A manufacturing company produces industrial oil pumps equipped with sensors that monitor their performance in real-time. Through digital connectivity, the company can collect data from these sensors and analyze it remotely.
Using this data, the company can predict when a pump might fail or require maintenance, and then schedule repairs proactively, often without the need for a physical visit to the customer’s site.
This service was previously difficult to export because it depended on physical presence, specialized technician visits, or manual inspections.
Now, thanks to the large-scale digitalization of economy in Saudi Arabia, the company can offer as a remote service to customers to neighbouring countries over secure internet connections to centralized cloud-based platforms, and of course reducing costs associated with physical service visits.
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Islam Zween
Saudi Arabia has invested heavily in developing robust internet connectivity, data centers, and smart city projects, creating a solid foundation for digital service delivery. This borderless financial transaction which helps boost the kingdom’s GDP eventually is part and parcel of the digital economy.
And this leads us to new revenue models that make the digital economy really unique: the outcome-based or subscription services.
So in the case of this highly-sophisticated oil company that exports the predicative maintenance service digitally, it is paid based on the achievement of specific results or performance metrics. Instead of charging a fixed fee, the company earns revenue based on the reduced downtime or increased efficiency realized by the client.
While in the subscription services, customers (who could be foreign importers) pay a regular fee (monthly, quarterly, annually) for ongoing access to digital services. A clear example in Saudi Arabia can be drawn from the vibrant cybersecurity sector; namely, a cybersecurity firm offering a cloud-based threat detection platform to manufacturing companies in different countries.
Since digital services can be delivered remotely via internet platforms, clients in different countries do not need to invest heavily in infrastructure or incur high costs for initial setup. This makes it easier for foreign firms to adopt and integrate these services into their operations without massive upfront investments.
That’s why Saudi Arabia has committed substantial resources to develop a world-class digital network, including high-speed broadband, cloud computing facilities, and smart city technologies.
By building a robust digital backbone, Saudi Arabia not only facilitates its domestic digital transformation but also positions itself as a competitive hub for global digital service exports, unlocking new economic opportunities and driving sustainable growth in the era of Industry 4.0
Review
by Sher Mehta
Saudi Arabia’s technology and telecommunications sectors have become the biggest and fastest expanding in the region.
The digital economy reached
495
SAR billion
($132 billion) in 2024, contributing 15% to GDP.
This remarkable contribution of the digital economy to the GDP is reshaping Saudi Arabia's economic structure, creating resilience against oil price volatility, diversifying the economy, and developing key sectors such as health, education, infrastructure, and tourism.
The rising need for Internet of Things (IoT) solutions is fueling economic growth and drawing both regional and international investors.
A simple example of IoT is a smart thermostat in a home. This thermostat (device) connects to the internet and can automatically adjust the temperature based on your preferences, the time of day, or whether you're home. It can learn your schedule, turn the heating or cooling on or off remotely via a smartphone app, and even detect when you're away to save energy.
The Information and Communication Technology Sector reached
43.5
billion in 2024
According to the latest report of Vision 2030.
Saudi Arabia stands 2nd in the G20 ICT Development Index (IDI).
12.6
M Machine-to-machine (M2M) subscriptions
Each subscription represents a device or set of devices that are connected to a network and can send or receive data automatically without human interaction.
These devices are embedded with sensors, software, and connectivity capabilities that allow them to exchange data, perform automation, and coordinate actions.
The ICT sector has created
381,000
high-skilled jobs
representing approximately 3.5% of Saudi's total workforce, indicating substantial skills transformation.
Female participation in the tech workforce
35%
compared to 7% in 2017.
Internet Services
-
Internet Penetration: was 99% in 2023, compared to 98.6% in 2022 and 95.7% in 2019.
-
Data center capacity grew by 42% y/y, reaching 290.5 MW.
-
Saudi Arabia plans to launch two new multi-billion-dollar technology companies by the end of FY2025, bringing the total to eight.
E-Commerce Acceleration and Retail Transformation
Saudi Arabia’s e-commerce market, according to Research and Markets, estimated at
USD Billion in 2024
Mada card e-commerce transactions hit
billion SAR (USD 52.64 billion) in 2024, up 25.8% YoY
Consumer Spending
-
There were 40,953 e-stores registered in 2024, a 10% YoY increase.
-
191 logistics providers were supporting the e-commerce ecosystem in 2024.
The 25.8% YoY surge in Mada card e-commerce sales reflects Saudi Arabia’s rapid transition to a cashless economy - driven by NFC-enabled devices and secure, user-friendly digital infrastructure.
Logistics Revolution
There’s significant investments in logistics and warehouse automation in recent years, notably a large-scale upgrade and improvement project for Saudi Post’s storage facilities, costing more than $ 1 billion. The project included a large distribution warehouse operated by Starlinks, covering 400,000 square feet.
It is equipped with over 250 robots to automate various processes, such as sorting, packaging, and shipping orders, making the fulfillment process faster and more efficient.
E-commerce is now a key pillar of Saudi Arabia’s retail and SME ecosystem, with 91% of consumers shopping online and the sector attracting record venture capital investment in logistics, payment, and last-mile delivery startups, which are companies that specialize in completing the final step of the delivery process — getting goods from a local distribution center or warehouse directly to the customer's doorstep.
This stage is often the most complex and costly in supply chains because it involves navigating urban traffic, ensuring timely deliveries, and managing a fleet of delivery personnel and vehicles.
The growing cashless society
The financial sector has experienced significant advancements, including the launch of digital banking services. Notably, D360 has become the Kingdom’s third digital bank, marking a major step in digital banking innovation.
Additionally, Samsung Pay has been integrated with Mada, which has accelerated the adoption of contactless payment methods across the region. Consumers can now use their Mada cards, credit cards, and other payment options through Samsung Wallet for seamless in-store, online, and in-app transactions. This innovation has further reduced reliance on cash and enhanced the security and convenience of digital payments.
The fintech ecosystem has also seen remarkable growth. The number of fintech companies increased from 20 in 2019 to an impressive 261 in 2024, reflecting rapid sector expansion.
Consumer Spending
-
Consumer Spending via ATM Withdrawals (SAR Billion): 552.78 (2024)
-
Consumer Spending via POS (SAR Billion): 668.18 (2024)
-
E-Commerce using Mada Card- Sales (SAR Billion): 197.42 (2024)
-
Total Spending (SAR Billion): 1418.38 (2024)
Point of Sale (POS): This refers to the total expenditure made by consumers through point-of-sale transactions, typically involving payment cards or digital payment methods at retail locations.)
-
No. of Issued cards: 50.21 Million in 2024, compared to 47.76 Million in 2023 i.e. 5.12% y/y. Over 5-year period (2020-2024), no of issued cards surged by 46.21%.
Ahead of Schedule: Saudi Arabia’s Digital Governance Sets Global Standards
Saudi Arabia has achieved remarkable progress in digital governance, firmly establishing the Kingdom as a global leader in digital government services and surpassing its Vision 2030 targets ahead of schedule.
Saudi Arabia placed 6th globally in the UN E-Government Development Index (2024). It has jumped 25 places, ahead of the 2024 target.
Further, it is 1st regionally and 2nd in G20 in the Online Services Index and 4th globally in online service delivery. Moreover, the Kingdom is 7th globally in the E-Participation Index.
Saudi Arabia began building its digital government early on with initiatives like the Absher platform, laying the groundwork for a sophisticated digital ecosystem. Vision 2030 gave these efforts new momentum by creating the Digital Government Authority, upgrading key platforms such as Tawakkalna and Nafath, and launching the Saudi Data and AI Authority (SDAIA) to steer the country’s strategy on data and artificial intelligence.