Many Middle East firms struggle to know where to start with AI

Firms need to shift to an innovation mindset, says Deloitte report

Saudi Arabia and the UAE are among the biggest drivers of AI in the Middle East. Reuters

Many Middle East companies are planning to boost their investment in artificial intelligence, but say they lack key elements to deploy the technology well.

A report from global consultancy Deloitte has found that more than a third of regional companies are having “trouble choosing the right technology” to align with their business goals.

This is compounded by difficulty in identifying use cases and managing risks (26 per cent and 23 per cent, respectively), and the lack of an adoption strategy (18 per cent), which all hinder the deployment of AI in their organisations. The study surveyed 155 companies across Saudi Arabia, the UAE and Qatar.

The report, conducted in collaboration with the Mohamed bin Zayed University of Artificial Intelligence in Abu Dhabi, indicates that nearly two thirds of Gulf companies plan to increase their AI investment.

Therein lies a critical disconnect: the high interest and perceived AI expertise of organisations across the wider Middle East often outpace readiness in terms of strategic planning.

Many Middle East companies are still either in the proof-of-concept or early implementation stages, with few examples of large-scale AI production systems, Deloitte said.

That leaves most of them in the “cautious recognition of value” stage of AI. They see its potential but are still working on strategies and the foundation for larger implementation, compelling them to accelerate their efforts to quickly reap the benefits of AI, the report said.

“The GCC region, led by Saudi Arabia and the UAE … has an opportunity to leverage AI as an equaliser in global tech innovation, but needs to shift from adoption to innovation mindset,” Yousef Barkawie, AI and data leader at Deloitte Middle East, wrote in the report.

While AI has long been used by businesses, the arrival of generative AI heralded a new era of innovation that has compelled companies to scramble to tap into the technology and implement it.

Saudi Arabia and the UAE are among the biggest drivers of AI in the Middle East. A strong foundation for AI-driven companies is backed by supportive government policies, major investments and a growing talent pool.

This is in response to an evolving landscape, where trends such as AI agents, hybrid reasoning models and physical AI, help companies identify opportunities that could bring significant value, said Damilola Ojo, senior managing director at Dubai consultancy FTI Delta.

The advancements in AI can help companies “drive efficiency, innovation and competitiveness”, Mr Ojo told The National. “When budgeting for AI investments, we have a well-established governance model and workflows to make sure these investments are aligned with our company's strategic goal.”

However, he cautioned that not every new trend or hype leads to sustainable growth and blindly following them can result in “inefficient spending and misaligned priorities”.

Privacy has also been a hot topic within AI, as user data is collected to train AI models and improve their accuracy – emphasising the need to conduct due diligence when companies are selecting partners and services for AI deployment.

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Misuse of customer or client data and the lack of confidence in the collection process are the two most common concerns of companies in the Middle East when it comes to AI, according to the Deloitte report.

More than half (53 per cent) of the organisations surveyed said they are using outside vendors to conduct independent audits and test their AI tools.

The same number of respondents said they train their AI staff to recognise risks and appoint a specific executive to manage these, Deloitte said.

“When using third-party models, businesses will face limitations on the data they can share from a data privacy, intellectual property and confidentiality perspective,” Kellie Blyth, a partner at international law firm Addleshaw Goddard, told The National.

“It's also advisable for businesses to perform thorough risk assessments to uphold principles like accountability, transparency and fairness, despite this assessment not being compulsory for all organisations.”