Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?

I am an IT sales and business professional who has worked with global IT companies across the USA, Europe, and APAC geographies. Over the last decade, I relocated to the Middle East and have spent most of my time in the GCC countries, working with the government, public sector, banks, gigaprojects, and oil and gas and Energy customers.

Q2. How do you see the current growth trajectory of the strategic IT outsourcing market in the Middle East, especially in key segments like government, banking, and energy?

In the key markets of the UAE and KSA, the government still remains the largest buyer of IT services, with almost half of all IT purchases driven by them. With the UAE Vision 2031, Saudi Expo 2030, and the World Cup 2034, the respective governments are promoting the adoption of e-gov, digital, cloud, and AI technologies, and demand is expected to remain robust for the next decade.

The financial sector is the second-largest consumer of IT services, presenting significant growth opportunities in the coming decade. Most banks have already completed the first phase of implementing core banking solutions and will be revamping them with newer features and upgrades. Almost all the banks have outsourced the Infrastructure Managed Services to a large global SI that is supporting them in the on-site-offshore model.

The other notable sector is the growth of the non-oil economy. The UAE has already registered a significant increase in GDP through services, tourism, and hospitality. Saudi Arabia is investing heavily in projects like Neom and Red Sea. This sector is experiencing growth in UI/UX, Digital Experiences, and service-oriented technologies, including AI and robotics.

Q3. How significant is the impact of national programs like Saudi Vision 2030 on outsourcing demand and procurement strategies?

Saudi Vision 2030 is the guiding principle in almost every action undertaken in the KSA for some time. Since its launch, it has seen progress in all aspects of society, including e-governance, digital priorities, cloud adoption, hospitality, and growth in the service sector, affecting all areas.

The vision has significantly impacted both the demand for outsourcing and procurement strategies. With a focus on Government-to-Citizen services, the demand for low-code/no-code platforms has grown. With a cloud-first policy, all the leading hyperscalers are already present in the Kingdom alongside the local players. With the advent of digital and AI, the demand for newer technologies and use cases has grown. This surge in demand led Saudi customers to seek better-skilled resources, shorter development times, and faster go-to-market strategies. Since all the skilled resources can not be brought inside the Kingdom, customers have accepted the onsite-offshore delivery model, except for critical information, data privacy, and cybersecurity-related projects. This was further emphasized during the COVID-19 pandemic, when critical projects were delivered with the majority of developers being offshore and only a lean team of business analysts and experts being onsite.

 The adoption of Vision 2030 led to changes in procurement strategies, making procurement more transparent and introducing new guidelines. For example, all government purchases are made only through the Etimad portal. Contract renewals to existing suppliers without competitive bids have been stopped, and manpower-only contracts have been converted into SLA-driven contracts.

Q4. How are emerging technologies like cloud, AI, and IoT reshaping the service offerings and revenue mix in outsourcing?

The whole of the Middle East region, primarily the GCC, has in excess of 100 DCs for Cloud hosting. The UAE is the biggest region with fewer restrictions on data access, and it provides the largest opportunities for outsourcing and offshoring. Bahrain has a large AWS DC, which caters to e-Government activities in Bahrain. Saudi Arabia also has approximately 50 data centres; however, there are data access restrictions in KSA, hence most DC/Cloud outsourcing opportunities are on-site, and only a limited amount of cloud application development work is offshored.

There is a significant opportunity provided by AI and IoT adoption for decision-making. In last year's edition of Leap and Gitex, the two largest tech events in the ME region, almost all leading companies were offering bots, GenAI, event AI, and robotics solutions. Leading companies in the energy, oil & gas, and infrastructure development sectors are rapidly experimenting with these latest technologies.

Q5. How are cybersecurity and regulatory compliance shaping client expectations and contract structures in outsourcing deals?

The Middle East is one of the most vulnerable regions to cyberattacks, and therefore, cybersecurity is one of the most crucial pillars in the IT strategy of every organization. There are organizations such as the National Cybersecurity Authority (NSA) in Saudi Arabia, which provides guidelines and mandates compliance for companies providing SoC services.

Contractually, most cybersecurity activities are carried out onsite with only authorized service providers. Local Emiraties, Saudis, Bahrainis, etc, nationalities are preferred for critical and sensitive assignments. The expats providing cybersecurity services need to be certified.

With these guidelines, restrictions, and compliances, the demand-supply is skewed, the availability of the right resource is a challenge, and the salaries are high.

Q6. Who are the main competitors you face among local firms preferred by government contracts and global players targeting private sector outsourcing in the Middle East?

The requirement of promotion of local content, local companies, localization (Saudization, Emiratization, etc) has significantly altered the pecking order of the System Integrators in the ME and especially in the Saudi market. The government and the Private sector alike have a preference for the local companies and local content. These can be purely local companies, such as AEC, Solutions, MIS, etc, operating in the Saudi market, or can be regional companies like Raya, Giza, etc, who have established local offices to provide local content and Arabic talent.

There is a shift in which local Arabic-speaking preference is palpable than the global talent. It is a curve that is in the reverse direction - a decade ago, it was bringing global talent to this region, and now it is preferring local talent.

Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?

As an investor, the focus would be to get into a venture where the return on the investment is secured. There are multiple niche sectors where there is enough headroom for new ventures to start and become profitable. The areas such as cybersecurity training, Ed-tech, K-12 and higher education solutions, healthcare, ICD coding, AI-driven smart-city solutions, surveillance systems, etc, are some of the areas that should be of interest to the investors.

There are some individuals who have worked at senior positions in some of the local and global companies, and now they have started their own small setup based on the connections they have developed in the market. Such small IT local companies are also low-hanging fruit for the investors who can leverage the strength of their local connections with the IT decision makers.