Home / / KSA nationalisation won’t disrupt channel operations

KSA nationalisation won’t disrupt channel operations

KSA channel stakeholders prepared in advance for Nitaqat regulations

KSA nationalisation won’t disrupt channel operations
Hamza says service providers that thrived on sub-contracting IT personnel have been impacted the most.

Saudi Arabia's nationalisation programme will not disrupt channel operations in the Kingdom, Channel Middle East has been told.

Channel stakeholders that participated in a vox pop interview, indicated that the Nitaqat regulations enforcement will not impact the day-to-day operations of the Saudi Arabia channel as most players in the Kingdom had prepared for these rules when they were initially unveiled three years ago.

A recent IDC research revealed that Saudi Arabia's nationalisation programme is likely to disrupt IT service providers in the Kingdom in the short term. The analyst company also warned that the Nitaqat regulations, which require Saudi companies to hire a certain percentage of local staff, will result in a shortage of skilled staff for service providers that have traditionally relied on expatriate IT professionals.

Dr Ali Baghdadi, president at Ingram Micro's Aptec, said having a quota of Saudi nationals in a company has been the case for several years. Baghdadi explained that the Saudi nationalisation programme has been in place for years and the recent changes aim to encourage the hiring of young graduates, both male and female.

"Saudi Arabia has good technical universities and our newly established training centre should provide the opportunities for needed technical certifications. Unemployment among Saudi males is over 10% and among females is over 40%," he said.

Baghdadi explained that Aptec has a mixture of Saudi nationals in management, accounting, HR and sales. "We also have a section for Saudi females and have recently established a new training centre in Riyadh, which will focus on providing training for technical certifications," he added.

Baghdadi said this is a gradual process and Aptec has established a programme to provide its channel partners in Saudi Arabia with enabling schemes, which will give them profit making opportunities. "We encourage the partners to engage and involve Saudi nationals," he said.

Hamza Naqshbandi, senior research analyst for software and IT services at IDC Saudi Arabia, said the new restrictions have impacted the ICT ecosystem at various levels as majority of the IT workforce in the Kingdom comprise of expatriates. Naqshbandi reiterated that progressive solution providers in the channel including large Indian system integrators had prepared for such enforcements and started hiring Saudi personnel beforehand.

He pointed out that service providers that thrived on sub-contracting IT personnel on a "no-objection" basis to other large service providers or customers have been impacted the most as such practices are now illegal. In addition, Naqshbandi explained that tier two and three service providers that cannot afford the high costs involved in recruiting and training locals may be adversely affected in the short term.

At KSA-based valued-added distributor (VAD) Al-Jammaz Distribution, the company said certain IT professionals will continue to be imported from other countries even with the new laws but companies will not depend on such expertise entirely, but create a mix of highly experienced expartriates and local staff.

Asim Saud Al Jammaz, vice president, Al-Jammaz Distribution, said although most channel players (distributors and resellers) have been preparing for this for some time, the new laws will make things more difficult for IT companies to do business in Saudi Arabia going forward, especially to fill the specialised skills that are in demand in the market.

Al Jammaz said for Al-Jammaz Distribution, this won't impact its distribution operations as the company has worked on this for a long time. "We have done many initiatives in the country towards training locals so some of our business units within the group have the highest percentage of Saudi nationals," he said.

Yakob Kafina, general manager, at specialist VAD, FVC Saudi Arabia, agreed and said: "As there was sufficient notification about the regulations, we made sure that we worked accordingly to comply with the regulations in advance. This has helped us to ensure that there are no disruptions in our operations in across Saudi Arabia."

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