Despite a surge in artificial intelligence adoption across Gulf economies, most organisations are stuck in early-stage experimentation, with few translating their ambitions into large-scale value creation, according to a new McKinsey & Company report.

“While nearly all organisations are using AI, more than two-thirds haven’t moved beyond pilots,” said the study, titled The State of AI in GCC Countries: In Pursuit of Scale and Value.

“Many people still equate AI with models such as ChatGPT. Knowledge of other AI tools and their potential is shallow. So I wouldn’t really say there is adoption at scale. It’s limited,” said one Gulf company executive surveyed in the report.

This and talent are among the main limiting factors to the adoption of effective AI, says Karan Soni, co-author of the report and a core leader of McKinsey's dedicated AI and advanced-analytics arm, QuantumBlack.

"Pilot purgatory is a real phenomenon and it's not a new one," he told The National on Thursday. Pilots are easy and cheap to implement, but they provide no real change in management to the organisation – scaling is very difficult yet transformative, he added.

If you spend $1 on technology, you have to spend $4 to $5 on change management, McKinsey says.

"To extend it to the entire company means you need to get your 20, 30 or 40 recruiters to be able to use that tool effectively in their workflow," said Mr Soni. This can take from weeks to years to see real, transformative change.

"You can affect change management anywhere [in] three to six months. If you're talking about a broader kind of transformation of the entire company, that is a multiyear journey," said the associate who helps lead at-scale digital and AI transformations for businesses across the Middle East and Asia.

This can take from one to four years, depending on the size of the organisation, he added.

Growing adoption

Banking and retail sectors have been at the forefront of adopting use cases of AI among Gulf countries, said Mr Soni. Now AI use is gaining cross sector adoption with industries such as manufacturing and others seeking to become early adopters.

The report finds that 84 per cent of surveyed organisations in the six Gulf countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – have adopted AI in at least one business function.

This is an increase from 62 per cent in 2023. Yet only 31 per cent have expanded or fully deployed AI across their operations.