MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

Despite the rise, organizations are becoming more cautious with their IT expenditures, according to an expert. Shutterstock
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Updated 18 June 2024
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MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

RIYADH: Information technology spending in the Middle East and North Africa region is set to reach $193.7 billion in 2024, a 5.2 percent increase from the previous 12 months, according to a new report. 

In its latest MENA IT Spending forecast, US-based consulting firm Gartner stated that while the outlay in the sector is set to increase, it will be at a slower rate than the 6.6 percent annual rise recorded in 2023.

This comes as tech startups based in the region secured $429 million in funding in the first quarter of the year. Additionally, MENA saw around $1 billion in tech commitments by venture capitals during the first six months of 2024.

Earlier this year, global investment manager Investcorp dedicated $500 million for growth stage tech companies in the region, while venture capital firms Singaporean Golden Gate and UAE’s Polynome Group both dedicated $100 million each for MENA-based tech investments.

Miriam Burt, managing vice president analyst at Gartner, noted that the slowing growth of expenditure in the IT sector is being caused by factors beyond the sector itself.

“While inflation in the region has eased, organizations in the Middle East continue to face challenges due to ongoing uncertainty caused by oil production cuts, downside economic risks linked to regional geopolitical tensions, as well as supply chain disruptions in key shipping routes,” she said.

“As a result, local organizations are becoming more cautious with their IT expenditures,” Burt added. 

Data center spend to fall




Data centers have been the focus of spending in recent years. Shutterstock

The report stated that despite experiencing growth in 2023, spending on data center systems is projected to decline by 0.3 percent in 2024, reflecting a shift toward alternative capabilities. 

Data center system expenditures are set to drop from $4.82 billion in 2023 to $4.80 billion in 2024. 

The systems in data centers include servers, external controller-based storage, and enterprise network equipment. 

“This is due to the rise in demand of alternative options such as software-defined storage, hyper-converged infrastructure software, and the ‘storage as a service’ model,” said Burt. 

MENA IT services spending is expected to record an increase of 9.6 percent in 2024 to reach $19 billion, up from $17.3 billion last year. 

“IT leaders in the MENA region are, in the first instance, spending more on professional and consulting services to prepare their businesses for cloud migration, AI (artificial intelligence), generative AI, and IoT (internet of things) implementations, and secondly, taking advantage of the data monetization opportunities resulting from the convergence of these technologies,” Burt added. 

“Security remains a key area for IT services spending, as well as the increasing purchase of products, services, and tools through ‘XaaS’ (Anything-as-a-Service) consumption models – both contributing to the overall growth of this segment,” she added. 

Demand drop of new devices




Shutterstock

Device spending is expected to decline by 4.5 percent in 2024 due to uneven demand for newer devices, such as mobile phones, in different countries within the MENA region. 

The subsector is set to drop from $28.3 billion recorded in 2023 to $27 billion this year. 

Software is set to see the highest growth in 2024, with spending forecasted at $15.2 billion, up from $13.5 billion in the previous 12 months. 

Communications services are expected to account for the bulk of 2024’s IT spending, with $127.5 billion in expenditures, up from $120 billion in 2023. 

“CIOs (chief information officers) in the MENA region are expected to increase their spending on cloud services. While AI/GenAI has some influence on cloud services spending, it is not expected to have an immediate and significant impact on IT spending levels in MENA in 2024,” said Eyad Tachwali, senior director advisory at Gartner. 

“Regional CIOs’ focus today is primarily on everyday lower-cost use cases rather than on costly game-changing AI,” he added. 

Furthermore, the report stated that global hyperscalers, which have the ability to offer extensive infrastructure for storage and computing facilities for AI and GenAI, are accelerating investments in in-country data centers, particularly world-class green data centers. 

“Some have launched sovereign cloud services tailored to the unique needs of specific Gulf Cooperation Council markets,” Burt said. 

Gartner’s IT spending forecast methodology relies heavily on rigorous sales analysis by over a thousand vendors across the entire range of IT products and services. 

On a separate note, other analysts state that Saudi Arabia is the fastest-growing IT market in the Middle East, Turkiye, and Africa. 

Jyoti Lalchandani, regional managing director of research firm IDC, said wider information and communication technology market spending is expected to reach $37.5 billion by the end of 2024. 

The comments were made during the ICT Indicators Forum hosted by the Saudi Ministry of Communication and Information Technology alongside the Saudi Communications, Space, and Technology Commission in Riyadh on April 24.  

It was further noted that spending in this area across the Saudi government sector would exceed $752 million by the end of 2024 as innovative technologies become foundational to building an “experience economy.” 

“AI, big data analytics, IoT, and cybersecurity spending is poised for tremendous growth and will account for almost one-third of overall IT spending in Saudi Arabia in 2024. Spending on AI in Saudi Arabia will surpass $720 million in 2024, reaching $1.9 billion by 2027 at a CAGR (compound annual growth rate) of 40 percent – half of that will be on interpretative AI,” Lalchandani said. 

“We have seen Saudi Arabia emerge as a hub for the cloud,” he added, with spending on public cloud forecasted to surpass $2.4 billion in 2024 and reach $4.7 billion by 2027.  

Software-as-a-Service will account for more than 50 percent of the 2024 spending. 

IDC further highlighted that spending on cybersecurity alone will surpass the $1 billion mark in 2024 and reach $1.6 billion in 2027. 

“I do remember a few years ago, the cybersecurity market was estimated at about $500 million. Today, we’re talking about literally double that. We’re talking about $1 billion in the cybersecurity industry, and to hear it be called the fastest growing market in the region is really a testament to our beloved nation,” Salman Faqeeh, CEO of Cisco Saudi Arabia, said while speaking on a panel during the forum. 


Flydubai says expansion plans have been hindered by Boeing delays

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Flydubai says expansion plans have been hindered by Boeing delays

DUBAI: Budget carrier flydubai’s fleet expansion plans have been hit by delays to Boeing’s aircraft delivery schedule, the Dubai airline said on Monday.
Flydubai said it is “evaluating its route development plans and potential frequency revision across the network due to a lack of new aircraft deliveries over the next few months.”
The statement added that Boeing’s delivery delays in recent years have placed substantial pressure on the airline and its ability to plan for its projected growth in the wake of strong post-pandemic demand for travel.


Saudi Arabia, Egypt to boost energy cooperation after high-level meeting

Updated 5 min 10 sec ago
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Saudi Arabia, Egypt to boost energy cooperation after high-level meeting

  • Ministers discussed various aspects of cooperation between the two countries

RIYADH: Saudi Arabia and Egypt are set to boost energy cooperation following a meeting between top officials to expand ties in petroleum, gas, electricity, renewable energy, and hydrogen. 
On July 21, Saudi Minister of Energy Prince Abdulaziz bin Salman met with Egypt’s Minister of Petroleum and Mineral Resources Karim Badawi and Minister of Electricity and Renewable Energy Mahmoud Esmat at his ministry’s headquarters in Riyadh. 
During the meeting, the ministers discussed various aspects of cooperation between the two countries, aiming to align their efforts with the shared visions of their leaderships and the ambitions of their peoples, according to a statement from the Saudi Energy Ministry. 


National Housing Co. partners with Korean firm Naver to boost smart city solutions in the Kingdom  

Updated 38 min 49 sec ago
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National Housing Co. partners with Korean firm Naver to boost smart city solutions in the Kingdom  

RIYADH: The Saudi real estate sector is set to embrace advanced technologies after the National Housing Co. partnered with Korean tech firm Naver Corp. to enhance smart city solutions. 

The collaboration, formalized in the presence of Housing Minister Majid Al-Hogail, aims to integrate Digital Twin technology, utilizing Naver’s advanced cloud system.  

The technology mirrors real-world entities in a virtual environment, supporting real-time decision-making through data analysis, prediction, and optimization. It will be cloud-based, with a focus on three-dimensional digital modeling. 

This move aligns with Saudi Arabia’s Vision 2030 goals, aiming to use this technology for urban planning and flood predictions while advancing smart city development.

The integration of Digital Twin technology is part of the Kingdom’s broader strategy to modernize its real estate sector and adopt cutting-edge solutions to enhance urban management and infrastructure efficiency. 

Minister Al-Hogail highlighted the significance of this partnership, stating on X that the deal opens the doors for innovation in digital solutions. “Together, we achieve strategic visions for the municipalities and housing sectors in our relentless pursuit of sustainable smart cities,” he said. 


Oil Updates – prices rise as investors look for signs US rate cuts to begin

Updated 22 July 2024
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Oil Updates – prices rise as investors look for signs US rate cuts to begin

TOKYO: Oil prices rose in early trade on Monday as investors keep a lookout for signs of a rate-cut cycle expected to begin as soon as September, according to Reuters.

Brent crude prices were up 48 cents, or 0.57 percent, at $83.10 a barrel by 2:35 a.m. Saudi time, and US West Texas Intermediate crude futures rose 42 cents, or 0.52 percent, to $80.55.

“Since the June FOMC meeting, inflation and labor market data have signalled that disinflation and labor market rebalancing are in place, which we expect will allow the Fed to begin its interest rate cutting cycle in September,” ANZ Research said in a note.

The US Federal Reserve will next hold a Federal Open Market Committee meeting on interest rates on July 30-31, at which investors expect the Fed to keep the rates unchanged, while looking for any signal of a cut coming later in the year.

On the political front, US President Joe Biden abandoned his reelection bid on Sunday under pressure from fellow Democrats and endorsed Vice President Kamala Harris as the party’s candidate to face Republican Donald Trump in November.

Slower-than-expected economic growth of 4.7 percent for China in the second quarter sparked concerns last week over the country’s demand for oil and continues to weigh on prices.

On Sunday, China released a policy document outlining known ambitions, from developing advanced industries to improving the business environment, with analysts spotting no sign of imminent structural shifts in the world’s second-biggest economy.

The 60-point document’s publication follows last week’s closed-door meeting of the Communist Party’s Central Committee that takes place roughly every five years. 


Global AI Summit in Riyadh to host top-level discussions on AI impact 

Updated 22 July 2024
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Global AI Summit in Riyadh to host top-level discussions on AI impact 

  • The event, organized by the Saudi Data and AI Authority, will focus on one of today’s most pressing global issues — AI technology

RIYADH: Saudi Arabia will welcome economic policymakers, major technology and artificial intelligence companies, international thought leaders, and heads of international organizations to Riyadh this September as the Global AI Summit returns for its third edition.

The event, organized by the Saudi Data and AI Authority, will focus on one of today’s most pressing global issues — AI technology — and will attempt to find solutions that “maximize the potential of these transformative technologies for the benefit of humanity,” a statement released Sunday said.

The third edition of the event will be held at the King Abdulaziz International Conference Center from Sept. 10 to 12 under the patronage of Saudi Crown Prince Mohammed bin Salman in his capacity as chairman of the board of directors at SDAIA, the statement added.

The GAIN Summit will take place amid increasing concerns about the impact of AI technologies and will reaffirm the Kingdom’s commitment to supporting international efforts aimed at enhancing human welfare in the face of the challenges associated with developing technology.

GAIN 2024 will focus more on AI than its previous editions in 2020 and 2022, with topics including innovation in the sector, key developments shaping a better future for AI, and fostering a supportive environment for human resources in the field.

Other topics include AI at local and global levels, the complementary relationship between humans and AI, business leaders in AI, the relationship between data and applications, GenAI, AI ethics, AI processors and infrastructure, and AI and smart cities.