Market Watch: Analyzing Trends and Forecasts in Saudi Arabia's Industries

Saudi Arabia's economy is poised for a significant transformation, with trends indicating a robust growth trajectory and forecasts promising a prosperous future. The nation is expected to witness its fastest economic expansion in nearly a decade, propelled by comprehensive pro-business reforms and a surge in oil prices and production. This growth is not just confined to the oil sector; the manufacturing industry is also projected to see a steady increase in value added, with an expected compound annual growth rate of 2.10% from 2024 to 2029.

The government's Vision 2030 policies are central to this economic renaissance, aiming to diversify and liberalize the economy to achieve more stable growth. These policies have already begun to yield tangible benefits, such as an improved business environment that attracts foreign investment and creates private-sector employment. Notably, the number of industrial facilities has increased, and there has been a significant rise in female participation in the labor force.

The IT market in Saudi Arabia is experiencing a period of significant growth and transformation, driven by the country's ambitious digitization initiatives. As of 2024, the IT services market is projected to reach a value of US$2.49 billion, with IT outsourcing being the dominant segment. This growth is expected to continue at an annual rate of 4.81%, culminating in a market volume of US$3.15 billion by 2029. The average expenditure per employee in the IT services sector is also anticipated to increase, reflecting the industry's expansion and the rising demand for IT professionals.

In the broader context of the Information and Communication Technology (ICT) market, Saudi Arabia's size is estimated at USD 50.60 billion in 2024, with projections to grow to USD 76.05 billion by 2029. This represents a compound annual growth rate (CAGR) of 8.49% during the forecast period. Such growth is indicative of the rapid advancements and integration of technology across various sectors, including banking, finance, healthcare, retail, and education, particularly as the country navigates the post-pandemic landscape and embraces Industry 4.0 in manufacturing.

The government's strategic focus on ICT is evident in its regulatory reforms and investments in digital infrastructure. For instance, the new Information and Communications Technology (ICT) law adopted in June 2022 covers telecommunications and IT sectors, aiming to bolster digital infrastructure, embrace new technologies, and promote e-government initiatives. This legal framework is expected to facilitate the growth of the IT market by providing a stable and supportive environment for innovation and investment.

Moreover, the Communications and Information Technology Commission (CITC) of Saudi Arabia has set a target for approximately 97.6% of the population to be online by 2026, which is likely to further stimulate the IT market. The country's mobile internet speed has already seen significant improvements, ranking sixth internationally and second among the G20 nations, surpassing the global average by a considerable margin.

Cloud computing skills are in high demand as enterprises seek to navigate their digital transitions. However, the scarcity of digitally skilled ICT workers in the country has led companies to rely on external expertise, combining digital, organizational, process, and change management skills. This reliance on external sources poses a risk of data theft, highlighting the need for a robust cybersecurity framework to protect sensitive information.

Based on the above, Staff Augmentation may become a strategic approach that allows companies to add skilled professionals to their in-house teams based on the specific skills required for the rapid growth of the market. This model allows businesses to add vetted skilled technical professionals to their teams on an as-needed basis, without many challenges of the traditional hiring processes. It helps maintain agility, prevents task delays, and promotes ongoing development. This method allows businesses to stay ahead of the competition and innovate freely, bypassing the limitations of conventional recruitment.

Summary

In conclusion, the IT market in Saudi Arabia is set for robust growth, supported by government initiatives, legal reforms, and investments in digital infrastructure. The market's expansion is not only a reflection of the country's economic diversification efforts but also its commitment to becoming a leading digital economy. With strategic planning and continued investment in human capital and technology, Saudi Arabia is well-positioned to achieve its vision of a digitally empowered future. We as CodeXTeam are really proud to be able to contribute to the growth and development of this amazing region!