The technology sector in Saudi Arabia is set to gain the most from leveraging generative AI (GenAI). The sector could achieve an operating profit margin of 15 percentage points by 2028, increasing its operating profit by up to SAR15 billion ($4 billion).
GenAI is a technological breakthrough that is already changing the way businesses operate by creating content, writing code, and analyzing data with increasing efficacy. This development could significantly reshape Saudi Arabia, with early adopters securing a decisive competitive advantage.
New research from Strategy& Middle East, part of the PwC network, assessed the potential impact of GenAI on the operating profit across various sectors in Saudi Arabia by 2028. The impact assessment also details how each sector can harness the potential of GenAI.
“Our analysis indicates that the telecom, media & entertainment, and technology sectors could achieve the highest potential margin upside by adopting GenAI. This presents a prime opportunity for companies to reassess their strategies and explore new avenues for growth and innovation,” said Hani Zein, partner with Strategy& Middle East.
Leveraging GenAI for growth
Tech firms in Saudi Arabia can realize this growth resulting from GenAI by developing and commercializing new use cases and meeting the demand for the hardware and infrastructure that GenAI requires. Companies can also leverage this technology to accelerate their R&D capabilities, streamline solution design, and automate the internal lead-to-cash lifecycle, reducing costs by up to 30 percent.
“These efforts can help to accelerate the development of local intellectual property and solidify Saudi Arabia’s position as a hub for national tech champions. GenAI can be the essential catalyst in accelerating this transformation, creating major growth opportunities, and enhancing internal capabilities,” said Fawaz BouAlwan, partner with Strategy& Middle East.
Impact on media and entertainment
Saudi Arabia’s media and entertainment sector could also achieve a margin growth of 14 percentage points by 2028 by leveraging GenAI, increasing its operating profit by up to SAR6 billion. Firms in the sector can attain this growth by utilizing GenAI to develop more original Arabic content, hyper-personalize customer experiences, and boost operational capabilities.
With an advertising spending per capita of just up to SAR240, Strategy& Middle East also suggests there is considerable potential to better monetize the Saudi customer base. This would further accelerate the transformation of the Kingdom as a media and entertainment hub, in line with its national agenda.
“To successfully embrace GenAI, companies must adopt a value-driven approach that delivers tangible benefits beyond technological innovation. This begins with synchronizing GenAI initiatives to business goals, performing thorough cost-benefit analyses, and driving operational readiness throughout the organization,” stated Ali Ghaddar, principal with Strategy& Middle East.
Read: Saudi Central bank confirms Q4 2024 as launch period for ‘Samsung Pay’ service in Kingdom
Telecom market to grow 12 percent
Saudi Arabia’s telecom market could achieve a margin growth of 12 percentage points by 2028, increasing its operating profit by up to SAR11 billion. Telecom firms across Saudi Arabia can leverage GenAI to gain deeper insights into broadband customers, tailor their value propositions, and improve broadband infrastructure utilization, which currently stands at around 50 percent for fiber-to-the-home (FTTH).
In addition, telcos can hyper-personalize campaigns by analyzing customer behavior, accelerating ICT cross-selling to SMEs, and capturing an opportunity projected to reach SAR10 billion by 2028.
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