Recruitment companies in the Gulf Cooperation Council (GCC)Gulf Cooperation Council (GCC) are increasingly encountering want amid plenty. Changes associated with the staggering pace of economic growth have made it difficult for companies to attract and retain enough suitable candidates even as the number of CVs being received has never been higher. Jobs going begging and compensation skyrocketing summarises the current operational dilemma faced by more and more regional companies.

It is becoming harder to find the right person with increasing functional sophistication in most industries. "There would be more demand for vertical skills with companies looking for a closer fit," says Eugene Koshy, CEO, Al TanmiyaTanmiya Holding Company. In this scenario, a talented employee can be just as valuable and hard to replace as a loyal customer. Even more so when the value being created by companies is largely a product of knowledge and information.

Striving to prevent their business objectives languishing in the face of shortage of right talent, these companies have thus been involuntary contributors to a dramatic upsurge in salary levels. Fearing increased attrition, companies are keeping a close eye on competition to see what offers are being accepted.

"Estimates of salary increases in the GCC vary widely, but our records indicate an overall increase in salary levels of approximately 25 per cent over the past 12 months. In many cases, we have seen candidates successfully gain salary increases of over 50 per cent when changing employers," says Siobhan O'Reilly, Recruitment Manager, Bac-ME.

A rise of this magnitude, however, represents extreme instances. "We have seen a number of examples where increases of 20 to 25 per cent have been justified by the large international companies for staff at the lower end of their salary structures. However, 10 to 12 per cent would seem to be the norm for increases in salary over the past year," qualifies Ian Giulianotti, Associate Director, Nadia Recruitment.

In certain skill pools, the salaries may be touching global levels. "This is not fully documented as yet but is starting to happen," says Freddy Becker, Policy, Compensation and Benefits Manager, Middle East, Caspian and South Asia, Shell EP International Limited. The rise is not uniform and varies with the country the executives are sourced from. "Cost of acquisition varies significantly between, say, London and Hong Kong," says Metin Mitchell, Managing Director, Korn Ferry International, Middle East.

The type of business is also a factor. "It is for the first time that the salary levels for the lower levels have risen more than that for the higher level, at least for the banking sector," says Adel Al-Alawi, CEO, Forum International Executive Search. According to him, although demand is high across the board in the banking sector, it is exceptionally higher at lower to mid level reflecting a rapidly growing economy.

"In construction and, oil and gas, we see salaries being offered 15-50 per cent higher than the prevailing compensation levels in an organisation," says Amit Saxena, Director, Gulf Personnel. Moreover, the rise is favouring the new employees. The general increases in salaries for existing employees ranges between 5 and 25 per cent, depending on the type of industry the company operates in, size of the company and type of company (public/private/multinational).

Surprising exceptions to this trend of steep salary rises have been Kuwait and Bahrain. According to Walid Riachi, Assistant General Manager, Kuwait Recruitment Bureau (KRB), "Unfortunately, the increase in cost of business has led companies to tighten their budgets rather than accommodate them to meet such salary increases."

"Although the banking and finance sector, as well as construction are the two main industries that have seen salaries rise, the increase in salaries have not been as much in Bahrain," says Noora E. Feleyfel, Regional Director, Marketing and Business Development, MRI Middle East. She believes that the salaries in 2007 in Bahrain will more or less be similar to 2006 with no more than a 5 per cent increase.

Financing teh spike
There are a number of factors behind this escalating premium on talent. The more obvious causes are definitely the higher cost of living and the ever-increasing competition for skilled personnel. "In Bahrain, the escalating cost of living is mainly due to the influx of Saudi residents [Arab and Western expats] moving to Bahrain and commuting to Saudi as Saudi companies offer their employees a higher housing budget," says Feleyfel, giving a local twist to the regional problem.

While organisations must find a way to deal with the spiralling costs of living in the Gulf, these two issues are of equal importance and it is impossible to separate them as they are both linked to the booming market conditions. The trend of IPO activity in the region has nearly doubled over the past year, with $7.61 billion in capital being raised a 10.7 per cent of total capital raised globally. This has fuelled the boost in the establishment of investment banks, private equity firms and financial institutions in the region, thus increasing the demand for top tier human capital.

At the more senior levels and for specialised skill sets, however, it is the limited pool of qualified resources that is creating the upward drive in salaries. At these senior levels the levels of inflation that exist are not high enough in salary-percentage terms to create a serious dent in lifestyle. "Also, at senior level, people generally move to cash in their career," says Al-Alawi.

Free for all
The shortage is more acutely felt in specialised free zones being set up in the region. "People are moving to jobs of a very similar category, but for more money," says Mike Hynes, Managing Partner, Kershaw Leonard. Facilitating their search is the setting up of institutions such as the Dubai International Financial Centre (DIFC).Dubai International Financial Centre (DIFC). In order to attract the investment banking and financial community to Dubai, employers within the DIFC are having to offer packages that are competitive with the world's leading financial centres.

"These new employers are prepared to pay at levels not seen before in Dubai salaries and far in excess of the current market levels," says Giulianotti of Nadia Recruitment. Similarly, although Dubai Silicon OasisDubai Silicon Oasis Authority (DSOA) started just a couple of years ago, the absence of an existing semi-conductor industry has meant that engineers have to be brought into the region from abroad, at least for now. Given the rate at which technology moves, it is not feasible to take electronics engineers and train them. It is even more difficult to recruit trainees or fresh graduates.

Besides, the region is continually looking at succession planning and how resources from international markets can help not only build and drive business performance, but also groom the next generation for more senior level roles. Part of the shortage may be cyclical, the product of a strong economy at the peak of its cycle. "Certain industries recorded fantastic growth and could easily afford to pay more," says Koshy.

But the higher operational profits of companies in these industries doesn't justify the unscientific increases in salaries. What should keep CEOs awake at night, however, is a number of trends that threaten a wide-ranging shortage in talent over the next five years.

Regional pull
It is getting harder to find skilled people in many categories, simply due to the greater opportunities available across the region. All the GCC countries are pursuing ambitious growth and investment plans so a severe competition for skilled professionals is inevitable.

The emergence of efficient capital markets and overall economic growth throughout the GCC region has enabled the rise of many small and medium-sized companies that are increasingly targeting the same people sought by large companies. Small companies exert a powerful pull across the whole executive spectrum, offering opportunities for impact and wealth that few large firms can match.

While this growth across the region is attracting more and more people to come up and work in the Gulf, it has also led to increased job mobility within the region. "It has become a merry go round of sorts within the region," confirms Deborah Webster, Consultant, Korn Ferry International.

The main pull is coming from Saudi Arabia, mainly due to its relatively large market size. Further, as different countries position themselves as having different specialisations, demand for experts in specific industries varies accordingly. For instance, demand for insurance personnel is currently highest in Bahrain. The regional competition has probably been most apparent in the construction sector due to the number of landmark projects across the region, and it is also one of the reasons that this sector has led the way with salary increments.

The subcontinent factor
"Another important factor to consider, however, is the strong economic growth in India, which is affecting the career decisions of many current and potential NRIs [non-resident Indians]," says O'Reilly. As it gets difficult to attract people from the subcontinent, it increases the pressure to move people within the region making the pool of available resources even smaller.

"For the first time, Indian oil companies are advertising to pull back people from this market," says Koshy. While the trend in this industry could be an acknowledgement of a local talent pool, the resources are drained in the IT sector is because career development is limited for expats in this market.

"Asians have, so far, dominated the regional market but to win this war on talent, we'll do whatever it takes," says an undeterred Al-Alawi, who, along with other head-hunters, now targets a much wider range of countries; not without challenges though, given the limited mobility of people from countries such as China and Russia. For this and the familiarity with the local language has meant that the Arab expats from Egypt and Jordan are also in much greater demand now.

However, the professionals moving back to India are primarily making their decisions not based on cost of living but based on career growth prospects, size of opportunity and the traditional bonds that they hold back in their home country. "The salary differential between the GCC and India at senior and mid levels of the organisation is now less than 15 per cent in most cases. At the top most level (that of C-level officers) the size of the opportunity, the growth prospects and the compensation levels are now a much more attractive proposition in India," says Saxena.

While there is no denying a trickle of professionals moving back to India at senior and mid levels, there is no flood yet. But with India and the rest of the subcontinent reckoned to continue experiencing a healthy economic growth, that could translate into more lucrative packages on offer next year for those who are to be tempted to stay back.

Localizing talent
Even as the dynamics of the global labour market are forcing people to review their approach to recruitment and development, another important factor in continued salary rises has been the emphasis on localisation in almost all GCC countries. With 80 per cent of the search by placement companies such as Korn Ferry International being global, a mandate for companies to groom local talent is more than justified on grounds of sustainability of economic growth.

"The government is pushing more emirates into the private sector and companies have accepted that localization is a non-negotiable concept," says Hynes. Whilst Emiratisation has been a hot topic for a number of years, it has been brought even more to the fore due to the emphasis of its importance with the launch of the Emirates National Development Programme last year. The initiative was followed by an announcement by the Ministry of Labour that within two years, all HR managers and secretarial positions would be localised.

"The HR ruling was a wake-up call for the private sector that the government is serious about nationalisation and integrating locals into every aspect of the industry and the economy," asserts Koshy. His recruitment company, SOS Recruitment, is part of Altanmiya, an investment company with a paid-up capital of $50 million, dedicated to the development of human capital.

"Initially, expatriates were somewhat concerned. However, the long-term view is that the growth of the UAE will not be allowed to slow and that some compromise will be reached," says Giulianotti. In fact, recent research by impaQta, a knowledge aggregation and integration company, indicates that various industry sectors can increase their competencies, boost gains, mitigate the risk of communication failure and lack of target market understanding due to cultural differences, behavioral norms and modes of presentation by relying on a diversified, multicultural workforce that includes UAE nationals.

Local companies such as Dubai Islamic Bank (DIB)Dubai Islamic Bank (DIB) are now at the start of their fifth round of the Emiratisation training programme, Iktasib. The programme is targeted at training the UAE nationals in Islamic banking services. In any case, government organisations such as DSOA inherently have a good amount of nationalisation. Multinationals such as MarriottMarriott Hotels work with localisation programmes to commit to each country they work in, as well as where enabled due to country specific staff shortages transfer skills from other MarriottMarriott hotels or hire from outside from countries with high unemployment and help those growing countries too.

"We will always seek to meet or exceed localisation targets in partnership with each country. This year [2006], we launched a three-year graduate management training programme in which we hired some 20 graduates in Saudi Arabia and Egypt and we intend expanding this initiative next year to Jordan, the UAE, Kuwait, Qatar and elsewhere, thereby growing future local managers from within," says Gary Dodds, Regional Vice-President, Human Resources for the UK, Ireland and the Middle East and Africa, MarriottMarriott Hotels.

Localisation in GCC countries, however, is most evident at the entry level. "There is no pressure at senior levels and chances
are dim in the medium term because of lack of experienced resources at that level," explains Nico Ekendahl, Managing Director, Middle East, Africa and Asia-Pacific, SpenglerFox.

Although the market here is still weighted against fresh graduates as there is a premium placed upon experience, the jobs for fresh graduates are mostly seeking locals in line with the great demand for localisation. "We have to remember that the pool of fresh graduates is three to four times bigger," says Al-Alawi, suggesting that demand pressures could be absorbed to some extent.

Also, the integration of nationals is a challenge, which could presently be more pressing in certain sectors, and will ultimately affect all companies. Besides, multinationals bound by their structures to be an equal opportunity employer now face another reason to hike salaries.

What is helping the cause is increasing alignment between the salaries of expatriates and locals. "The difference has come down to 10-15 per cent from an earlier range of 40-50 per cent," says Al-Alawi. "But the median salary expectations of fresh national graduates hovers around Dhs8,000 [$2,180] compared to the Dhs4,000 [$1090] for Asian expatriates," qualifies Saxena of Gulf Personnel.

"The high difference in salaries companies are offering between nationals and expatriates is creating a sort of resentful and de-motivational attitude for expatriates, especially when some of those nationals are not really up to the required mark," adds Riachi drawing attention to the flip side of nationalisation initiatives. Some companies even have two HR managers - one for locals and one for the expatriates. "The dual salary structure developing in the region is a very backward step for countries looking at global integration," argues Hynes.

At the same time, localisation criterion being different across industries and countries makes it difficult to measure the progress against a uniform benchmark. "There is a dire need for qualified local talent in Bahrain and Saudi as these countries have very strict nationalisation policies," says Feleyfel. In the same vein, whereas Shell has achieved close to 80 per cent Omanisation, the company's progress in other countries varies significantly.

Employees market
Whatever be the reason, the immediate beneficiaries of this premium being placed on talent are the candidates. According to a DBM HR survey, the region is becoming an employees' market, with job seekers having the power of choice. Candidates are increasingly selective and aware of their market value. "It is a candidates' market as more of them are turning down job offers or negotiating salary levels very aggressively," says Hynes. "Since the strongest bargaining position is when starting a new job, candidates are taking advantage."

In the most in-demand sectors, candidates have much greater power over the recruitment process and some firms have struggled to adapt to this. "It has become very difficult to find people in Kuwait due to the big gap of what they require and what companies are willing to offer," says Riachi confirming the trend in Kuwait.

There are several specialized positions where the supply is so constrained that an offer is almost always followed by an upward negotiation. "For example, for positions like that of quantity surveyors, contracts manager, safety manager in the construction industry, compensation designed on experience and current-compensation fitment is the rule," says Saxena. While there is no longer a static organisational grade-based compensation system for such positions, the availability of people is more constrained at the senior and middle levels of the organisation.

Acknowledging the importance of employees, hotel chain MarriottMarriott holds an annual associate opinion survey to ask all its staff how the group is doing in caring and leading them, and seeks to adjust and align each year to be better. "When 82 per cent of the staff says we get this right, as has happened each of the last two years in the Middle East, we know we are walking the talk," says Dodds.

Attracting vs Retaining
Clearly, finding people is not a problem as much as finding the right people. For every position advertised by Nadia Recruitment there are, on average, 150 applicants with only 10 per cent of these having suitable experience or transferable skill sets. The company's website averages over a million hits a month and receives somewhere in the region of 250 speculative CV applications per day.

While all these developments have made the recruitment process harder, companies are adopting a two-pronged strategy. Firstly, they are moving away from dominant sourcing to secondary sourcing strategy identifying resource pools in new countries. Secondly, as it becomes more difficult to recruit, companies are spending more effort to retain.

Recruitment companies in general are seeing a rise in applications from established candidates who are seeking to overcome the rising costs by seeking new employment at a higher remuneration rate than that being offered by their present employer. "Thus, we see retention of staff being a major problem for employers over the next year," confirms Giulianotti.

And the first step is to offer timely career opportunities, especially since 51 per cent of the people leaving a company do so because of lack of career opportunities. More importantly, in such a dynamic environment, firms have had to become much more flexible and responsive with their policies towards remuneration and reward in order to attract and retain the most talented professionals.

According to a white paper by the Economist Intelligence Unit, talent management now features prominently on the CEOs' agenda, taking more than 20 per cent of their time. Money is important too.

This twin focus on retention and attraction could be the reason why more and more companies are willing to pay benefits such as a joining bonus and a market adjustment or cost-of-living allowance. Some companies are increasing the House Rent Allowance (HRA) component in direct proportion to the market rent percentage rises in line with compensation design philosophies followed in other mature economies with a mature housing market.

In fact, a major part of the salary increase is accounted for by these additional variable benefits, which allow companies to mark the compensation to the market while retaining flexibility to restructure when things change. In sectors such as oil and gas, where companies are recruiting aggressively, companies need to reach effectively and fast. "We stretch offers dynamically in this hot market," confirms Becker.

Performance pays
The rise in rents is an immediate cause for concern and companies who had previously used rent allowances as a method of reducing exposure to gratuity payments are now coming under pressure to review their allowances by their employees. A greater weightage on variable components also means that salaries are more customised to individual performances.

The approach allows companies to reward and retain their key staff without raising their salary levels across the board. "A marked shift towards performance-related pay is a reflection of the need to retain," says Webster admitting that the best way to hold people to high standards is to directly reward achievements.

"Many of our multinational clients have sought our advice on this issue due to the rapid pace of change and the difficulty in securing up to date salary benchmarks," says O'Reilley. Support for retention approach also comes from research such as that done by impaQta which suggests that strategic human resource development could increase productivity by as much as 30 per cent in regional firms.

Attracting new employees, meanwhile, has meant that companies are paying more guaranteed bonuses for the first year and are also more willing to buy out bonuses for new recruits. Some are designing more creative remuneration packages such as ones with air miles as a bonus. "In Kuwait there has been an attempt to substitute physical benefits with significantly less cash allowances," says Riachi.

Although Bahrain is not seeing much change in basic salaries, companies are leaning more towards profit sharing/bonuses, and performance-based incentive schemes (commissions). "More are starting to offer quarterly bonuses," confirms Feleyfel.

With more and more start-up companies in the region seeking global executives, they need to have a compelling scenario to make someone travel half-way around the world. Clearly, it is the newer entrants into the labour market who have an advantage in terms of salary restructuring.

"Changes in salary structuring in well-managed HR environments can't be driven by short-term external 'shocks' to the system and not without a review of the rewards strategy," says Aman Merchant, CEO, Paradigmz. According to him, senior management levels saw the highest overall increase in gross pay, albeit it was underpinned mostly by variable pay, and not fixed pay. Mid-management saw relatively higher increases in fixed pay, or what one could call guaranteed cash.

At the same time, this being a rapidly growing economy unlike the matured European markets - allows employees to add significant value to their employer and achieve something much quicker. "In these conditions, there should be an overachievement bonus an unlimited earning potential for high performers. Companies with good strategies have already brought this into the concept," argues Ekendahl.

One of the long-term implications of these evolving salary structures is that firms will increasingly look to quality over quantity in their recruitment, and there will be a greater focus on identifying talent, increasing efficiency and monitoring staff performance. These trends are evidenced by the rising demand for HR professionals with a proven track-record in performance management, training and development.

Talent management
The objective of a business, however, is to maximise profits per worker rather than wages per worker. Companies being more focused on return on resources are looking at developing their own resources through training of high potential individuals identified within the company. However, a commitment to promote from within would be meaningless unless the company offers training and development that can prepare employees for new jobs.

Besides, studies show that over 50 per cent of organisational diversification and expansion plans in the region achieve less then half of their initial objectives due largely to people-related issues. Attracting, training and retaining talent is thus becoming increasingly important in successful change management and sustainable growth. Human resource has to become an integrated function within strategic planning, as competitive advantage in the knowledge economy comes from aligning personnel goals with business objectives and organizational culture.

A lot of companies are now willing to take people without the exact skills needed for a job profile and then train them into the role. This is especially true for specialised roles in construction and oil and gas. "In these industries, the availability of professionals in some roles like planning, safety and construction is so constrained and the market compatibility of salaries is so dynamic that some organisations have decided to institutionalise the hiring of people into junior roles at lower salaries and then train and coach them to step up into the desired role," says Saxena.

For the immediate term, this means that clients are running short on people with the exact skill sets they require which may sometimes impact delivery and operations. In the long term, however, they are creating significant value for their employees and for their work culture by fostering career growth and encouraging employees to move up the value chain. Eventually, this can only help the company to grow in the long term.

The Al Tayer Group considers its structured training system as an excellent attraction and retention tool in the face of greater awareness that learning and development lead to the bigger salary. The group's Learning Centre is an indigenously created initiative to drive the learning and development programmes for the organisation's employees. To capitalise on talent, companies need to recycle resources, take a holistic view of development, rather than focus on specific skills for specific roles and create the cultural environment for this type of development.

"Learning is a strategic tool not only for the employees, but at the level of the organisation itself, to get business, and a differentiator when approaching customers," adds Becker. Shell has various regional learning hubs. Recently one was set up in Oman, and there will be one soon in the Qatar Science and Technology Park.

DSOA is establishing an educational facility that will be at the university level; to train and educate more people. This is in the future, but for now, DSO cannot take in people even with PhD's and masters degrees who have no experience, as it is experience that builds competency.

Perhaps the training structure in DSOA is less mature than that of Shell or the Al Tayer Group and is still in the process of manning companies existing in DSO through recruitment of engineers from India, Egypt, Turkey, and Vietnam. In spite of no set strategy, there is a training budget and training department. The location of DSO next to Academic City could turn into a huge opportunity to build educational and training programmes for new talent. Although every industry has its own speed of compression, underneath the compression is a never-ending treadmill of improving skills.

The MarriottMarriott has a minimum of 40 hours of training and development commitment to every single employee annually. An increasing number of current associates are renewing their contracts with their present hotel within the MarriottMarriott system. Not surprisingly, successful companies in the region are trying innovative ways to train and up-skill their workers. "You would see a lot more initiatives, such as leadership development solutions which look at succession planning and continuity of businesses," says Webster.

Other measures being adopted by companies in the region include detailed induction programmes and on-board coaching. "Companies are under pressure to show that they invest in employees to enhance retention," says Karen Oliver, Managing Director, DBM Arabian Gulf. The company has run a programme for the Dubai government employees to increase their awareness for big roles coming up for them.

But change is a slow process. Although two Abu Dhabi-based companies have shown interest in transition coaching, she is finding it hard to break into the regional scene. Most of her clients are international companies already catered to by DBM's global operations.

Value proposition
A robust employee-value proposition that extends beyond the training then becomes key. Shell, for instance, positions itself as a technologically superior company. In a similar vein, although government jobs sometimes offer more than half of what the private sector offers in Bahrain, some candidates (mostly the women) prefer to stay in the public sector because of less working hours, job security, and a lesser work load per person, as well as benefits such as maternity leave etc.

Market conditions are definitely changing in the region. "Candidates have too many options and they gravitate towards an employer of choice," says Ekendahl. The coming war for talent may seem like a crisis, but like any crisis, it's also an opportunity to seize the competitive advantage by differentiating themselves in the eyes of the prospective employees.

As labour-intensive structures become increasingly expensive to maintain in many sectors, companies may also resort to restructuring, outsourcing, or relocating personnel to lower cost locations. However, with category quotas, companies can have only a limited number of low-cost staff from, say, India or the Philippines.

Recruitment companies are confirming instances of candidates relocating from Dubai to other GCC countries due to the rising cost of living. One of the challenges all companies in the GCC are facing is rationalisation due to cost of living and marketing compatibility of salaries in different regions. In multinationals, this issue is magnified since the workforce and the markets they operate in are more diverse than others.

However, this is not a straightforward trend as we also see movement in the other direction, as candidates are attracted by lifestyle benefits and a perception that 'Dubai is the place to be.' "Kuwait-based companies are losing employees to other GCC countries due to the fact that employees are looking for better exposure and better standards of life," confirms KRB's Riachi.

A lot also depends on the individuals' priorities. "For many younger and more ambitious professionals, Dubai is the regional destination of choice. For some older professionals with established careers and families, the prospect of a quieter and more affordable lifestyle elsewhere in the Gulf can prove attractive," says O'Reilly. It should be noted that other GCC countries are also experiencing cost of living increases, with Qatar the most notable case.

While it is apparent to all that Dubai has lost the cost advantage it held a few years ago, companies still prefer Dubai to other locations in the GCC primarily due to its unrolling of regulatory hurdles and transparent practices. "We have had quite a number of companies re-locating out of Bahrain to Dubai. It has a lot to do with the ease of setting up, getting licences, etc, as well as the fact that it is a bigger market," says Feleyfel.

"Most consumer goods companies in the region are either based in Saudi Arabia or the UAE, mainly due to market size and opportunity," adds Feleyfel. In a dynamic economy, only time will tell if this is a sustainable competitive advantage that Dubai holds. While some companies may be reviewing their plans and presence in Dubai, there has not been any significant relocation of staff or companies to other areas. New companies are still establishing a presence here at a rapid rate and it would appear that the level of business opportunity currently outweighs the higher cost structures.

As the region gets more talent constrained and organisations get more competitive at all levels, a flexible workforce might emerge to be a cost-favourable option.

Looking ahead
As salaries are rising, the average tenure at the senior level has decreased because of increased pressure to deliver in a growth hungry economy. "There is definitely more rotation," says Ekendahl. Also, it would get increasingly difficult for small to medium-sized companies to offer double digit pay rises which large and multinational companies recognise as required to keep pace with the current rising cost of living.

"Although the cost of living is offset by the ease with which the banks are prepared to loan money on an unsecured basis, what we are seeing is a rapid rise in individuals being unable to service these debts which they have been using to subsidise their expenditure," says Giulianotti.

With the stabilisation and maturing of the HR market in the region, money would be replaced by issues such as the company atmosphere, types of challenges, quality of life and sophistication of the company's processes as the main incentives. "People overvalued themselves because of huge demand pressures and the shift has already started coming to the surface," says Al-Alawi.

As regional countries witness record growth and begin to host an increasing number of multinationals, high quality talent is and would increasingly get attracted to the region, especially Dubai. There are signs that the market would get cleaned up by the exit of low and mid-level performers. At the same time, as some GCC countries relax the labour laws, demand will receive a fresh boost. "Regionally, corporate governance has been playing an increasingly major role in attracting investments and international talent," says Mitchell.

Sector-wise, the structure of demand is expected to evolve with the evolving regional industries. Currently, even as the demand for project manager in the construction sector is getting tougher, more stringent requirements in terms of building quality would bring with them a whole set of new requirements. The construction sector has obviously been extremely active, but retail and real estate are also witnessing rapid expansion. The development of the various financial free zones is also starting to build up real momentum, and 2007 could see further development in the financial services sector.

"In the case of financial services, we foresee a steady demand for investment bankers with an increasing need in global banking expertise such as debt finance, fund, wealth and asset management, Islamic investment solutions and others," says Mitchell.

Although private equity, real estate and investment banking would continue to be the main sectors and even the roles could be the same, the profile of candidates being sought after could change depending on the strategic goals of companies and their place on the growth cycle. "Besides, office location will dictate the salaries accepted. For instance, people travelling to Jebel Ali would demand a higher salary," believes Hynes of Kershaw Leonard.

Some argue that salaries will keep rising as long as the regional countries continue to grow. "Let's not forget that we are not the top paymasters in the world," says Koshy. Comfort could be drawn from historical evidence that indicates that the pressure on the skill pool usually gets corrected by the market after a period of time. For instance, the rising cost of living, especially in Dubai and Qatar, has meant that companies are getting cost conscious and are streamlining their operations.

"Besides, every time a new project is announced, it brings new talent into the region to sustain these plans leading to a qualitative jump in people employed in the GCC, which has matured into a significant qualitative pool," says Koshy. As human capital becomes a major cost component for companies, they will utilise this factor more effectively thereby enhancing productivity. The challenge then would be to translate this productivity growth on an economy-wide scale.

Driven by the quest is to exploit local resources fully and import only more specialised talent, the Arab expatriates would be the sought-after candidates. Clearly, companies need to get more sophisticated in assessing employees and to work on differentiating themselves in the eyes of prospective hires. You can win the war for talent, but first you must elevate talent management to a burning corporate priority.

© Gulf Business 2007

 

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