BrazilCloud: A $180 billion opportunity for Middle East by 2030
If the Middle East’s 600 top companies and the public sector seize upon public cloud technology, as much as $183 billion in value could be generated by 2030 – a sum equivalent to roughly 6% of the region’s current GDP. Most of that potential value (about 70%) would come from creating and scaling new products.
This optimistic forecast for cloud in the Middle East, revealed in a new report from McKinsey & Company, is based on an analysis of over 700 cloud use cases across 600 companies and parts of the public sector. Combined, the two groups studied account for about 20% of the region’s GDP.
Public cloud refers to computing services – including storage, applications, and servers – that are owned and operated by a specialized cloud provider. Using public cloud services allows organizations to avoid the costly and difficult process of design, developing, and maintaining their own IT solutions.
The breakdown of the projected value from cloud technology is divided between the private and public sectors, both of which have a lot to gain from public cloud offerings. About $130 billion is at stake for the region’s top companies, while the remaining $50 billion or so pertains to the public sector.
The oil and gas sector, by far the leading economic driver in Middle East countries (especially the GCC countries), is likely to make up the lion’s share of the value created by cloud technology adoption. Public cloud adoption in oil and gas would create value of around $82 billion, which is 62% of the total estimated value for all companies across all sectors of the report.
The second largest share of added value would be seen in the public and social sector. The public sector has been increasingly adopting public cloud solutions since the pandemic because of the flexibility and scalability of the solutions.
The telecom and banking industries each stand to gain 6% of the total value added by public cloud. In the pharmaceuticals sector, eight companies could earn up to $3 billion, benefiting from improved sales and forecasting, as well as cost savings in marketing, sales, product development, and supply chain management.
“Embracing public cloud as a substantial opportunity is essential for companies seeking to enhance their business value and overall operational efficiency,” said Christian Stüer, partner at McKinsey & Company and author of the report.
“It's crucial to note that cloud technologies should be treated as a business focus rather than solely an IT aspect for unlocking genuine value. Failure to transition to public-cloud adoption leaves companies lagging behind, depriving them of advanced capabilities that are indispensable in today’s business landscape and can only be harnessed with the assistance of cloud technology.”
However, despite the great value potential, the report also notes that companies are facing financial and other obstacles. Around three quarters of respondents said the cost of moving their IT infrastructure to the cloud was too expensive for their organizations’ budgets, and 38% said a cloud migration would take too long.
A previous study from McKinsey estimated that further adoption of cloud technologies by Fortune 500 companies worldwide could unlock around $1 trillion. Similar to the Middle East-focused study, the oil and gas industry was highlighted as one of the areas where most value would be created.
In related news, last month Google Cloud announced the launch of its latest cloud region in Dammam, which is expected to accelerate the uptake of cloud in the region.
