90%

Procent mieszkańców Kuwejtu posiadających smartfona

5

Liczba godzin spędzanych przez mieszkańców Arabii Saudyjskiej na mediach społecznościowych dziennie

PROGNOSIS ON THE GROWTH OF THE IT SECTOR IN THE MIDDLE EAST

New technologies

Middle East’s population is becoming younger, unlike Europe’s. Average age of the people living in this region stays at 26.8 years. Over 50% of MENA population is under 24. Large numbers of young people influence the trends. There is a growing market for new technologies and software.

Young Arabs use social media frequently. In 2019 Facebook has had a 82% penetration rate in UAE. In the same year 91% of Kuwaitis older than 13 years old has had an account. The popularity of this site grows stronger year after year in the MENA region. Twitter has over 2,3 million Egyptian accounts and over 11 million in Saudi Arabia. That number rose significantly after a major investment of 300 million dollars made by the prince Waleed Bin Talal.

Covid-19 pandemic of 2020, with lockdowns, closing of the shops, restaurants and supermarkets, made people more inclined to use the online options for shopping, communication and remote working. Every country in the region registered a major increase in the usage of the mobile applications, especially Saudi Arabia, UAE and Kuwait. In March 2020 Persian Gulf announced a 883% increase of the usage of the communication platforms, 20% – of the news apps and 18% – mobile games with microtransactions systems.

E-commerce market proved to be flexible and adaptive during the time of global crisis. According to the estimates from April 2020, estimated growth of the e-commerce sector, especially due to the growing interest in electronics, clothes, accessories and furniture, is supposed to reach 308 billion USD in 2023. Although many experts and specialists argue if the changes are here to stay. The unprecedented financial crisis that will follow the pandemic and changes in the restrictions may further influence the consumer behaviour.

Popularność technologii cyfrowych wśród firm

Digital Technology

Middle East registers a growing popularity of the digital technologies not only within the group of the private users, but also companies and offices. Currently the numbers of the digitalized companies is not high – 17% in Egypt and 5% in Saudi Arabia. The statistics are rising steadily, and the need for the software meant for the management, revitalization of the existing structures and ideas is also showing. Online payment, which is mentioned in the Saudi Arabia’s Vision 2030, is aiming to increase the statistics by 70%.

Trends


IT sector in the Middle East is steadily growing. Many countries keep increasing their budgets meant for the technologies. Since 2008 the funding was made 5 times bigger, and in 2019 amounted to 207 billion USD.

The growth is mostly influenced by the Cloud, large amount of data processing, changes in the social media, new mobile phones and modern technologies such as AI, cognitive systems, robotics, virtual reality, 3D printing and blockchain.

4th Industrial Revolution

So called 4th Industrial Revolution is increasing the need for the modern IT systems in the industry. Software is among the most dynamic sectors. In 2018 it grew by 11,1% and reached the value of 6,2 billion USD.

According to the Economist Corporate Network report from 2019, 78% of the companies, that took part in the survey, claimed that digital transformation proves to be the most promising for the countries in the region, due to the existing macroeconomic and geopolitics’ issues. 4th revolution will likely influence the employment in the technology sectors. Middle East is lacking the skilled professionals such as the programmers, costumer experience designers, analytics and digital marketers.

Application software

Application software is among the sectors that are steadily and dynamically growing in the MENA region. Business and industry implement the automatization processes, whereas the popularity of the mobile phones and portable technology is rapidly increasing.

This kind of software allows for the tasks to be solved with the minimal human interaction required. It offers various kinds of facilitation for the business analysis, data management, communication with the employees, business partners and clients, management of the resources and supply chains. Applications that are used locally or through the cloud are also tied to the servers, which allows the bigger range and further improvement.

Software in the UAE, Kuwait and Saudi Arabia


UAE’s government is highly prioritising the technological advancement. Sheikh Mohammed introduced the National Innovation Strategy that aims for the changes in the design and programming. UAE is also a hub that reexports the ICT. Over 50% of all goods, that cross its borders, is later on transferred elsewhere. Local sector is relatively small, which can be seen as a major opportunity for the foreign investors.

Most of the companies that provide software in UAE work in the free zones of Dubai and transfer to the other countries in the region. Governmental funding for the ICT in 2019 was 9,9 billion USD. UAE’s IT sector is highly competitive. Investors, who face little to no challenges during the phase of entering the market, are bound to pay one-time fees. Dubai’s Internet City focuses on software, Internet, multimedia, telecommunications and IT services. Companies that provide software work mostly with developing the segment and providing new solutions.

Emirates National Oil Company (ENOC) can work as an example of using modern software for the industrial development. It introduced a cashless system of paying for gas based on RFID thanks to the cooperation with a chain of gas stations EPPCO. Other major players in the oil sector in the Gulf Region are also working towards creating and establishing software that is meant to improve the functionality of the oil plants.

Governmental support for the high technologies

Saudi Arabia has the biggest market of IT and communication in the Middle East. Saudi’s telecommunication segment amounts to 55% and IT – 51% of the general market in the region. Saudi’s Ministry of Communication and Technology introduced a ICT Strategy for the years 2019-2023, that aims for creating a modern and solid virtual architecture and supporting the technological development of the country.

In 2018 Saudi’s ICT market grew by 6% and was worth 36 billion dollars. It’s mostly due to the governmental, telecommunications, financial and oil sectors. New investments are being made, as the need for intelligent management, modernization of the infrastructure and so called “giga” projects are gaining more and more popularity. “Giga” projects serve as a way to recreate Saudi Arabia as a modern business and touristic hub in the region.

More than 90% of people in Kuwait use smartphones

In Kuwait software is most needed by the petrochemical, telecommunications and financial companies. Implemented modernization is cost effective and improves functionality. Application software is gaining speed in the private sector. 98% of Kuwait’s population uses the Internet, and 73% – social media via the smartphones.

Examples of the major international IT companies working in the Middle East:

  • Focus Softnet  Indian company established in 1991. Present on the UAE’s market since 1995. Works in Dubai, Abu Dhabi, Bahrain, Saudi Arabia, Qatar, Oman and Kuwait and mantains relationships with over 50 companies in the region, notably with: Al-Khalid Holding, Al-Rashed, Bahrain Air, G4S, Globe Group. Main focus of the company is the software packages intended for the companies dealing with management, customer service and IT.
  • SPT Group – stablished in 1989, present in Middle East since 2003. Delivers software meant for the petrochemical sector. The main focus is on optimization of production and lessening the explanation rate of the pipes.

Energy in the Gulf

All 10 Gulf countries rely on oil or gas as the primary source of power. Consequentially, all of them are reliant on the petrochemical sector and the changes in the prices of the resources. 97% of energy in UAE, Oman, Lebanon, Qatar and Bahrain comes from gas. Further digitalization processes of the oil plants are cost effective. Every year more and more companies need:

  • Inside software systems,
  • DSR (Demand Side Response) systems, which influence the behaviour of the clients and users and aim for the further safety of the energy sector,
  • Data analysis and management software,
  • The risk of cyberterrorism influences the need for the safety systems and firewalls.

Cyberterrorism

Safety

Growing digitalization in the region is inherently tied to the cyberterrorism, especially in the business sector as well as for private users. At the beginning of 2019 Gulf countries, notably UAE, had to deal with the increased number of online attacks focused on the telecommunication and petrochemical sectors, both crucial for the region. UAE, one of the most technologically advanced country in the region, is often a target for cyberterrorism.

As technology in the region further advances, the need for the firewalls will be growing in the near future. Other important aspects influencing the growth of the sector is the commercial infrastructure boom as well as growing numbers of ‘smart homes’. Finance, tourism, hospitality are new users of the electronic safety systems that use the Internet of Things and AI.

Social problems

Modern software is not meant just for major corporations. It can make life easier for billions of users every day, introducing quicker and smoother administration, medical and educational systems. The prime example of those changes in the Abu Dhabi Education Council, that allows users to register online and share timetables. Companies that are affiliated with government that allow the users to access the invoices via the Internet such as Dubai Electricity and Water Authority as well as Roads and Transport Authority that offer mobile tickets are also present in everyday life of UAE’s citizens.

The most popular mobile apps used by the Arab countries are connected with the following topics:

  • Cooking and parenting,
  • DIY,
  • News,
  • Support for the disabled (i.e. Accesible Qatar),
  • Health,
  • Entertainment (streaming of the concerts, dances, theatre – i.e. Time Out Dubai),
  • Religion – for the prayers and other elements (i.e. Salam Hajj&Umrah Guide).

Statistics shows, that the most popular types of apps in the MENA region are online and mobile gams (60% of Arab users), social media (37%), music (28%), sport (27%), education (21%), video and photography (20%), shopping (18%), health and wellbeing (16%), weather (15%), lifestyle (14%), travel (14%). More than 40% of responders claim to have more than 5 apps on their phone. The highest number of Arab apps is being used in Saudi Arabia (81% of users access them regularly) , Jordan (70%) and Egypt. 1/3 of the users who access the international apps are doing it only because the local apps were lacking something. That proves the growing need for the software development in the Arab countries.

Banking

Finance, insurance and services

Modern banks and financial institutions are more and more inclined to offer the virtual services that allow money transfers, accessing the accounts, payments and more.

More and more companies that deal with commercials, consulting, cleaning (i.e. Maid.ae), data management, PR, graphics (i.e. Digital Print Center in Qatar) are using personalized software. eCommerce sector is also growing rapidly. In January 2020 Amazon bought one of the most popular shopping platform in the region – souq.com. Growing interest in online shopping fuelled by the Covid-19 pandemic and following economical restrictions and lockdown meant more profits for the online shops. It also showed, that the sector proves to be resilient in the time of crisis and is likely to expand exponentially in the future.

Summary


Growing number of the social media users is fuelling the need for the software meant for Arab speaking users, which makes the region unique in the scale of the world. MENA populations use entertainment, educational and prayer apps. In the last few years a growing interest in the infrastructure software, that allows the companies to manage their employee’s and clients data more efficiently is also showing in the statistics.

More and more companies are working towards the implementation of the modern IT systems that are meant for the increase in efficiency and cost reduction. Middle East is a promising region for the companies who deal with this sector.