Saudi market calls for substance over style

When it comes to identifying growth spots in the Middle East, Saudi Arabia is usually at the top of the list. But vendors which are launching operations in this fast-growing market need to be honest about the extent of their plans.

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By  Administrator Published  January 1, 2007

A spate of IT providers have rushed to open offices in the Saudi market during the past quarter, intensifying a trend that has been quickly gaining momentum since the beginning of the year.

But there is one big question that remains unanswered: just how committed are these companies to developing a sustainable Saudi business and supporting local channel partners?

While the heavyweight technology vendors have had the resources to function inside Saudi for some years, the next tier of players - which have typically had an established GCC base operating out of Dubai until now - are finally seeing the value of having a dedicated in-country presence in the Kingdom.

In the last six weeks alone, software vendors such as Sage, 3i Infotech and Trend Micro have either opened, or are in the process of opening, a locally-staffed Saudi branch office. Egyptian software services reseller ITWorx recently launched a Saudi arm to serve customers more efficiently, while distribution outfit Almasa appointed a regional director to put in place the building blocks for a local KSA operation.

I fully agree that the mere act of opening a local office in Saudi is a statement of ambition in itself, especially as so many companies are content to manage their entire Middle East operation from the UAE. Having an on-the ground presence automatically brings you closer to customers, partners and, most importantly, the market.

However, the challenge for companies that are fresh faced to the Saudi market is how they go about building on their investment over the next 18 months, if they do so at all.

If you have just opened an office in Saudi, or plan to do so in the near future, then you should already be asking yourself a number of important questions.

Do you just maintain a token presence with a handful of representative staff? Or do you actually put in place a series of measures to aggressively build the business out, even if it means using a significant proportion of your overall regional budget to achieve that?

The dilemma for many companies - and one which members of the Saudi reseller channel are monitoring closely - is to what extent incoming vendors plan to develop their local operation.

Will an in-country office be able to provide partners with dedicated sales and marketing support? Is there going to be any concession made for pre- and post-sales service? And are the technical and service centre capabilities that really add value to the channel going to be made available locally? These are the tools that will be most keenly welcomed by domestic business partners in the long run.

In addition to that is the issue of how readily prepared companies are to expand outside of the capital city and into other major locations such as Jeddah.

The Saudi market is spread across such a large geography that anybody with genuine ambition to address the market must already have formed a basic idea of how to develop the business beyond Riyadh.

Saudi Arabia is a market deserved of special attention. Already the consumption of PCs in the country is larger than any of the other Gulf states, while the Saudi IT services market is expected to be worth almost US$800m by the end of this year. A recent Channel Middle East quick poll asking which market will see the highest IT growth in 2007 saw almost 70% of respondents vote in favour of KSA. There is no doubt in my mind that manufacturers and suppliers of IT products which are committed to opening fully fledged country branches with a certain amount of autonomy from their Dubai HQ are best placed to achieve long term success in Saudi. Let's wait and see who takes the initiative first.

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