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5 October 2023



Everything You Need to Know About the Middle East Software Development Market

The Middle East region has recently experienced a booming IT industry, especially following the end of the COVID-19 pandemic. FinTech, eCommerce, super apps, ride-sharing software, and many other novelties attract investors and win the hearts of millions of users who value efficiency, speed, and omnichannel customer experience. The region is nothing less than a center of digital transformation in 2023, yet, like any other location, it has its perks and drawbacks businesses need to consider before investing. For example, a study shows as of 2022, the FinTech sector in the Middle East received whooping hundreds of millions of dollars in investments. Keep reading this guide to learn more about the specifics of the Middle East IT industry, the region itself and why is it home to so many successful tech startups. 

Facts About the IT Industry in the Middle East You Need to Know

  1. The Saudi Ministry of Communications and Information Technology (MCIT) intends to invest USD 18 billion in the construction of a network of large-scale data centers throughout Saudi Arabia. 
  2. Partnerships are being pursued by key players in the technology industry to expand their businesses and strengthen their market positions. Microsoft, for example, extended its partnership with the African Development Bank to promote Africa’s young entrepreneurs through the bank’s Youth Entrepreneurship Investment Banks (YEIB) project.
  3. The artificial intelligence market revenue is predicted to expand by USD 1,414.36 million by the end of 2025, according to Tractica. 
  4. The Middle East’s cybersecurity market is anticipated to develop at an average yearly rate of 14% to over $30 billion by 2025.
  5. Across the region, the yearly rise in the contribution of AI is anticipated to vary between 20 and 34 percent, with Saudi Arabia and the UAE experiencing the greatest growth.


Related: Everything You Need to Know About Software Outsourcing to Africa


The Software Development Landscape in the Middle East


Regional Diversity:

  • Israel is renowned for its thriving technology sector, often referred to as “Silicon Wadi.” Tel Aviv, in particular, is home to numerous startups and tech companies, including Waze and Mobileye.
  • The UAE has launched initiatives like “Dubai Internet City” and “Abu Dhabi Global Market” to attract tech companies and startups, making Dubai and Abu Dhabi prominent tech hubs.


Government Initiatives:

  • The Egyptian government established Technology Innovation and Entrepreneurship Centers (TIEC) to support tech entrepreneurship and innovation through funding and mentorship programs.
  • Saudi Arabia’s Vision 2030 plan includes a strong focus on technology and innovation, with initiatives like NEOM and the Red Sea Project.


Startup Ecosystem:

  • Dubai Technology Entrepreneur Centre (DTEC) is the largest tech co-working space in the Middle East, providing an environment for startups to grow and collaborate.
  • Saudi Arabia’s Badir Program offers support for tech startups and entrepreneurs, helping them establish and scale their businesses.


Education and Talent:

  • American University in Cairo (AUC) offers computer science and entrepreneurship programs, nurturing talent and fostering innovation.
  • Israel-based Coding boot camps like Le Wagon and Ironhack are training individuals with little to no coding experience to become skilled software developers.


Industry Verticals:

  • The UAE has seen significant growth in fintech startups like PayBy and Sarwa, addressing the region’s financial services needs.
  • Jordan hosts health tech startups like Altibbi, providing online medical information and telemedicine services.


Factors Driving Growth

In 2023, the Middle Eastern software development market is thriving due to several key drivers. Governments in the region are actively investing in technology and innovation, aiming to diversify their economies beyond oil. Initiatives like “Vision 2030” in Saudi Arabia and smart city development in the UAE are fueling demand for software solutions in sectors like healthcare, education, and transportation.


The burgeoning startup ecosystem in cities such as Tel Aviv, Dubai, and Riyadh is fostering innovation and increasing the demand for software developers. The region’s youthful and tech-savvy population is also contributing to the growing talent pool.


Global companies are recognizing the Middle East’s market potential, further boosting the demand for software services. Industries like fintech, e-commerce, and logistics require tailored software solutions to meet regional needs.


Lastly, the adoption of emerging technologies like AI, blockchain, and IoT is driving innovation and providing opportunities for software developers to create cutting-edge solutions. These factors collectively position the Middle East’s software development market for significant growth in 2023 and beyond, driven by government support, entrepreneurial activity, and technological advancement.


Read also: Business Process Outsourcing (BPO) vs. Build-Operate-Transfer


Challenges and Opportunities

Challenges and opportunities in the Middle East’s IT market present a complex landscape. Challenges include cybersecurity concerns, regulatory complexities across countries, and geopolitical tensions. Cybersecurity threats are on the rise, requiring substantial investments to protect sensitive data and infrastructure. Navigating varying regulations within the region can be daunting for businesses.


On the flip side, numerous opportunities exist. Governments are actively promoting tech innovation and investment through initiatives like the previously mentioned “Vision 2030” in Saudi Arabia and “Dubai Internet City” in the UAE. A young, tech-savvy population provides a substantial talent pool for IT development. Additionally, as businesses diversify, there’s a growing demand for IT solutions across sectors like FinTech, healthcare, and eCommerce. 


Middle East Software Development Market: Conclusion

Summing up, the Middle East’s IT market is ripe with opportunities driven by government support, a youthful population, and evolving industry needs. While specific threats may pose obstacles to the region’s growth, it’s unlikely that their impact will be significant enough to derail the widespread digital transformation. Fueled by government initiatives, a burgeoning startup ecosystem, and the adoption of cutting-edge technologies, it presents a promising landscape with abundant opportunities for innovation and economic advancement in the region. Plus, with a young and tech-savvy population, combined with a strategic position on the global stage, the Middle East’s software development market is poised for sustained success and impact in the years to come. If you are interested to learn more, contact NearshoreFriends and we will help you make an informed decision with our Software Development Consulting service.  

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