From Tradition to Innovation: The Tech Enabled Growth of Saudi Arabia’s Conventional Sectors

Saudi Arabia's conventional sectors have long been the backbone of its economy. Recently, as the country navigates its Vision 2030 economic agenda, these industries have undergone significant transformation fueled by advancements in technology. This article explores key conventional sectors of Saudi Arabia and highlights how they have embraced technology to thrive in a rapidly evolving digital economic landscape and bring forth a remarkable evolution.

1. Construction & Real Estate

Expected to tip the market value of USD 91.4 billion by year 2029, Saudi Arabia’s construction sector is experiencing an unprecedented growth marked by ambitious Giga projects and cutting edge technologies.

Besides NEOM, other prominent nationwide Giga projects include Diriyah Gate, Amaala, the Red Sea Project, Qiddiya and ROSHN. To fuel their development, KSA is heavily investing in its infrastructure projects that have been crucial in sustaining the sector's growth.

The adoption of innovative technological advancements such as AI, ML, AR, cloud computing and IoT are playing a pivotal role in shaping Saudi Arabia’s construction sector boom in several ways. This includes simplification of procurement, distribution and tracking of products and services, use of Building Information Modeling & visualisation, implementation of sustainable practices such as prefabrication & modular construction, reduction in costs, minimisation of waste and enhanced efficiency. These advancements present compelling growth opportunities for international companies to venture into KSA.

A notable example of the sector’s tech-driven progression is Wa’ed Venture, the VC arm of Saudi Aramco, co-leading a USD 52 million Series-B round in the US-based construction technology startup, Mighty Buildings.

A natural beneficiary of the construction sector boom is the real estate sector that is experiencing a remarkable rise. The deployment of advanced proptech solutions such as virtual property tours and AI-driven property management, is fueling the growth of smart buildings and use of automated property management systems in the Kingdom. Saudi Arabia taking a leap in its ranking to 38th spot in JLL’s 2024 Global Real Estate Transparency Index, is one of the prime indicators of its flourishing real estate market.

?2. Logistics & Transportation

Central to the goals set forth by Vision 2030, the logistics industry’s role is pivotal in strengthening the Kingdom’s connectivity to global markets and attracting foreign direct investment. By 2030, Saudi Arabia aims to achieve the status of global logistics hub powered by an influx of tech investments.

The state-run initiatives, NIDLP and NTLS, are working diligently towards this goal. With USD 100 billion and SAR 200 billion being invested by the two respectively, significant advancements have been made in the logistics and transportation sectors. Alongside this, the Global Supply Chain Resilience Initiative launched by Crown Prince Mohammed Bin Salman aimed at integrating local SMEs with large strategic industries, is set to attract USD 10 billion in investments giving a further boost to the logistics sector.

The presence of 221 logistics tech startups in the country as of now including Salasa, Barq, Zajil Express, OTO and SPL, points towards the sector’s burgeoning growth.

3. Manufacturing

According to the World Economic Forum, Industry 4.0 (4IR) is already changing the way KSA manages its factories and is set to turbocharge the country’s manufacturing sector. KSA is now at the forefront of implementing AI, robotics and 4IR automation technologies for transforming the manufacturing industry of the country. Central to these efforts are the government’s NIDLP and SAGIA that are aiming to further the Kingdom’s ranking in global competitiveness.

The company Alat, is an eminent example of that. Driven by a USD 100 billion direct investment from PIF, Alat is a world-class enterprise that is leading the way on the transformation of KSA’s manufacturing industry through sustainable tech. Recently, Lenovo Group Limited announced its expansion in Saudi Arabia including the establishment of a tech and manufacturing hub, as a part of its agreement with Alat.

4. Telecommunications

Expected to reach USD 18.32 billion by the end of 2024, the telecommunications sector in Saudi Arabia is witnessing robust growth. Anchored in the rapid expansion of digital infrastructure, smart city projects, increasing penetration of smartphones, growing adoption of IoT devices, and rise in demand for high speed internet and data services, the Saudi telecom sector is expected to surpass USD 22 billion in value by 2029.

Major industry players playing a central role in shaping the nation’s digital communication landscape include STC and Zain. This growth presents numerous expansion opportunities for international companies. A recent example of this is TPS Worldwide, a global provider of digital banking and payment technology, announcing its expansion into Saudi Arabia in partnership with AstroLabs. Additionally, the existence of 30 telecom infrastructure startups in the country such as TAWAL, Arabsat, Advanced Communications and Electronics Systems, and Saudi Networkers Services, is another fact indicating the sector’s growth.

The Irrefutable Role of the IT Sector in Advancing Conventional Sectors of Saudi Arabia

In all of the above mentioned advancements, the IT sector has been the linchpin. Emerging as the frontier of growth in the nation’s digital transformation navigated by Vision 2030, KSA’s tech sector presents innumerable opportunities for foreign businesses. Now is the prime time for international companies to jump on the bandwagon and expand.

The Saudi future is here already; will you be a part of it?