RIYADH: Saudi Arabia’s technology sector could see an increase in operating profit of SR15 billion ($4 billion) by 2028 with the adoption of generative artificial intelligence, a new report showed.
An analysis by global consulting firm Strategy& Middle East suggests that a 15 percentage point margin growth is attainable if tech companies develop and commercialize new GenAI use cases and meet the demand for advanced hardware and infrastructure.
Aligned with its Vision 2030 goals, Saudi Arabia aims to position itself as a regional technological hub. The Saudi Data and Aritifical Intelligence Authority, established in 2019, is driving this agenda to elevate the Kingdom as a global leader in data-driven economies.
The Kingdom will host the third Global AI Summit in Riyadh from Sept. 10 to 12, focusing on ethical AI development and its applications in various sectors, including transportation, urban design, mental health, and resource management.
Hani Zein, partner with Strategy& Middle East, said: “Advancements in GenAI are expected to impact all sectors in Saudi Arabia. Our analysis indicates that the telecom, media and entertainment, and technology sectors could achieve the highest potential margin upside by adopting GenAI.”
He added: “This presents a prime opportunity for companies to reassess their strategies and explore new avenues for growth and innovation.”
The report highlighted that GenAI will enhance research and development capabilities, streamline solution design, and automate the lead-to-cash lifecycle for tech firms, potentially reducing costs by up to 30 percent.
“These efforts can help to accelerate the development of local intellectual property and solidify Saudi Arabia’s position as a hub for national tech champions,” said Fawaz BouAlwan, partner with Strategy& Middle East.
“GenAI can be the essential catalyst in accelerating this transformation, creating major growth opportunities, and enhancing internal capabilities,” he added.
The analysis said that the media and entertainment sector in Saudi Arabia is projected to achieve a 14 percentage point margin growth by 2028, increasing its operating profit by up to SR6 billion.
The report underscores GenAI’s potential to boost original Arabic content creation, hyper-personalize customer experiences, and enhance operational capabilities.
“With an advertising spending per capita of just up to SR240 in Saudi Arabia, the research also suggests there is considerable potential to better monetize their customer base,” the report said. “This would further accelerate the transformation of the Kingdom as a media and entertainment hub, aligned with its national agenda.”
The telecom sector is expected to achieve a 12 percentage point margin growth by 2028, raising operating profit by up to SR11 billion.
The report added that GenAI is anticipated to help telecom operators differentiate themselves and navigate challenges related to monetization and price wars.
“To successfully embrace GenAI, companies must adopt a value-driven approach that delivers tangible benefits beyond technological innovation,” said Ali Ghaddar, principal with Strategy& Middle East.
“This begins with synchronizing GenAI initiatives to business goals, performing thorough cost-benefit analyzes, and driving operational readiness throughout the organization,” he also. said.
Ghaddar emphasized the importance of a phased rollout, governed by strong operational guardrails and precise measurement, for successful implementation.
