Microsoft cloud site to draw ‘hundreds’ of companies to Saudi

• Project set for November opening
• Overseas providers to expand presence
• Access to locally hosted infrastructure

Microsoft’s new data centre region will encourage hundreds of international software businesses to launch Saudi-based services, according to the US technology company’s regional head.

Ayman AlGhamdi, president of Microsoft Arabia, said the project would spur investment and hiring by giving overseas third-party providers access to locally hosted infrastructure in the country.

The Saudi Arabia East region, located in the Eastern Province, will open in November and provide supported cloud and AI services through Microsoft’s Azure platform.

Saudi rules impose conditions on transferring personal data overseas, while some government and regulated workloads are subject to additional data-localisation requirements, creating demand for software and cloud services delivered in the kingdom.

Independent software vendors, or ISVs, develop applications that can run on Azure. “There are hundreds of global ISVs for Microsoft that were just waiting for this announcement,” AlGhamdi told AGBI.

The region will comprise three physically separate availability zones, each with independent power, cooling and networking. This spreads the risk of localised outages and allows customers to design services that remain operational if one fails.

Microsoft’s expansion could help Saudi Arabia translate growing computing capacity into investment, employment and wider business activity.

Data centre investment gathers pace

AlGhamdi, who leads the technology giant’s work in the kingdom, described the launch as a new phase after 28 years of Microsoft operating in the kingdom.

“This is going to be a turning point for [businesses] to be able to embrace our cloud economy, knowing that they’re compliant and are able to use infrastructure closer to them,” he said.

The November launch date was announced at the Leap technology conference amid a raft of data centre initiatives unveiled in Riyadh.

Amazon Web Services said its $5.3 billion Saudi cloud region would open in December. It has expanded its partnership with Humain, the AI company owned by Saudi Arabia’s Public Investment Fund, to provide up to 50 megawatts of AI capacity by 2028.

Humain and Saudi-backed data-centre developer DataVolt have started construction on a planned 360MW AI data centre at Neom’s Oxagon industrial region, with the first 100MW due in 2028.

Saudi telecoms operator Zain KSA and DataVolt also signed a non-binding agreement to explore developing data centres across the kingdom.

Microsoft’s data centre region will allow Saudi organisations to move “eligible workloads” from on-premises systems, known as on-prem, into its public cloud while keeping the relevant data inside the kingdom.

On-prem refers to software and infrastructure that an organisation runs on its own servers and hardware, rather than through a remote cloud provider.

Further reading:

• Iran attacks reshape Gulf data centre backup strategies
• Saudi Arabia’s Humain and Qualcomm unveil AI laptop
• Saudi data centre ambitions could require $42bn by 2030

AlGhamdi estimated that at least 1 million enterprise email inboxes in Saudi Arabia still ran on-premises.

“Most of these emails are actually running on-prem, and at some point [they] will have to move to the cloud,” he said.

Moving workloads into the cloud can reduce the cost of maintaining an organisation’s own hardware while giving it easier access to additional computing capacity and AI tools.

Microsoft has not yet disclosed which cloud and AI services will be available from November.

AlGhamdi said the development would persuade overseas technology providers to expand their presence in Saudi Arabia to help customers adopt their services.

“Regional partners will have to increase hiring and resources to capture that opportunity and meet the customers where they are,” he said.

A Microsoft-sponsored study by research company IDC estimates that Microsoft, its partners and customers using its cloud technologies could generate $44 billion in additional Saudi revenue between 2027 and 2030.

The estimate covers Microsoft’s broader Saudi ecosystem rather than activity generated solely by the new data-centre region.

IDC attributes about 13 percent of the projected revenue, equivalent to around $6 billion, to the new region. It also forecasts about 100,000 jobs across the Saudi economy during the same three-year period.

AlGhamdi said 30 percent of those jobs would be skilled technical positions, increasing demand for workers trained in Microsoft and other cloud technologies.