Saudi Arabia’s position as the Middle East’s largest IT channel reseller market remains unhampered. With smart cities and other IT infrastructure projects lined up in the next few years, what prospects does Saudi offer for growth to channel partners in the region and what does it take to succeed in the region’s biggest IT market?
As the Kingdom of Saudi Arabia readies the next wave of big IT and infrastructure projects, it is not surprising that vendors, distributors and resellers have all set their sights on the Middle East’s largest IT market. This rapidly evolving ICT landscape in the Kingdom certainly has its more challenging aspects – not least the grey market and counterfeit products, which look set to be a thorn in the side of the authorised distribution channels for the foreseeable future in that country.
However, a combination of the mobile boom, opportunities created by a growing youth population with disposable income, a flourishing middle class and government investment in IT and other infrastructure projects is already proving irresistible to IT suppliers at every level. Analyst IDC expects the KSA ICT market to be worth $11.5bn in 2014 alone.
The research firm recently released the “Saudi Arabia Vertical Markets 2013 to 2017 IT Spending Forecast”, which revealed that consumer, communications, finance, and oil and gas sectors will be the biggest IT spenders during the five-year projection period.
IDC said it expects IT spending in Saudi Arabia to increase at a CAGR of 8.9% over the five-year forecast period to reach $14.2bn in 2017. The analyst firm singled out government as one sector that will be the fastest growing vertical during this period, with IT investment expanding at a CAGR of 12.9% through 2017. The other two top-performing verticals in terms of growth over the forecast period according to IDC are education (12.0%) and oil and gas (11.9%). From a technology perspective, investment growth will be strongest in IT services and software, IDC stated in its report.
Rami Karajah, country manager, KSA at Fortinet, said the KSA market is huge and offers so much potential with a lot of government spending on infrastructure. Karajah added that this has put a lot of pressure on large system integrators and service providers to compete to try and get the largest market share possible. “In order to compete, these companies normally decrease their margins and also on their overhead cost, which impacts the quality of service provided,” he noted.
Pradeesh VS, general manager at ESET Middle East, pointed out that the IT landscape in KSA has always been promising and with a dedicated team catering to that country, ESET has managed to win good deals and is seeing some significant growth in revenue. “We are making strong inroads into the SME market as a number of small to medium scale organisations are formalising their IT infrastructure and working security into the equation,” he said.
Hisham A. Alsheikh, country manager, KSA at Riverbed, explained that there is growing demand for better connectivity and service providers have been rolling out 4G, Fibre connectivity to homes and other services that are in line with government initiatives. “These initiatives also include increasing the availability and usage of eServices,” he said.
Alsheikh said this has resulted in new opportunities for solution providers to address everything from application development to optimisation and security.
While the Saudi IT market continues to grow rapidly with more government IT projects coming online, that plus other IT trends like cloud computing, BYOD, mobility, smart cities is influencing IT spending in KSA.
Karajah said cloud computing and BYOD present a challenge to enterprises as part of the key infrastructure moves out of the control of the IT department. “These technologies force both the enterprises and cloud service providers to deploy robust and high performance network security solutions in their environment. This creates a big business opportunity for Fortinet and it channel partner ecosystem,” he said.
Karajah explained that KSA like any other market is driven by many factors like, new technologies, market threats and breakthrough hypes. That said, Karajah pointed out that most of the small and large infrastructure IT projects in KSA are filtering through to local resellers for the ease of deployment, follow up, local support and also having a legal entity.
ESET’s Pradeesh said in terms of spending, KSA remains the single largest IT market in the Middle East. “Catering to this market requires local investment and by establishing our local dedicated team, we have managed to overcome the challenges typically associated with securing business in the Kingdom,” he said.