Saudi small businesses gear up for regional growth

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Small- and medium-sized enterprises in Saudi Arabia are gearing up for a technology-fueled expansion drive across the region, the new Oxford Economics survey “SMEs: Equipped to Compete” revealed.

To become more competitive and help drive job creation in the region, nearly two-thirds (63 percent) of the Kingdom's SMEs have either completed, are undergoing, or are planning a business transformation, the survey said.

Of those, about two-thirds (65 percent) are planning to enter new geographic markets, nearly double the global average of 37 percent. In three years, no SME in the Kingdom expects to be operating solely in the country, whereas the number operating in six or more countries will rise from 16 to 41 percent, it said.

Infographic: Saudi tech
Infographic: Saudi tech

About 31 percent of SMEs said they use cloud computing, but that is projected to skyrocket to 54 percent in three years – a growth rate of 72.4 percent.

In addition, 37 percent said they used mobile technology now – a figure set to rise to 53 percent in three years.

The importance of social media is also on the rise with 37 percent currently using it, and 43 saying they will use it during the next three years.

According to the survey, 66 percent of Saudi SMEs claimed that they would only invest in technology when there is a clear return on investment (ROI).

Their current investment priority is software related to business management (52 percent), business analytics (45 percent) and cloud computing (37 percent), it said.

“SMEs in Saudi Arabia are not only growing in the country and creating vital new jobs, they're increasingly looking to expand beyond the Kingdom's borders to seize new regional opportunities,” said Ahmed Al-Faifi, managing director, SAP Mena.

“Clearly, much of this growth will be fuelled by technology that increases insight, flexibility and overall competitiveness. SMEs are vital economic engines and incubators of innovation, so the positive, progressive sentiments indicated in this study bode extremely well for the future,” he said.

SMEs are also expected to make a significant impact on lowering the unemployment rate, which stood at 5.8 percent as of Q1 2013, the Kingdom’s Central Department of Statistics and Information said.

The Kingdom continues to grow its economy, posting a 2.7 percent growth in GDP in Q2 2013, with the non-oil private sector growing by 4.2 percent in April-June 2013, according to news analysis of government data.

“The survey shows that Saudi SMEs across various industries are making major changes to their business models, products and go-to-market strategies,“ said Sherif Hamoudah, Head of Ecosystem and Channels, SAP MENA.

“Globalization, transformation, and technology will be the hallmarks of successful companies, and, with a commitment to enter new markets and willingness to adopt technology innovations, SMEs have never been better positioned to win.”

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