Dubai: The land of opportunity

In a short period of time, a dynamic international community of ICT companies has established itself at the Dubai Internet City. The booming IT industry and the turbulent political landscape of the Middle East makes Dubai an attractive hub from where global ICT giants can service the rest of the region.

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By  Sarah Gain Published  April 25, 2005

|~|website--tejari.jpg|~|Dubai’s geographical proximity to the talent and markets of the Middle East, the Indian Subcontinent and Northern and Southern Africa, combined with its status as the most sophisticated logistics infrastructure between the Far East and Europe, make Dubai the location of choice for IT businesses seriously seeking to thrive in the region, says Saqib Iqbal, COO of Tejari. |~|The UAE is a mixture of traditional values of the East and the modern technologies of the West. Various nationalities of people live and work together, sharing aspirations and working towards same goals.

Dubai, which is the second largest in terms of GDP out of the seven Emirates that form the UAE, make it a safe place to live, offering a high standard of living and as a result, the recruitment and relocation of skilled staff poses little problem for multinationals, according to Crawford Beveridge, executive vice president for people and places and chief human resources officer for Sun Microsystems. “Dubai is favoured by large [corporations] not just from a business point of view, but also from a lifestyle standpoint. It is a clean, modern, crime-free city. It also offers a luxurious lifestyle, advanced healthcare and a good education system. All this makes the city one of the most appealing places to relocate to in the Middle East, and these factors are especially attractive to Western job seekers,” he says.

The past ten years has brought rapid growth and technological sophistication that has changed the face of Dubai from vast deserts to a thriving modern metropolis with strengths in technology, trade, services and manufacturing, fortifying the economy and bringing huge investments to its shores. Having successfully developed an international reputation as a regional commercial hub, Dubai effectively leverages a market of over two billion people in the Middle East, Africa and South Asia with GDP in excess of US$1.1 trillion. Strategically, Dubai is an ideal hub from which to target the flourishing GCC markets. It is also within easy reach of neighbouring Saudi Arabia, the largest market in the region.

“Dubai’s geographical proximity to the talent and markets of the Middle East, the Indian Subcontinent and Northern and Southern Africa, combined with its status as the most sophisticated logistics infrastructure between the Far East and Europe, make Dubai the location of choice for IT businesses seriously seeking to thrive in the region,” says Saqib Iqbal, COO of Tejari.

The Emirate follows a balanced economic policy that has fostered a strong international reputation. Combined with the country’s political stability and efficient administration has encouraged both national and foreign corporations to participate in its economic activities. “Overall, what Dubai has that has given it such a strong position in this region is its customer-oriented philosophy. The country’s decision-making processes are being sped up, and this is what allows Dubai to be so progressive,” according to Jalal Alqassab, head of IT infrastructure at Gulf Air.

Dubai’s non-oil sectors contributed 90% of the Emirate’s total GDP in 2003, according to global research firm IDC. This figure is predicted to go up by 4% in 2005, with manufacturing, tourism and services making strong contributions. Furthermore, the region’s e-government initiatives also give global corporations yet another incentive to select Dubai as their regional base.

John Davies, Intel’s vice president of sales into vertical sectors, believes the government’s move to support both businesses and their employees have helped Dubai’s popularity. “What is beautiful about the region is that it is adopting technology quickly. It is unwiring, adopting multimedia, developing wireless corridors and multimedia cities and improving government services,” he enthuses.

“For business people, the ability to apply for a visa online is a strong incentive— that is just one of several e-government initiatives that will save huge amounts of time for those who have to travel for work, allowing them a much greater degree of flexibility. The Dubai government is forward thinking in its e-government ventures, a true leader in the Middle East region.”

Attracting foreign businesses to its free-trade zones has been one of Dubai’s strongest achievements. With the aim of diversifying its sources of income and reinforcing its industrial base, the Dubai government established the Jebel Ali Free Zone in 1985 to provide opportunity for private sector investments.

||**|||~|Beveridge-website.jpg|~|Dubai is favoured by large [corporations] not just from a business point of view, but also from a lifestyle standpoint. It is a clean, modern, crime-free city. It also offers a luxurious lifestyle, advanced healthcare and a good education system. All this makes the city one of the most appealing places to relocate to in the Middle East, and these factors are especially attractive to Western job seekers, says Sun's Crawford Beveridge.|~|Encouraged by the venture’s success, the government launched Dubai Technology and Media Free Zone, a multi-billion dollar initiative comprising Dubai Internet City (DIC) and Dubai Media City (DMC). Companies with operation in the free zone have the luxury of foreign ownership, full repatriation of capital and profits, no corporate tax for fifteen years, no currency restrictions and no personal income tax for staff.

“The scope for state-of-the-art technology and the liberal benefits, has led to a surge in foreign investments in the region. Advantages such as the complete freedom to move capital and the lack of imposition of taxes on profits or income are very attractive to businesses of any size,” he explains.

The DIC and neighbouring DMC have been equally successful in adding a high-tech information and communication stratum to the city’s economy. While both the DIC and DMC ventures have proved to be hugely successful, it is the DIC that has been responsible for placing Dubai on the global information technology industry’s map.

“Dubai has been the pre-eminent centre for business in the region for a long time and has maintained this position through its willingness to accept new skills, practices, technology and the cultivation of an innovative and entrepreneurial business culture,” says professor Sa'ad Medhat, chairman and CEO of Productivity4you and a long-term resident of Dubai.

The DIC community, which includes players in the fields of hardware and software development, business services, e-commerce, consultancy, education and training, and back-office operations, all have access to a rich network of resources that support enterprises and enable the generation of partnerships and ideas. “DIC is a knowledge economy ecosystem, designed to support the business development of ICT companies. There fact that there are no currency restrictions and assistance is offered with registration and licensing makes the transition process extremely simple for businesses,” Beveridge adds.

“It also has the Middle East’s biggest IT infrastructure with a large commercial internet protocol telephony system, all protected by stringent cyber regulations. It is only logical that large multinational operations want to base themselves in Dubai.”

A community of over 5,500 workers, employed by ICT corporations, is based at the DIC in order to take advantage of its modern technology platform. The burgeoning ICT cluster offers a high quality of business interaction and networking opportunities that contribute to the community’s enhanced problem solving and knowledge sharing capabilities. A host of wireless zones in Dubai is further enabling the modern trend towards more mobile enterprises, allowing Dubai-based companies to adopt the same flexible working practices that are being favoured by their counterparts in the US and Europe.

The IT infrastructure delivers competitive advantage to businesses and continues to encourage local, regional and global enterprises to invest in the area. “We have a commitment to expansion into public and private sector organisations in the Gulf region and have chosen to enter the Middle East market because of its state-of-the art infrastructure and rich technology expertise,” explains Dan Vetras, president and CEO for Talisma, which wants a slice of the region’s customer relationship management (CRM) software market.

Samer Alkharrat, who is Cisco’s service provider regional manager, says it is not always easy for foreign corporations to establish themselves in an emerging market, shares the Talisma viewpoint. “The availability of facilities, services and talent is a strong draw card for companies wishing to serve the Middle East region by operating out of Dubai. [Corporations] are looking for a hub where they can establish their business and [exploit] lucrative [commercial] opportunities.

Dubai has taken the lead on that, having excelled in that space, it remains in the lead in terms of providing business opportunities and the infrastructure that is needed for organisations to do business in the Middle East as a whole,” he says.

The DIC is at the very heart of this critical infrastructure, providing a value proposition for investing enterprises by offering both set-up and operational benefits and providing an environment that includes every element of the value chain for ICT businesses. The community’s administration also develops programs that can be leveraged by the ICT community to explore and expand channel development opportunities.

The development touts itself as a ‘one-stop-shop’ for business support and ensures that processes such as company registration and legal compliance are as hassle-free as possible by providing a simple framework for approval procedures. “By establishing a mixture of services that can meet different sector’s requirements and by beginning to build on the infrastructure, adding different facilities, Dubai has become a prototypical hub, creating a lot of different channels that flow in and out of the country,” notes Gulf Air’s Alqassab.

The platforms and infrastructures supporting DIC’s services have been carefully engineered and implemented to provide service at the highest levels of availability and performance, in harmony with customer expectations and global standards. “Dubai has provided what all companies are looking for – provisioning for the enterprise was the whole concept behind the infrastructure in Dubai. As far as technology is concerned, the government has developed state-of-the art services, and best-of-breed technologies,” Alqassab adds.

Beveridge attributes the lack of obstacles and low costs to the government of Dubai and its support for free zone initiatives. For example, the process of incorporation, which is essential for incoming operations in order to secure legal protection, obtain credit, raise capital and enjoy benefits such as tax exemptions, is generally an onerous chore for businesses attempting to establish themselves in an emerging market. However, for those choosing to base themselves at the DIC, once the basic formalities have been complete and the necessary documents verified, DIC issues the certificate of incorporation and share certificate within an hour.

“Because DIC works closely with government departments, the process of obtaining government services is easy. Enterprises do not require the sponsorship that they would otherwise require if they were to set up elsewhere and the process of obtaining different types of residence and entry permits for employees is facilitated,” Beveridge adds.

In addition, flexible labour laws ensure that industry needs for part-time and temporary requirements are met and a 24/7 visa service and fast-track immigration process for new employees guarantee timely access to required talent by making the recruitment process less daunting. The process is made easy by DIC’s assistance with finding accommodation and transportation for staff as required.

“The process involved in establishing businesses has been streamlined and while Dubai remains in the lead in terms of providing the facilities, opportunities and the right environment, what we have been seeing in the last two or three years is that other Gulf countries are starting to follow Dubai’s example in terms of its type of business model and infrastructure,” Cisco’s Alkharrat points out.

The governments of the GCC nations are attempting to build similar infrastructures to those that have been exemplified by Dubai. International events such as the recent Bahrain Grand Prix and the upcoming Asian Games to be held in Qatar put a positive spotlight on the Middle East region and draw global attention that raises the region’s profile. Furthermore, the ongoing deregulation of the region’s telecommunications sector indicate a strong move on the part of governments to create business-friendly environments and encourage competition from outside.

Bahrain has commenced the construction of an e-Tech centre. In addition, with the governments of Oman and Kuwait considering developments similar to DIC, it is apparent to the outside world that countries in this region are ready to embrace technological advancements and the investments that it brings.

The differentiating factor between IT players is not necessarily the technology itself, but the quality of service they offer. As a result, most corporations are beginning to see the advantages of having a presence in every country in which they operate in order to remain competitive. A growing number IT businesses are, therefore, setting up satellite branches in other Middle Eastern countries and controlling these operations from a central head office in Dubai.

This enables corporations to tailor their business models for different customer segments and different countries’ markets, enabling the localisation of operations. “Wherever we see lucrative opportunities and long-term sustainable business we will generally open country offices. We currently have our central office in Dubai, with a smaller, satellite operation in Abu Dhabi, three offices in Saudi Arabia and further offices in Kuwait, Cairo, Morocco, Lebanon and now in Pakistan. As the potential in business increases, we like to be closer to our customers and partners and part of that is having a legal entity and establishing an office in the country,” says Cisco’s Alkharrat.

“Dubai remains the regional head quarters from where the majority of our shared functions such as human resources, finance and channels are performed,” he adds.

However, in the push for decentralisation, the Middle East’s turbulent political landscape cannot be ignored. It is not always possible or safe for large American conglomerates to open branches and have staff on the ground in every region. These organisations take precaution and operate within strict corporate guidelines. They form partnerships with companies already based in a particular country in order to raise brand visibility and to tap into the country’s market opportunities, whilst still managing the partnership from the safe haven of Dubai.

For those enterprises determined to establish a presence in unsafe areas, it is important to work with local expertise, according to Tejari’s Iqbal. “It is important that foreign companies make effort to understand Arabic culture, integrate themselves with the environment and employ local and Arabic-speaking staff to ensure that their customers and clients realise that they are making a long-term investment in the country,” he explains.

While the new technologies and wealth of services available not just at the DIC, but also at DMC and Knowledge Village, and with plans of building Dubai Studio City and Dubai Outsourcing Zone, the Emirate will continue to be a hot IT destination for foreign investors. At the same time, improved communications and increased mobility continue to break down boundaries, bringing people closer together.

“The world is a small place now, enterprises can be based anywhere and still have access to the whole world. The major IT vendors are always just a phone call away and this region is so small that it is possible to travel quickly and easily. Certainly in my experience, having to fly to meetings does not impact on relationships between customers and vendors,” says Alqassab. “Major Gulf Air partners include Cisco Systems and HP and they are based at DIC and that makes no difference to us.”

Like every thing else, there is always some downside to fast changing economies. One school of thought is that Dubai and its economy have expanded too far, too fast. Traffic congestion, the high cost of accommodation and pollution of the natural environment are just some of the common complaints from local residents.

However, the progress shows little sign of slowing down and indeed the requirements of the continuing flood of new businesses will itself help to drive unremitting IT investment. “It is a cycle — the booming technology lures people and the influx results in another surge in IT investment,” Iqbal surmises.

Ultimately, Dubai is too much of an IT goldmine for vendors to resist and indeed, the MENA region are at the top of the agenda for many company executives. Although Dubai has been leading the way with its business-friendly infrastructure, its success as a regional nucleus and the success and growth of the IT industry in any other GCC country are not mutually exclusive as Professor Medhat explains: “The [state-of-the-art] infrastructure in Dubai will not stop organisations from investing in other markets, and at the same time the growth of other countries’ markets should not be seen as a threat to Dubai’s economy. It is an extremely positive thing – I doubt that Dubai will ever lose its position, but its success in the field of IT will have a trickle-down effect. Other countries will learn and gain a great deal and the region as a whole will become more prosperous.”||**||

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