Rackspace Riyadh Expansion
Rackspace Technology Establishes Riyadh Headquarters to Accelerate Cloud and AI Growth in Middle East
Anonymous
Rackspace Technology (NASDAQ: RXT) has opened its regional headquarters in Riyadh, Saudi Arabia, making the move official in June 2026. The company appointed Shakeel Mohammed to lead the new hub, which will serve as the central base for its cloud and AI operations across the Gulf Cooperation Council (GCC), according to GlobeNewswire.
The Saudi public cloud market is projected to reach $13.5 billion by 2030, according to Yahoo Finance. Rackspace, which posted roughly $2.3 billion in annual revenue in FY 2023, is betting that a boots-on-the-ground presence in the Kingdom will unlock high-margin government and enterprise contracts it otherwise could not win.
Saudi Rules Forced Rackspace's Hand on Riyadh
Saudi Arabia's Regional Headquarters (RHQ) Program is a key driver here. Since January 2024, state-backed entities in the Kingdom have been barred from signing contracts with foreign companies that lack a Saudi regional HQ. For Rackspace, that rule made a Riyadh office a legal necessity, not just a growth move. Over 500 international firms had secured RHQ licenses by early 2026, with Rackspace among the most recent high-profile additions, according to MarketScreener.
Saudi Arabia's Cloud First Policy, run by the Ministry of Communications and Information Technology, also requires government agencies to use cloud-based systems over older on-premise setups. That policy opens a direct pipeline to public sector contracts — exactly the clients Rackspace needs. Without the Riyadh HQ, it would have been effectively locked out of that pipeline.
Shakeel Mohammed Leads a Push for Sovereign AI
Shakeel Mohammed, the new Managing Director for Saudi Arabia, framed the opening in strong terms. "Our physical presence in Riyadh is not merely an office opening," he said. "It is a commitment to the Kingdom's digital DNA." His job is to make sure Saudi enterprises get AI tools built for local needs — not just global products adapted for the region, according to Yahoo Finance.
CEO Amar Maletira backed that framing. "Saudi Arabia is at the vanguard of the global AI revolution," he said. A key goal is building large language models (LLMs) — AI systems that understand and generate text — optimized for Arabic dialects. Western AI tools have largely ignored Arabic language nuances, leaving a gap Rackspace sees as a competitive edge.
Debt-Laden Rackspace Eyes High-Growth Middle East Market
Analysts describe the Riyadh move as both a growth play and a survival strategy. "The Middle East represents a high-margin, high-growth frontier where the managed services model is still in high demand," a senior Gartner analyst noted. Rackspace has faced debt pressure and lost US market share to larger cloud rivals. The GCC gives it room to grow where the competition is still taking shape, according to CA MarketScreener.
Saudi government IT spending on AI and cloud is estimated at 30% of total IT budgets through 2026. That spending is tied to Vision 2030, the Kingdom's sweeping plan to cut oil dependence. Giga-projects like NEOM require massive cloud and AI infrastructure. Rackspace wants a seat at that table — and now, with a Riyadh address, it has one.
Rackspace Enters a Crowded and Competitive Riyadh Arena
Rackspace is not moving into an empty market. Google Cloud, Microsoft, and Oracle all locked in Saudi data center deals by early 2024. Local giant Saudi Telecom Company (stc) and IBM are also competing for the same enterprise clients. Industry insiders expect a "talent war" for AI engineers in Riyadh to heat up fast as Rackspace starts local hiring, according to GlobeNewswire.
Some skeptics also raise the risk of "ghost HQs" — offices that exist on paper in Riyadh while real technical work stays in Dubai. UAE media has flagged this concern as Saudi Arabia pulls more regional headquarters away from the Emirates. Whether Rackspace's Riyadh hub becomes a true operational center or just a compliance address will depend on how fast it hires and builds local capacity, according to Yahoo Finance.
Sentiment
NeutralNEGATIVENEUTRALPOSITIVE
Publishers
6
Articles
6
Reach
6
Topics
A
AnonymousAuthor
