“The UAE IT industry is a rapidly growing sector, driven by government initiatives, digital transformation efforts, and a strong focus on innovation. With a supportive ecosystem, advanced infrastructure, and a skilled workforce, the UAE is poised to become a regional hub for technology and IT services.”
Q1. We have observed some of the major categories/ segmentation in the market – Cloud services, Data centers, AI, IT Consulting, Networking, Security, HPC and others. We want to understand the percentage of revenue contribution for each of these services in the UAE IT Service Market. What are the major technology trends in these segments?
Answer. Firstly, we can talk about cloud services which contribute around 20 to 30% revenue to the industry. It includes Hybrid and multi-cloud, Serverless computing, AI-powered cloud services, IaaS, PaaS, SaaS, Cloud Applications.
Datacenter is one the fastest growing segments and contributes around 15% revenue to the industry. Subcategories include Edge computing, Green Data centers, Storage, colocation, Managed hosting.
AI contributes 5 to 10% and it is one of the most focused areas now. Subcategories of AI include Machine Learning, Computer region, Deep learning, IOT, Chat GPT, Quantum Computing, Big Data and others.
IT Consulting contributes around 10 to 15%. Companies like Accenture, Etisalat consulting IBM Digital focus on IT Consulting. Digital transformation, Data analytics and business intelligence are some of the emerging trends in this segment.
Connectivity, which includes network services, telecommunication and internet connectivity, contributes around 10-15% again. More focus is on 5G technology nowadays. SDN, 5G Networking, Network virtualization are major technology trends.
Cybersecurity contributes around 10 to 16% to the industry’s revenue. Managed IT services contribute 12-13% to the industry’s revenue.
Q2. Please mention the percentage of revenue contribution for major industries in UAE IT Service Market.
Answer. The government is the biggest contributor in UAE as they are taking various digital initiatives to provide good quality services to the citizens. It contributes 20 to 25% of the total spend on ICT Services. The education sector contributes around 10 to 15%. They are adopting E-learning, smart classes, peer-to-peer learning platforms. BFSI contributes 15 to 20%, Media contributes 10 to 15%, retail contributes 12-16% and healthcare contributes 15-18% to the total revenue of ICT Industry.
Q3. How are data centers and cloud services priced in UAE?
Answer. The pricing of data centers and cloud services in the UAE can vary depending on various factors such as the provider, service offerings, infrastructure capabilities, and specific requirements of the customer. Here is a general overview of data center and cloud service pricing in the UAE:
Data Centers: The pricing for data center services in the UAE can be influenced by factors such as the size of the facility, power and cooling infrastructure, security features, connectivity options, and additional services offered. Data center pricing is typically structured based on factors like rack space, power consumption, bandwidth usage, and any additional services required, such as managed services or disaster recovery solutions.
Cloud Services: Cloud service pricing in the UAE is usually offered based on a pay-as-you-go or subscription-based model. Cloud providers may offer different tiers or pricing plans based on the level of resources, features, and support required. Pricing for cloud services can include components such as computer resources (virtual machines), storage (object storage, block storage), network bandwidth, data transfer, and additional services like databases, AI/ML services, and serverless computing.
Q4. Any major incentives provided by the government which are impacting the IT Industry in UAE?
Answer. The government of the United Arab Emirates (UAE) has implemented various initiatives and incentives to promote and support the IT industry in the country. These initiatives aim to attract technology companies, encourage innovation, and foster digital transformation. Here are some major incentives provided by the UAE government that have impacted the IT industry:
- Free Zones: The UAE has established several free zones, such as Dubai Internet City, Dubai Silicon Oasis, and Abu Dhabi Global Market, which offer various incentives for technology companies. These include 100% foreign ownership, tax exemptions, simplified business set-up procedures, and access to state-of-the-art infrastructure and facilities.
- Innovation and Research Centers: The UAE government has established innovation and research centers to foster collaboration between academia, industry, and startups. Examples include Dubai Future Accelerators and Abu Dhabi's Hub71. These centers provide support, funding, and mentorship programs for tech startups and innovative companies.
- Smart City Initiatives: The UAE government has launched ambitious smart city initiatives, such as Dubai Smart City and Abu Dhabi's Vision 2030. These initiatives focus on leveraging technology and data to enhance the quality of life, improve government services, and drive innovation in sectors like transportation, healthcare, energy, and infrastructure.
- Investment and Funding: The UAE government has set up investment funds and venture capital programs to support technology startups and attract international investors. Examples include the Mohammed bin Rashid Innovation Fund and the Abu Dhabi Investment Office.
- Technology Hubs and Events: The UAE hosts various technology-focused events, conferences, and exhibitions like GITEX Technology Week and Dubai Expo 2020, which attract global technology companies and provide networking and business opportunities.
- Digital Transformation Initiatives: The UAE government has been actively driving digital transformation across sectors, including government services, healthcare, education, and transportation. This creates a demand for IT services and solutions, benefiting the IT industry.
Q5. We would like to know your insights on some of the major players operating in the UAE ICT Market.
Answer. Alibaba USP: Alibaba is known for its extensive e-commerce platform, Alibaba.com, which connects businesses and consumers worldwide. It also offers cloud computing services through Alibaba Cloud, known as Aliyun.
ORACLE USP: Oracle is known for its comprehensive suite of enterprise software and services, including its flagship database products, Oracle Database, and its cloud platform, Oracle Cloud.
Microsoft USP: Microsoft's main products and services include the Windows operating system, Office productivity suite, Azure cloud platform, and various enterprise software solutions.
MORO USP: MORO focuses on delivering end-to-end IT services and digital solutions tailored to the needs of the Middle East market, providing expertise in areas such as cloud computing, infrastructure management, and cybersecurity.
Etisalat USP: Etisalat combines its telecommunications infrastructure with various IT services, including cloud computing, cybersecurity, and digital transformation solutions, catering to the needs of businesses and individuals.
Ali Baba Partnerships:
Collaboration with Starbucks: Alibaba partnered with Starbucks in 2018 to provide a seamless digital experience to Chinese customers through the Starbucks app and Alibaba's platforms.
Partnership with Marriott International: In 2017, Alibaba and Marriott International announced a joint venture to provide personalized travel experiences for Chinese travelers.
Strategic alliance with Ford: Alibaba and Ford announced a strategic partnership in 2017 to explore new retail opportunities and improve the car-buying experience in China.
Ali Baba Mergers and Acquisitions:
Acquisition of Lazada: In 2016, Alibaba acquired a controlling stake in Lazada, a leading e-commerce platform in Southeast Asia, to expand its presence in the region.
Investment in Paytm: Alibaba has made significant investments in One97 Communications, the parent company of Paytm, a popular mobile payment and e-commerce platform in India.
Acquisition of Ele.me: In 2018, Alibaba acquired Ele.me, a major food delivery platform in China, to strengthen its position in the online food delivery market.
Investment in Ant Financial: Alibaba owns a significant stake in Ant Group, formerly known as Ant Financial, a leading financial technology company in China.
Oracle and Microsoft Cloud Partnership: In 2019, Oracle and Microsoft announced a partnership to enable their customers to connect their cloud platforms, Azure and Oracle Cloud, seamlessly.
Oracle and Deloitte Collaboration: Oracle and Deloitte have collaborated on various initiatives, including cloud services, digital transformation projects, and industry-specific solutions.
Partnership with Salesforce: In 2013, Oracle and Salesforce announced a partnership to integrate their cloud platforms, enabling customers to connect Salesforce CRM with Oracle's cloud-based applications.
Oracle Mergers and Acquisitions:
Acquisition of Sun Microsystems: In 2010, Oracle acquired Sun Microsystems, a leading provider of hardware and software products, including the Java programming language.
Acquisition of PeopleSoft: In 2005, Oracle completed its acquisition of PeopleSoft, a major enterprise software company, after a lengthy acquisition battle.
Acquisition of NetSuite: In 2016, Oracle acquired NetSuite, a cloud-based software company specializing in enterprise resource planning (ERP) solutions.
Acquisition of BEA Systems: In 2008, Oracle acquired BEA Systems, a leading provider of middleware software, to strengthen its position in the middleware market.
Microsoft and Adobe Partnership: In 2016, Microsoft and Adobe announced a strategic partnership to integrate their cloud services, Adobe Marketing Cloud and Microsoft Dynamics 365, to provide better customer experiences.
Partnership with LinkedIn: In 2016, Microsoft acquired LinkedIn, the professional networking platform, and established a partnership to integrate LinkedIn's services with Microsoft's productivity tools and services.
Collaboration with SAP: Microsoft and SAP have collaborated on various initiatives, including integrating their cloud platforms and providing joint solutions for enterprise customers.
Microsoft Mergers and Acquisitions:
Acquisition of GitHub: In 2018, Microsoft acquired GitHub, a web-based hosting service for version control and collaboration on software development projects.
Acquisition of Skype: In 2011, Microsoft acquired Skype, a popular communication platform, to enhance its presence in the voice and video communication market.
Acquisition of Mojang (creator of Minecraft): In 2014, Microsoft acquired Mojang, the Swedish game developer behind the popular game Minecraft.
Acquisition of Nokia's Devices and Services Division: In 2014, Microsoft acquired Nokia's mobile phone business, which included its devices and services divisions, aiming to expand its presence in the mobile market.
Collaboration with Huawei: Etisalat has collaborated with Huawei, a leading telecommunications equipment provider, on various initiatives such as 5G network deployment and digital transformation projects.
Partnership with Ericsson: Etisalat has partnered with Ericsson, a multinational networking and telecommunications company, for the deployment of advanced network technologies and solutions.
Strategic alliance with Mobily: Etisalat and Mobily, a Saudi Arabian telecommunications company, established a strategic partnership to explore joint opportunities and enhance their network capabilities.
Etisalat Mergers and Acquisitions:
Acquisition of Atlantique Telecom: Etisalat acquired Atlantique Telecom, a telecommunications operator with operations in several West African countries, in 2005 to expand its presence in the African market.
Acquisition of Maroc Telecom: In 2014, Etisalat completed the acquisition of a majority stake in Maroc Telecom, the leading telecommunications company in Morocco, to strengthen its presence in North Africa.
Acquisition of PTCL: Etisalat acquired a majority stake in Pakistan Telecommunication Company Limited (PTCL) in 2005, marking its entry into the Pakistani market.
Collaboration with VMware: AWS and VMware announced a partnership in 2016 to provide customers with a hybrid cloud solution, enabling VMware workloads to run on AWS infrastructure.
Strategic alliance with Salesforce: AWS and Salesforce announced a partnership in 2016 to integrate their respective services, providing customers with enhanced cloud capabilities and integration options.
Partnership with Microsoft: In 2019, AWS and Microsoft announced a partnership to enable interoperability between their respective AI platforms, Amazon Alexa and Microsoft Cortana.
AWS Mergers and Acquisitions:
Acquisition of Annapurna Labs: In 2015, AWS acquired Annapurna Labs, an Israeli semiconductor company, to enhance its data center infrastructure and develop custom chips for its cloud services.
Acquisition of Elemental Technologies: In 2015, AWS acquired Elemental Technologies, a software-defined video solutions provider, to enhance its video processing and delivery capabilities.
Acquisition of Cloud Endure: In 2019, AWS acquired Cloud Endure, a cloud migration and disaster recovery company, to further strengthen its capabilities in these areas.
Partnership with Salesforce: In 2017, Google and Salesforce announced a partnership to integrate their respective cloud services, Google Cloud Platform and Salesforce's CRM platform, to enhance customer experiences and productivity.
Collaboration with Intel: Google and Intel have collaborated on various initiatives, including optimizing Google Cloud Platform for Intel processors and collaborating on open-source projects.
Google Mergers and Acquisitions:
Acquisition of YouTube: In 2006, Google acquired YouTube, the popular video-sharing platform, to enhance its online video capabilities and expand its reach in the digital media space.
Acquisition of Motorola Mobility: In 2012, Google acquired Motorola Mobility, the mobile devices division of Motorola, primarily for its patents and to strengthen its position in the mobile industry.
Acquisition of Nest Labs: In 2014, Google acquired Nest Labs, a company specializing in smart home products, to enter the smart home market and develop connected devices and services.
Acquisition of Fitbit: In 2021, Google completed its acquisition of Fitbit, a wearable fitness technology company, to expand its presence in the wearables market and enhance its health and fitness offerings.
Abu Dhabi Department of Health: G42 partnered with the Abu Dhabi Department of Health to establish a state-of-the-art COVID-19 testing laboratory and provide advanced diagnostics solutions during the pandemic.
Israeli Ministry of Health: G42 collaborated with the Israeli Ministry of Health to jointly develop and implement healthcare research and technology projects.
Oxford Nanopore Technologies: G42 partnered with Oxford Nanopore Technologies, a UK-based genomics company, to bring advanced genomics technologies to the Middle East region.
Note that Etisalat and G42 acquired Khazna Data centers
Ken Research Private Limited
Ankur Gupta, Director Strategy and Growth