COVID-19 shows pressing need for quicker digital transformation in Saudi Arabia

KPMG, a leading provider of audit, tax and advisory services in the Kingdom, has urged the government ministries, institutions, authorities in Saudi Arabia to focus on key priority digital agendas that would help navigate the Covid-19 crisis and beyond, such as telehealth, digital education, and teleworking.

“The digital transformation in these unprecedented circumstances has become a pressing necessity rather than a long-term aspiration, as it will help countries and businesses alike alleviate the impact of a looming crisis, according to a recent report conducted by KPMG in Saudi Arabia.

The latest report ‘Covid-19 as accelerator for digital transformation and the rise of the gig economy’ said the digital transformation has become a major determinant of countries’ competitiveness and a prerequisite for securing and sustaining socio-economic prosperity. More importantly, it will ensure sustainability and growth beyond the crisis.

“The digital economy has been growing 2.5x faster than the legacy economy, thereby making leading nations achieve +35% contribution to GDP from the digital economy, commented Tareq Dreiza, Senior Director at KPMG in Saudi Arabia.

“In pre-Covid-19 studies, the global digital economy was expected to grow from an average of 18% in 2019 to 25% by 2025 of the global GDP. This has pushed governments to compete in devising the best digital strategies and allocating the necessary resources for national digital transformation programs,” he added.

He also said that digital transformation enables businesses and organizations to grow while being efficient and resilient. It can bring several benefits that organizations can reap through robust digital plans and strategies such as agility in operation and crisis response, customer-centric culture that fosters “know-your-customer” mindset, cost-effectiveness and efficiency of operations using digitalized processes.

In Saudi Arabia, digital transformation is considered a key enabler to achieve Vision 2030, aiming to build a digital vibrant society, a digital thriving economy, and a digital ambitious nation. Achieving these objectives can be accelerated through large-scale digital transformation programs in key sectors such as health, education, e-commerce, and culture and tourism.

“The implementation of digital transformation in Saudi Arabia has taken a phased and flexible approach. Starting with the foundations, it went into an accelerated pace while currently focusing on digital excellence. The past and recent digital efforts and initiatives showcase the Kingdom’s strong potential to achieve the expected impact of its digital transformation programs,” Dr. Ahmad Dhaini, Digital Transformation & Strategy Solution Lead noted.

“The Kingdom should also review all the policies and regulations that do not cater for the future digital world, keep enhancing the quality of digital infrastructure (e.g., Cloud, broadband access, and 5G), and accelerate the execution of national digital projects (e.g., National Digital ID) and initiatives in priority sectors,” Dreiza opined.

Likewise, the gig economy in the Kingdom is expected to witness growth as important as the rest of the world, particularly in the transportation-based services (especially in the delivery service).

According to KPMG report, the development of the gig economy has been one of the top priorities of the government, as it particularly contributes to achieving one of the most important objectives of Vision 2030 - job creation. The government is particularly bullish about reducing the youth unemployment rate and on increasing women participation in the labor force.

The KPMG report says that Saudi Arabia has taken a big leap in building its innovation and entrepreneurship ecosystem. Monsha’at has been a key player here, developing a strategy to encourage the development of co-working spaces, incubators and accelerators for the private sector. 

However, much work still needs to be done as the Kingdom is still lagging to advanced countries and needs to provide more co-sharing workspaces for independent workers. As such, this presents an opportunity to capitalize on the acquired experiences, and account for services that would focus on gig workers as well.

“The development of a robust and scalable gig economy ecosystem would allow the Kingdom to meet the future demand for gig services and would make the economy even more sustainable and resilient,” Dreiza concluded.