai, generally known as Dubai Internet City.
- Qatar is creating an innovation cluster for digital applied sciences generally known as TASMU Digital Valley.
- Bahrain has adopted a Digital Government Strategy for 2022, outlining their technique for growing a digital state.
These digital initiatives are additionally embedded in higher-level paperwork:
- Kuwait plans to develop IoT and fiber optic communication as a part of their nationwide growth plan.
- Saudi Arabia is specializing in the event of e-commerce and fintech.
- Oman is engaged on IT infrastructure growth and eGovernment initiatives to develop into a digital state.
Saudi Arabia is enterprise mega-projects like “Neom” (a futuristic metropolis) and “AMAALA” (constructing luxurious resorts and growing ecotourism on the Red Sea coast). These initiatives require important investments in digital infrastructure, trendy applied sciences like AI/ML, IoT, edge computing, and 5G.
The digitization of GCC international locations’ economies requires superior infrastructure, together with information storage. Local corporations have traditionally relied on overseas infrastructure. Amazon Web Services (AWS) opened its first information middle in Bahrain in 2019, and the second within the UAE in 2022. Saudi Aramco, Saudi Arabia’s largest oil firm, partnered with Google Cloud in 2022 to develop cloud companies within the nation. In the identical 12 months, two joint information facilities had been established by STC (the biggest telecommunications firm in Saudi Arabia) and Alibaba (China). The cloud companies market in GCC international locations is anticipated to exceed $18 billion by 2027, indicating a greater than twofold progress over the subsequent 5 years.
Figure 5. Public Cloud Market, $ Billion
Source: Fitch Solutions, creator’s evaluation.
Industrial and repair sector diversification in GCC international locations is being carried out utilizing trendy applied sciences and gear, enabling real-time information assortment and evaluation. Saudi Arabia is enterprise mega-projects resembling “Neom” (a futuristic metropolis) and “AMAALA” (constructing luxurious resorts and growing ecotourism on the Red Sea coast), which require important investments in digital infrastructure and platforms, trendy AI/ML (Artificial Intelligence and Machine Learning) applied sciences, IoT (Internet of Things), edge computing, 5G, and extra.
The expertise of “digital twins” was vividly demonstrated on the FIFA World Cup in Qatar when roughly 40,000 IoT units had been used to handle huge crowds of followers. In Dubai, the EC3 management middle makes use of AI expertise, digital cameras, and thermal imaging expertise to handle 11,000 surveillance cameras, 5,000 km of roads, 10,000 taxis, and extra. Continued investments in tourism growth and internet hosting worldwide occasions, such because the Winter Asian Games within the “smart” metropolis of Neom in Saudi Arabia in 2029, are among the many drivers of the IoT market’s progress. By 2030, in response to Oliver Wyman’s forecast, there shall be over 1 billion IoT connections in GCC international locations.
The digitization of presidency companies is actively progressing. Bahrain’s National Digital Transformation Strategy, adopted in 2022, includes consolidating current authorities information for forecasting and decision-making functions. In Saudi Arabia, over 130 authorities authorities are implementing information administration functionalities, and Dubai’s authorities tremendous app, Dubai Now, has processed 20 million transactions price $2.7 billion since its launch in 2015. Similar apps to Dubai Now exist in Saudi Arabia (Tawakkalna Services), Kuwait (Sahel), and Qatar (Hukoomi).
Significant consideration is being given to the event of AI. The governments of the UAE, Saudi Arabia, and Qatar are investing extra in AI than some European international locations. For occasion, Saudi Arabia has invested over $135 billion within the Softbank Vision Fund and goals to be among the many prime 15 international locations in AI growth by 2030. The UAE turned the primary nation on the earth to determine a Ministry of Artificial Intelligence. Oman, as a part of “Vision 2040,” can be inserting a robust emphasis on AI to boost productiveness and create new jobs.
The presence of long-term imaginative and prescient and substantial monetary assets within the Gulf Cooperation Council (GCC) international locations will place the area as one of many key IT hubs on the earth. It is anticipated that greater than 45 unicorn startups (with valuations exceeding $1 billion) will emerge within the Middle East and North Africa area, with a good portion of them originating from Saudi Arabia.
The foremost challenges for the event of the IT sector within the GCC area are associated to attracting certified workforce (many international locations depend on expatriates to drive financial progress), offering infrastructure and comfy dwelling situations for specialists, and sustaining political stability.