ScrollHow Can National Tech Companies Leverage Growth for the Middle East’s Economy?
Summary
The global economy is rapidly shifting from traditional businesses to digital and tech enterprises. And in the Middle East, especially Saudi Arabia, IT outsourcing is being hailed as the next big thing. The tech industry holds the future of the Middle East’s economy and the IT companies in Saudi Arabia can take the lead in the digital disruption by developing their business in the right direction.
Adaption to Survive & Grow
The adaptability of the latest trends has always determined the success rate of businesses. While innovation stands at the top, the adaption of innovative trends and technologies has helped many companies shift the horizon and landscape of business. Those who were even remotely investing in the new paradigms have overtaken business giants in the tech industry.
The commercial playing field is fast-paced and merciless for stagnant thought leaders and companies[i]. And the Middle Eastern region heavily relies on its petroleum, mining, and tourism industry currently[ii]. It may be important to note that the Gulf countries have already begun their transformation into business havens. The governments have also focused on the tech industry particularly, anticipating the treasure of digital transformation.
Vision 2030
When it comes to Information Technology companies in Saudi Arabia, the first and most critical initiative for their convenience is Vision 2030[iii]. Saudi Arabia is second to none in its game plan to shift their dependence from oil and petroleum to the IT sector. Their goal to diversify their national economy is powered by their vision to become the leaders in the global IT market.
Untapped Potential
According to Datareportal’s Digital Report of 2023 for Saudi Arabia, the internet penetration in the country stood at 99.0% with almost 36.31 million internet users[iv]. The government has launched initiatives worth well over $1.2 billion for digital upskilling and job opportunities in Information Technology, Artificial Intelligence, Cybersecurity, Robotics, etc.[v]
It is speculated that Information Technology in Saudi Arabia alone is worth around $119 billion if the national tech companies can rise to the levels of advanced digital tech champions present around the globe[vi].
Saudi Arabia is on the list of digital adopters and shows a lot of promise as the leader of the IT industry in MENA.
Scaling the Digital Skyscrapers
To become regional and global leaders in the IT sector, tech companies in Saudi Arabia need to transform into tech savants. A solid portfolio, scaling vertically and horizontally, and geographic expansion are key to becoming authoritative leaders in MENA. The digital adopters need to become digital disruptors that make a difference in the tech industry.
In the present scenario, we see that some technological progress is far more impactful than others such as the development in the fields of AI and cloud services. In comparison, certain measures need to take place because they are a crucial need of time[vii]. Cybersecurity is on the rise in the GCC and despite the best efforts of the experts, there is a huge loss of data and resources being incurred to organizations because of cyber-attacks.
Similarly, if we take a look at digital solutions, emerging technologies, digital applications, and platform-specific development are paramount to the digital transformation of traditional IT companies in Saudi Arabia. There is a prediction of 24% annual market growth for digital solutions in the GCC from 2020 to 2025. However, traditional IT services are estimated to have a 10% per annum market growth only.
These projections depict that Saudi Arabia alone can create around 340,000 job vacancies if the country successfully reaches the advanced digital status of digital disruptors.
How to Become a Tech Trailblazer
For Information Technology companies in Saudi Arabia to grow into tech giants, there are several strategies and initiatives that can be adopted with suitable adjustments according to the actual service and product deliveries being offered.
1. Foundations Of Success
In the first stage, companies need to start building foundations for success in the form of a credible portfolio as well as the value proposition of their services and products in the market. To further explain what it means:
a. Talent Acquisition
Acquiring the future of the industry in the form of top talent and leaders who can drive the process of enhancing the capability of the company individually and the whole region collectively by hooking in business prospects from the global market.
b. Minimum Viable Products
Stepping up the game of product development by focusing on the development of Minimum Viable Products (MVPs) for a specific target audience or market segment. MVPs are offered with basic core functionalities that have minimal features, can be developed rapidly, and it is further upgraded or modified based on the iterative approach.[viii]
MVPs are not technological prototypes. In reality, they may not even be developed but they can be used as a validation criterion for a business idea. According to Eric Ries, founder of Lean Startup methodology, MVP is the elixir of proven customer knowledge with minimum effort.
Making MVPs for specialized portfolios means narrowing down your target audience to the point that the product can be easily developed or dumped based on the audience's reaction. In case there is a need for further development, the investment in its features and functionalities is done with minimal risk. The final product is still ensured to be useful exactly as intended for the target customers.
c. Core Functionalities
Oftentimes, companies focus on their core capabilities till their growth becomes stable. In order to deliver the performance needed for extraordinary growth, the core capabilities need to improve as well. The cycle of innovation usually starts from the strength of a company’s core functionalities.
d. Resilient Corporate Structure
On the topic of the base of success, companies require a tenacious working strategy in the face of obstacles, challenges, and changes in the market. Establishing an organizational framework that can withstand and adapt to uncertainties is pivotal to becoming a tech champion.
With the “Great Resignation” and other disruptions causing chaos globally, it is essential for companies to treat their Risk Management departments with care. Redundancy, contingency plans, decentralization of decision-making, robust communication, talent development, financial prudence, customer-centricity, and long-term vision can help organizations navigate through crises and transformations while maintaining stability and growth.[ix]
2. Expansion
To go upwards and beyond, the second stage involves scaling the business offerings and capturing a greater market volume beyond national or regional markets. Scaling up is much different from physical or geographical expansion as it can be used in other dimensions as well.
Technological upgradation, expansion of the offerings, market expansions, enhanced customer support to match the scale-up, branding, and marketing are key factors in the scaling of a business.
Here are some details of the second stage of the journey of tech champions.
a. Synergies
With different people onboard, it is hard to identify the right synergy between people in the organization. With different chemistries and psychologies, people can either perform very well or very poorly while working together. To bring a company to utilize its resources to the fullest, there is a need to determine the kind of synergies needed in the business.
With the scaling up of enterprises, there needs to be a supportive environment for the development of innovative intellectual property.
b. Geographic Footprint
Different means of expansion are required to meet different ends. To make things easier, companies can choose whatever means necessary for business augmentation. Strategic partnerships, acquisitions, and direct representation are a few options.
3. Global Reach
In its final stage, companies become tech champions by using their geographic footprint to get a global reach. Diversification and monetization at a global scale are a must to become a tech disruptor.
The diversification leads to a portfolio that showcases various offerings.
Apart from these, there are a few factors that can determine the success of company while following these three stages.
- Sustainable value creation and clear identity
- A successful go-to-market formula
- Agile operating model
- Effective talent system
- Government policies and regulations
i. Sustainable value creation and clear identity
A company cannot survive and grow without a clear identity. It needs an identity to build a candid view of its ability to compete in any market, most effectively. Some companies try to be a master of all when their audience can gauge the extent of their truth. The world of technology ecosystems is expanding too rapidly for any company to be able to do everything for everyone.
For a tech company in Saudi Arabia, they need to establish a competitive advantage over their target market. A company should start by defining its archetype, value chain characteristics, the way its business model would operate, and how their products become different from each other and all other products in the market.
No matter what archetype a company chooses, they need to establish the path of their company accordingly. While some companies focus on innovation and superior quality, others emphasize cost differentiation.
Archetypes that require more financial investment often lead to higher risk probabilities. But their returns are equally great. Operating expenses can offer sustainable financial performance.
ii. Successful go-to-market formula
As discussed above, companies adopt archetypes. According to their archetype, these companies can choose multiple go-to-market models. Any intellectual property of these companies is crafted by partnerships with other companies, acquisition from third parties, or through self-development. For a product-oriented tech company, Managing intellectual property is their daily bread and butter.
Service providers provide professional and managed services instead of selling their intellectual property. Adopting a customer-centric approach and frictionless customer experience, tech companies these days offer zero-touch services and end-to-end digital transformations for their customers.
iii. Effective talent system
Acquiring the right talent is becoming increasingly difficult. According to the World Economic Forum, the digital economy can create millions of new technology jobs globally by the year 2025.
The digital nomads and freelancers can provide a quality talent pool for these companies and the “Great Resignation” will linger if companies don’t consider their talent valuable.
iv. Agile operating model
With increased adoption rates for project management methodologies, companies are trying to get a hold of their operating models based on the same methodologies. The agile methodology is one of the most famous and has become assimilated into the working system of many companies.
The usage of AI, IoT, and Cloud services has made many processes indefinitely smoother than before. Centralized DevOps, incubators, shared services, and cyber security are a few functionalities that companies have started benefiting from, all thanks to centers of excellence.
v. Regulations and policies
GCC governments are taking the necessary steps to introduce incentives, programs, and policies to ensure that they build tech companies in their homes. The governments need to find the right mix of supporting their own tech champions, attracting global tech brands, and ensuring fair market practices for new startups.
Stimulation of these companies through digitization programs and giga-projects to create demand and supply systems for tech services and products.
The promotion of large-scale deployment of new and latest technologies across the board has become the need of time. R&D investment seems to be on the rise and needs to be pushed further by public policies. The smooth transition in the global market will not only bring an influx of foreign exchange but globally competitive talent as well.
The Saudi government needs to modernize its capital market laws and venture capital ecosystem to level the playing field for startups and entrepreneurs.
Conclusion
With the initiatives being placed by the government, technology development and investment companies in Saudi Arabia can take these opportunities to climb the ladder of the advanced digital status of industry disruptors. Saudi Arabia needs to transform their position in the global market. It requires a lot of concentrated effort by national companies to take the lead while the governments facilitate them in a fair manner.
