An Untapped and Digital Savy Labor Force Coupled with Initiatives to Accelerate Digital Adoption Underpin the Kingdom of Saudi Arabia’s Plans to Become a Manufacturing Hub

For many people, the Kingdom of Saudi Arabia grabs their attention because of the country hosting boxing contests, Formula One races, and attracting high-profile soccer players to their domestic league. Hosting sporting events works to raise the profile of the country and is part of the Saudi Government’s strategy to diversify its economy away from oil & gas.

The overarching plan to achieve this, the Saudi Vision 2030 initiative, involves many different strands of the government, including the Ministry of Communications and Information Technology, the Ministry of Investment, Saudi Exports Development Authority, and the Communications, Space & Technology Commission.

Industrial and manufacturing firms continuously evaluate their choices of manufacturing locations. Increasingly attracting international manufacturers to establish operations in the country as part of their sourcing strategies is a component of Saudi Vision 2030, as is improving digital capabilities of local manufacturers.

Several announcements in 2024 have concerned international technology companies investing in Saudi Arabia.

In Riyadh, Hewlett Packard Enterprise (HPE) has commenced production of its ProLiant Gen11 servers. The investment is notable for two reasons. First, the investment is part of the “Saudi Made” program with all servers produced being shipped with a “Saudi Tech” logo to promote the Kingdom as a manufacturer of high-profile technologies. Second, the majority of the workforce at the site is female.

Automation specialist Emerson is establishing a new facility at the King Salman Energy Park (SPARK) to assemble control valves, pressure relief valves, solenoid valves, and control and safety systems. Similarly, WIKA Group, a manufacturer of industrial measurement technology, will also break ground on a new facility that produces diaphragm seals, instrumentation valves, and thermometer thermowells. Automation is a key focus for industrial and manufacturing firms in the country with, for example, Mastek announcing earlier this year that it is working to automate and digitize production lines at Yanbu Cement.

Highlighting the availability of digital talent in the country is the announcement that Cognizant and Google Cloud will be partnering in Saudi Arabia to develop solutions, underpinned by generative Artificial Intelligence (AI) and AI that enable customers to improve their operations and customer engagements.

Overall, the Saudi Government is looking to attract high-value work, rather than competing to be a low-cost manufacturing location.

The Ministry of Investment’s Saudi National Investment Strategy is targeting manufacturers from the aerospace, automotive, and pharmaceutical industries, as well as in the healthcare sector. The strategy looks to take advantage of the country’s location vis à vis Europe and Asia as a distribution hub that will interest manufacturers seeking flexibility in their sourcing strategies. The Ministry is promoting the fact that Saudi Arabia has a young (60% of the population is under 35) and educated workforce.

In addition, the country will become increasingly important for technology suppliers as a source of revenue in the coming years. Local manufacturers’ adoption of digital technologies is being encouraged by Aramco Digital, which is a branch of Saudi Aramco charged with upskilling local firms’ digital capabilities to improve their competitiveness.

Saudi Aramco showcases the country’s digital capabilities. Four of Saudi Aramco’s facilities have been included in the World Economic Forum’s Global Lighthouse Network that identifies manufacturing facilities that have implemented advanced technologies across their operations to improve productivity and resilience.

The young and digitally savvy workforce located near two vital regions for customers will mean that manufacturers will increasingly view Saudi Arabia as an attractive location for establishing manufacturing operations.