KSA ICT Market Outlook to 2030

Market Overview

• The KSA ICT market is valued at USD 44 billion, driven by increasing investments in digital infrastructure, cloud computing, and 5G networks. Government initiatives such as Vision 2030 are key drivers, aiming to diversify the economy and reduce dependence on oil. The rapid adoption of IoT, AI, and smart city projects further fuels this market, with investments from both public and private sectors. Sources like the World Bank and the Saudi Ministry of Communications and Information Technology highlight the importance of ICT in transforming KSA into a digital economy.
• Riyadh and Jeddah are the dominant cities in the KSA ICT market. Riyadh, the capital, serves as the administrative and business hub, attracting massive ICT investments for government e-services and enterprise solutions. Jeddah, being a key commercial and trade center, sees strong demand for ICT services in the logistics, retail, and telecom sectors. Both cities benefit from advanced infrastructure and government support, making them the key drivers of ICT growth in the country.
• The National Cybersecurity Authority (NCA) in KSA has implemented stringent cybersecurity regulations to safeguard digital assets. By 2023, KSA had invested USD 1.5 billion in enhancing its cybersecurity framework. These regulations are critical for protecting sensitive data across industries such as finance, healthcare, and government services. Compliance with these regulations is expected to increase the demand for cybersecurity solutions by 2024.

KSA ICT Market Segmentation

By Component: The market is segmented by component into hardware, software, and services. The services segment holds the dominant market share due to the growing demand for managed services, cloud solutions, and cybersecurity services. Government projects, especially in the public and smart city sectors, rely heavily on these services for implementation and management, driving their continued dominance.

By End-User: The market is segmented by end-user into government, BFSI, telecom, healthcare, and retail. The government sector dominates the market, fueled by investments in e-government services, smart cities, and digital transformation under Vision 2030. The governments focus on building a digital infrastructure to support the economy drives the need for advanced ICT solutions in this segment.

KSA ICT Competitive Landscape

The KSA ICT market is highly competitive, with key players focusing on expanding their service portfolios and investing in cutting-edge technologies like AI, cloud computing, and cybersecurity. Leading companies such as Saudi Telecom Company (STC) and Mobily are at the forefront, benefiting from their established market presence and government contracts. International players like Microsoft and Cisco are also investing heavily in the region to expand their footprint.

Competitive Landscape Table

KSA ICT Industry Analysis

Growth Drivers:

• 5G Network Expansion: The Kingdom of Saudi Arabia (KSA) has been rapidly expanding its 5G networks, aiming to cover 50 cities by the end of 2024. With over 15 million mobile internet users reported in 2023, 5G network rollouts are enhancing connectivity, enabling faster data transfer speeds. This expansion is a key part of the nations Vision 2030 goals to drive digital transformation and improve infrastructure for smart cities and digital services. According to the Ministry of Communications and Information Technology (MCIT), the investment in 5G infrastructure in 2024 has surpassed USD 3 billion.
• Digital Government Initiatives (Vision 2030): KSAs Vision 2030 aims to digitally transform the public sector through initiatives like the National Digital Transformation Program. As part of this strategy, government services are moving online, with more than 30% of public services already digitized by 2023. By 2024, the government is investing USD 12 billion to modernize its IT infrastructure and promote e-governance. This program is expected to accelerate growth in the ICT sector as more sectors, such as healthcare and education, become digitally integrated.
• Increase in Demand for E-Commerce: With over 28 million active internet users in KSA, the demand for e-commerce is surging. As of 2023, the online retail sector generated more than USD 7 billion, a number that is projected to increase due to growing mobile penetration and digital payment systems. KSAs ICT infrastructure is expanding to support this growth, particularly through investments in logistics and cloud-based platforms that ensure scalability and reliability for e-commerce platforms.

KSA ICT Market Challenges

High Initial Investment in ICT Infrastructure: The development of ICT infrastructure in KSA requires significant initial investments, posing a challenge for smaller enterprises to participate in the digital transformation. This cost burden affects the pace of private sector innovation due to high capital expenditure requirements. Despite ongoing government efforts, securing adequate infrastructure financing remains a challenge for many companies.

Lack of Local Skilled Workforce: KSAs ICT sector faces a shortage of local talent in advanced digital skills such as AI, cloud computing, and cybersecurity. While the government is making efforts to upskill local talent, the gap between the demand and supply of skilled workers continues to present a challenge for sustainable growth in the ICT sector.

KSA ICT Market Future Outlook

Over the next five years, the KSA ICT market is poised for remarkable growth, driven by the rapid adoption of digital services, the expansion of cloud and AI technologies, and the nationwide rollout of 5G networks. With continued government support under Vision 2030, KSA is expected to become a regional leader in ICT, with strong demand across sectors such as healthcare, retail, and education.

Market Opportunities

• High Initial Investment in ICT Infrastructure: The development of ICT infrastructure in KSA demands high initial investments, with over USD 15 billion allocated for 5G and data centers as of 2024. This cost burden limits smaller enterprises from fully participating in the digital transformation. According to the MCIT, this has raised concerns about the pace of private sector innovation due to high capital expenditure requirements. Despite government efforts, infrastructure financing remains a challenge for many companies.
• Lack of Local Skilled Workforce: KSAs ICT sector faces a shortage of local talent in advanced digital skills such as AI, cloud computing, and cybersecurity. The Human Resources Development Fund reports that by 2024, the demand for skilled workers in the ICT industry will exceed supply by 200,000 positions. The government has allocated USD 1.5 billion to upskill local talent, but the gap between demand and supply remains a challenge for sustainable ICT growth.