Firms ramp up Saudi tech investments
12 February 2025
The first two days of Leap, Saudi Arabia's annual technology conference in Riyadh, saw international and local firms commit or pledge at least $14.9bn of investments in the kingdom.
The majority of these investments, some of which were consolidated from previous announcements, are geared towards building various cloud-based, digital infrastructure to enable the transformation of the kingdom's economy in line with Vision 2030.
These investments for the most part will cover the construction and operation of advanced data centres that can host artificial intelligence (AI) and machine learning models or applications catering to various industries and economic sectors as well as to government and state-owned entities.
Upskilling will play a key part, given the kingdom's goal to equip young Saudis with appropriate skills that match the labour demand of this nascent industry and to decrease unemployment levels.
The upskilling part will probably be the most important policy focus to ensure these projects yield expected returns for the investors and investee.
It is understood the kingdom is pursuing a multi-pronged approach in terms of people or skills development. It is luring back Saudis who have had successful careers in the field of technology and entrepreneurship abroad, and senior executives of established companies to relocate to the kingdom.
There is a strong push for universities to offer degrees related to computer sciences and engineering, with female Saudis understood to outnumber their male counterparts in terms of enrolment in those courses.
The main challenge, which the upskilling programmes need to address urgently, is filling up the mid-manager positions as the government entities and the private sector endeavour to implement their AI strategies.
The broadening appeal of the tech sector as an investment destination, perhaps unprecedented since the dot com bubble of the 2000s, not least due to AI's potential to create new revenue streams and improve efficiencies, is likely to be sustained over the coming years.
The world's largest hyperscalers such as Amazon Web Services, Google or Microsoft, or established tech companies such as Lenovo or Salesforce are not the only ones making a major foray into the Saudi market.
Local players such as the Abunayyan Group-backed data centre operator DataVolt, local tech pioneer Al-Moammar Information Systems, or major contracting firms like Alfanar Company are making their entry into a sector that offers a different set of risks and returns compared to their core industries such as utilities, traditional software applications or even construction.
The growing interest by private equity firms such as KKR or Saudi Fransi Capital to invest in data centres and AI-related assets is also set to further accelerate as they try to match the growing appetite of key local stakeholders to reap the early benefits of a what is hoped to be the region's largest digital economy.
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