IT spending in Saudi Arabia set to rebound to $27.7bln in 2021

RIYADH: Spending on IT systems in Saudi Arabia is expected to rebound in 2021, after a slight decrease in 2020 as a result of the economic impact of the coronavirus pandemic, according to a forecast by US-based research firm Gartner.

According to a new report, $27.593 billion was spent on IT in the Kingdom in 2020, a decline of 1.6 percent compared to 2019. However, the figure is expected to grow by 2.1 percent year-on-year in 2021 to $27.734 billion, and by 5.1 percent in 2022 and 5.2 percent in 2023.

Despite the overall decline last year, a breakdown of the figures showed that a push by companies to digitalize their systems and a spike in online activity led to increased demand for data centers. The total spent in this sector rose 8.7 percent year-on-year to $965 million in 2020. However, this was offset by a decline in communication services spending — the largest sector — which dropped 2.2 percent to $17.570 billion. This sector will improve in 2021 but is not forecast to make a full recovery until 2022, the report said.

Spending on IT devices in the Kingdom is also forecast to see a surge in spending in 2021, up 7.1 percent to $4.687 billion. In parallel with this, software spending is expected to grow 9.1 percent in 2021 to $1.4 billion and continue to grow, with double-digit growth over the next few years, rising 12.4 percent in 2022, 11.5 percent in 2023 and 2024 and 12.2 percent in 2025.

“Most industries in Saudi Arabia will recover to 2019 spending levels by the end of this year,” a Gartner analyst told Arab News. “Notable exceptions are retail, manufacturing and wholesale trade. Once the retail industry adjusts to the new reality, IT spending growth jumps to 10.5 percent in 2022 and maintains the highest growth rate of all industries through 2025. Manufacturing will wait longer for a sustained global trade recovery before investing heavily in IT — 2019 levels do not return until 2023.”

Across the Middle East and North Africa (MENA), Gartner said that IT spending is projected to total $171 billion in 2021, a year-on-year increase of 4.5 percent.

“IT projects were either put on hold or canceled in MENA because of COVID-19. In 2021, as the situation in the region improves and businesses understand the true value of a resilient digital ecosystem, IT spending will return to a pre-pandemic growth rate,” John-David Lovelock, research vice president at Gartner, said in a press statement.

“In the first quarter of 2021 projects such as ‘remote work visas,’ ‘Smart Dubai 2021,’ and other economic policy regulations were launched. These are expected to boost technology investments in the region,” he said.