Digital transformation powering Saudi Arabia’s transition to an innovation-driven economy

The Saudi government's Vision 2030 initiative aims to diversify the economy and increase the private sector's contribution to national GDP (iStock-1182641721)

The Saudi government’s Vision 2030 initiative aims to diversify the economy and increase the private sector’s contribution to national GDP (iStock-1182641721)

When we think about the future and technological developments, perceptions are often shaped by movies and TV shows. Visions of talking robots, flying cars, and entire populations clad in silver overalls are classic clichés. Four-wheeled AI-powered robots that take visitors through the Riyadh airport and greet them in Saudi Arabia in dozens of different languages ​​are perhaps a less imagined future at this stage.

But such technological capabilities are becoming a reality in the kingdom today as a visible symbol of the technological and digital transformation that is going on in the world today.

As part of the Saudi government’s Vision 2030 initiative, which aims to diversify the economy and increase the private sector’s contribution to the national GDP, the development of localized Fourth Industrial Revolution (4IR) solutions will help the kingdom’s innovation-driven, Knowledge-based economy.

So far, the plan seems to be working. Saudi Arabia’s digital industry is worth nearly $40 billionincluding 318,000 jobs and making it one of the largest in the region. And with more anticipated investments 24.7 billion dollars determined for various technologies by 2025It is among the highest government spending on technology in the world.

In turn, major global technology players such as Google, Alibaba, Oracle and SAP are investing in the kingdom, which helps foster the growth of domestic tech-based companies while creating jobs and experience in the Saudi market.

All this leads to some impressive numbers and significant global progress. Internet penetration rate in Saudi Arabia is 98 percentFrom a population of 36 million at the beginning of 2022.

The Kingdom was also ranked second worldwide among G20 countries in the 2021 Digital Competitiveness Report; Second in the world in the 2022 Global Cyber ​​Security Index; Third globally for digital government transformation with the World Bank’s GovTech Maturity; and ranked first in the Arab world and 22nd globally in the most recent Global Artificial Intelligence Index.

With Saudi Arabia’s location between Africa, Asia and Europe, it also acts as a strategic logistics hub for data movement between key gateway markets.

big numbers

The digital transformation taking place in Saudi Arabia is supported by strategic financing. Digital Government Authority, smart cities, digital healthcare initiatives, improved infrastructure and autonomous transportation, blockchain technology for money transfers and a The value of the e-commerce market is expected to reach over $13 billion by 2025. It’s also part of a movement with the Communications, Space and Technology Commission that encourages companies to adopt more IoT solutions for their business.

Most of the funding has been allocated from the Vision 2030 National Investment Strategy and has thus far led to the digitization of government services, the establishment of a digital academy, a national IT academy and various funding and support packages.

In 2021, the government announced a series of programs worth $1.2 billion to improve the digital skills of 100,000 Saudi students by 2030., focusing on cybersecurity, programming and e-gaming. It also announced $1.4 billion to support start-ups through a startup called Garage, which works with stakeholders like the City of Science and Technology King Abdulaziz and invests in early-stage businesses.

Including international companies Google invests $2.5 billion in cloud technology in the kingdomand is also working to educate the nation’s youth with the launch of the Google for Startups technology center and Cisco Networking Academy.

Local players also made their own announcements: Neom, with an investment of 1 billion dollars in technology and autonomous transportationalso XRVS, the world’s first cognitive metaverse, and M3LD, a personal data management program. The Saudi Telecom Company announced center3, a $1 billion investment in regional technology and infrastructure. duration Aramco has a $1 billion Prosperity7 fund. Meanwhile, Alibaba helped establish the Saudi Cloud Computing Company (SCCC), creating two secure data centers in Riyadh.

Technology startup boom in the kingdom

With such a wide range of support, Saudi Arabia’s growing technology market already has its own success stories and a host of very promising start-ups. Pay-it-now fintech start-up Tamara recently raised $100 million in a Series B stock round It is managed by venture capital firm Sanabil Investments, a company owned by the kingdom’s Public Investment Fund. Founded in 2020, the company has partnered with well-known global brands like Ikea and Adidas, driving more than three million customers and 10x annual revenue growth.

B2B platform Meanwhile, Sary raises $75 million in Series C fundingAgain under the leadership of Sanabil Investments, it has reached a total of $112 million to date. This startup already has 350,000 customers and serves more than 40,000 businesses. The platform connects small companies with wholesalers and brands to increase supplies more efficiently.

Qawafel provides a market data service to support small factories in creating and innovating new products. It has helped more than 300 local factories so far, increasing average order rates.

Challenges to be overcome

Digital transformation is already benefiting the Saudi Arabian economy. Digitization of vital sectors, including energy, finance and government services, accounts for more than 50 percent of the country’s GDP and increases productivity and efficiency while reducing the risk of human error.

Embracing technology and the digital economy ahead of other countries and focusing on creating agile regulations that support emerging industries make Saudi Arabia more attractive in an uncertain global landscape.

It also offers opportunities for the growing female workforce, which will rise from 15 percent of the total workforce in 2018 to 35.6 percent in 2022. For example, the Middle East’s first Apple Developer Academy in Riyadh is a chance to teach women how to become programmers and developers, coding, design, entrepreneurship and more.

But in such a rapidly expanding market, steps need to be taken to ensure that an adequate workforce is available, equipped and equipped with a robust talent range, ready to bring digital native skill sets and an innovative, problem-solving mindset to future jobs. Tailored training programs and a sufficient number of programs will be needed to develop relevant skills.

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