Region missing out on IT boom

The Middle East is missing out on the global opportunities of the ICT boom because of a lack of innovation and risk taking in the region, a leading expert has warned. While the region is seeing expansion in a number of areas, it is “lagging behind” in the IT sector.

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By  Caroline Denslow Published  June 26, 2005

The Middle East is missing out on the global opportunities of the ICT boom because of a lack of innovation and risk taking in the region, a leading expert has warned. While the region is seeing expansion in a number of areas, it is “lagging behind” in the IT sector, Tony Murphy, vice president, Gartner Consulting Europe told IT Weekly in an exclusive interview. While Murphy’s home country of Ireland, with a population of 3.5 million people, makes an estimated US$40 billion a year from the export of IT products and services, the entire Middle East exports account for only a fraction of that, he pointed out. Murphy blames cultural issues for the region’s failure to make the most of IT. “One of the issues is that in many Arab countries you’ll find that there’s a structure whereby there isn’t a highly competitive or open economy,” he claimed. “A lot of people make a lot of money by being intermediaries. There isn’t the same incentive to invest and to take risks in developing and deploying advanced IT.” Murphy, a leading consultant in the strategic exploitation of IT, is currently working with several government bodies in the region to identify how the Middle East can effectively create a knowledge economy. Among other problems, he cited the prevalence of quasi-nepotism where favoured people are the ones who normally win the contract, as a factor which holds back the region. “There are favoured people… that tends to undermine the drive to be innovative and competitive because if you feel that you are going to provide the best and most cost-effective solution, and yet you are not going to get the deal, it’s self evident that you are not going to put the effort,” Murphy said. “There has to be some sort of cultural change.” Such cultural change is happening in the UAE, Murphy said, and he hopes other countries will do the same. Murphy urged the region to act quickly in addressing the concerns he mentioned in order to benefit from business opportunities, such as technical help desks and call centres specific to Arab-speaking people, Arabisation of software — which Murphy said is mostly happening outside the Middle East — and the development of Arabic or Islamic web content. Other figures in the region support Murphy’s views. Morten Kvammen, chief operating officer of Injazat Technology Fund, said the lack of infrastructure to support innovation means the region is lagging behind global drivers such as the US. “Countries that are really driving global IT development have a whole infrastructure that supports innovation. They have companies with people and resources that are focused in that area. They have education and research institutions, and significant funding for research. More importantly, they have a funding infrastructure that allows entrepreneurs and innovators to go out and get funding from the market,” he claimed. According to Kvammen, Injazat Technology Fund, a venture capital company that targets technology companies, aims to provide the same environment for local entrepreneurs. “We’re trying to build a similar infrastructure in the region through our activities… but if you reflect on all the factors I just mentioned, you will see that this region does not necessarily have a lot of the things that would support a very high level of technology and innovation,” he said. However, Kamran Hussein, vice president of sales at Tech Access, said he has seen such issues occur in the past, but he believes that the state of the IT sector in the Middle East is improving. “The issue of not having an equal level playing field was true to an extent some time ago, but now we are genuinely seeing organisations respond and win tenders based on the merits of their response alone,” he claimed.

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