Caught short

HQ has approved your expansion proposal, the office space has been secured and its public knowledge that you are on an aggressive recruitment drive. There’s only one problem: you can’t get the staff. Not only is this scenario becoming increasingly common in the Middle East IT channel, it is also threatening to massively compromise the market’s development.

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By  Andrew Seymour Published  February 7, 2007

HQ has approved your expansion proposal, the office space has been secured and its public knowledge that you are on an aggressive recruitment drive. There’s only one problem: you can’t get the staff. Not only is this scenario becoming increasingly common in the Middle East IT channel, it is also threatening to massively compromise the market’s development.

It’s no exaggeration to say the IT market in the Middle East has exploded in the past five years. Vendors of all backgrounds and pedigree have swarmed to the region - particularly Dubai - to assemble extensive operations encompassing the full shebang of sales, marketing, technical, channel, administrative and finance functions. Dubai Internet City, for instance, is now home to 800 technology companies, while Jebel Ali has emerged as an equally significant employment base for the IT sector. The economic zones currently being established in Saudi Arabia have the potential to make a similar impact.

But has this unprecedented rate of growth forced the market to suffer a recruitment crisis? I am hearing increasing accounts of companies struggling to find and attract the calibre of staff they desire to enhance their business. Anecdotal evidence suggests the recruitment of accomplished staff is now commonly regarded as one of the steepest challenges faced by both vendors and distributors in the Middle East.

The catalyst of this crisis - somewhat ironically - is the fact that so many manufacturers are pumping investment into their Middle East subsidiaries at once. Building a solid infrastructure to grow a business boils down to the placement of good people, but that demand can only be satisfied by access to a highly-skilled labour pool.

Dubai still represents the primary destination for workers who take up roles at large IT vendors in the region. The local recruitment market remains burdened by size and fierce competition, prompting companies to source qualified staff from outside the region. That solution is becoming increasingly complicated, however. A marked rise in living costs and anxieties over property availability has dampened the appeal of a move to Dubai.

Interestingly, recent reports suggest Cisco plans to triple its headcount in the UAE this year. Is there the recruitment base out there to guarantee that the individuals it seeks are of the highest possible standard? I doubt it at the moment.

Dubai is not the only issue. At least two sources I’ve spoken to in the past week cite difficulties in persuading experienced, senior staff to take up positions in other Gulf countries. One even admits that it has been searching for an executive to run its Saudi marketing activities for the best part of 12 months, but simply can’t find a willing candidate who fits its demanding job description.

It is common to see vendors solve a recruitment dilemma by poaching employees from their distribution partners. This is happening with alarming frequency, allege distributors. Many employees in this tier of the channel harbour aspirations to work at manufacturer level. They regard it as a step up the career ladder and therefore welcome any opportunity they may get to make the jump. However, the absurd result of this scenario is that vendors are then complaining about the distributor’s performance even though they have plundered its best staff! Such an action doesn’t solve the skills shortage, but merely transfers the problem from one layer of the channel to another.

Just as significant is the relaxation of labour laws that has occurred in recent years. It is now far easier for workers to change horses, fuelling a much more dynamic and free recruitment environment, but ultimately one where the emphasis has shifted from employer to employee.

The point I am making is that the combination of all these factors suggests the channel is facing a skills shortage that could potentially inhibit the growth of the entire market. Will we eventually reach a stage where IT companies in the Middle East have a front-end sales office here and back-office functions somewhere else? If current trends persist then that proposition might not seem as radical as it sounds.

Training turmoil

While some parties in the Middle East are berating a shortage of staff, it seems others are unhappy about the blatant lack of interest in reseller training courses. Let me explain. Channel Middle East was mistakenly copied in on an internal e-mail discussion between several employees at a well-known value added distributor based in Dubai earlier this week. We’ll refrain from naming them, if only to spare their blushes.

The story goes that the distributor ran a couple of promotions in April last year to coincide with an event that one of its major partners - a large and reputable security vendor no less - held for resellers in the UAE. The first promotion didn’t exactly prove to be much of a hit, however. Just two resellers submitted applications that made them eligible for the promotion, which was eventually pulled in October after it “generated no incremental business”, according to the distributor’s Middle East and North Africa business development manager in charge of that particular brand.

The second promotion, meanwhile, offered Middle East resellers a generous 30% discount on all training courses run by the vendor and booked through the distributor, providing the candidates became fully certified within a pre-stated, six-month timeframe. That promotion, like the first one, went down like a lead balloon.

As the business development manager candidly explained in his e-mail: “Again this failed unfortunately to generate additional demand for training slots from our partner community - I think this is indicative of the level of investment companies are prepared to make in this region on training plus I think we could have done a better marketing job.”

Training course apathy is certainly a concern and this particular distributor’s worries could indicate a much deeper-rooted problem in the market. Perhaps it wouldn’t be such an issue if vendors just woke up to the fact that resellers in this region won’t pay for training. If vendors want partners to be better educated about their products, they need to provide training for free.

We’d also love to know if the distributor in question got round to admitting to the vendor that its marketing efforts weren’t up to scratch. Now, where’s that ‘forward’ button…

Have you got the Power?

The excitement is mounting and the countdown has begun. It is just a matter of weeks until Channel Middle East publishes its 2007 Power List - the definitive guide to the leading UAE-based IT distributors.

Now in its third year, the Power List is firmly established as Channel Middle East’s most eagerly anticipated feature of the year. Last year’s Power List featured 15 distributors that collectively posted sales of more than US$3.1 billion, emphasising the pure size, scale and influence of the market’s heavyweights.

The 2007 Power List is shaping up to be the most comprehensive yet and will provide a complete and updated picture on the distribution landscape. For the first time ever, we will assess some of the sector’s rising stars and take a look at the value added heroes that have carved out a strong proposition in the market. What they lack in volume, they more than make up for in punch.

Last year’s credit crisis and the increasingly competitive nature of the market could easily see some new names making it onto the Power List for the first time. As it stands at the moment, a minimum of US$40m in sales per year is enough to secure a place on the List.

Are you a UAE-based distributor with authorised vendor contracts that makes more than US$40m in annual sales a year? And can you prove it?

If the answer to both questions is a resounding “yes” then please e-mail andrew.seymour@itp.com

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