GCC key focus for global cloud technology players amid rapid digital adoption

Exclusive: Rise of tech-focused young consumers and evolving digital landscape make Gulf an attractive region, Alibaba vice president says

Selina Yuan, vice president of Alibaba Group, said several GCC countries have boosted policy support to facilitate digital transformation. Photo: Alibaba

Countries in the GCC are increasingly attracting a large number of global cloud technology companies due to the rise of tech-focused young consumers and an evolving digital landscape in the region, a top executive at China's Alibaba Group has said.

While the region might have had a later start with cloud adoption compared to other international markets, the GCC has transformed into one of the most active markets for the cloud, Selina Yuan, general manager of Alibaba Cloud Intelligence's international business unit and vice president of Alibaba Group, told The National.

The UAE and Saudi Arabia, in particular, are leading the region because of the flexibility of their digital programmes, she said.

“Traditionally, GCC economies have depended primarily on energy resources to drive economic and national prosperity. With the rise of digital technologies, the Gulf area has diversified efforts to develop its financial sectors, establish knowledge-based economies and has made considerable progress in adopting digital technologies over the past decade,” Ms Yuan said.

The global cloud computing market was valued at $368.97 billion in 2021 and is projected to grow at a compound annual rate of almost 16 per cent from 2022 to 2030, with emerging technologies such as artificial intelligence and machine learning among its primary drivers, according to Grand View Research.

Global spending on public cloud services, meanwhile, is expected to rise more than 20 per cent annually to $495bn this year — nearly $84bn more than what was spent in 2020 — and hit $600bn in 2023, research firm Gartner said in a May study.

The UAE has rolled out several initiatives to promote digital adoption and inclusion.

In April, the UAE Cabinet approved a strategy in which the digital economy will contribute 20 per cent to the gross non-oil national economy in the coming years. It also approved the formation of a digital economy council.

The plan includes more than 30 initiatives, projects and programmes and five new areas of growth.

Several global players are also establishing data centres in the region as the cloud market picks up.

Alibaba Cloud inaugurated its first regional data centre in Dubai in 2016. Microsoft opened two data centres in 2019, one each in Abu Dhabi and Dubai. In 2020, IBM unveiled two data centres in the UAE, making its first such foray into the Middle East and Africa.

Amazon Web Services, the world’s biggest cloud storage service provider, said last year it will open three data centres in the UAE this year.

Saudi Arabia is also diversifying its economy away from oil as part of its Vision 2030 strategy, with technology as one of the key pillars of the plan. Riyadh is encouraging entrepreneurship and seeking investments from both local and foreign entities to develop the tech sector.

Major Saudi entities are contributing to the digital push, including Saudi Aramco, the world's biggest oil producer; the Public Investment Fund, the kingdom's sovereign wealth fund that continues to invest in technology companies globally; and Saudi Telecom Group, the country's biggest telecoms operator that teamed up with Alibaba Group last month to establish a $238 million cloud computing venture in the Arab world's biggest economy.

Cloud computing is one of the most important underlying technologies for digital transformation, Ms Yuan said.

“To meet the growing demand of the corporations for digital transformation, apart from the best-in-class cloud technology, it is imperative to bring vertical industry insights to the enterprises to enable them to fully embrace digital transformation during their digital journey,” she said.

This transformation has become a “pivotal trend” that has spread into key sectors, including finance, retail, logistics, manufacturing, media, entertainment, internet companies and the public sector, which are all leveraging AI and data intelligence technologies to achieve business efficiency and continuous growth, Ms Yuan said.

“This will further speed up cloud adoption,” she added.

Another factor driving the increased usage of the cloud is the Covid-19 pandemic. Aside from upending economic activity, it confined people to their homes and led to a surge in trends such as remote working and online learning, which in turn increased demand for cloud services.

The digital economy has “gained tremendous momentum against this trend, making both public and private organisations realise the urgency and necessity of developing their digital economies”, Ms Yuan said.

She noted that several GCC countries boosted policy support to enable digital transformation by expanding their technology sectors, investing in infrastructure, adopting digital and electronic platforms and launching technology parks and business incubators.

“The pandemic underscored the importance of furthering the growth of the digital economy, making it a requirement for economic resilience and the development and advancement of every sector of the economy,” Ms Yuan said.