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Dubai: Courting IT investors

A major software developer's plans to open a training centre in Dubai look set to strengthen the emirate's bid to become a regional information technology (IT) centre, although growth in the sector could be hindered by the constraints start-ups face in finding financing.

SAP , the world's largest business software developer, announced in early August its intention to set up a training and research and development institute at the Dubai Silicon Oasis ( DSO ) as part of a long-term drive to generate a pool of IT talent in the Arab region.

Plans to carve out a niche for Dubai as a leading regional centre for IT innovation feature strongly in the long-term vision for its development and form an integral part of the UAE's shift towards a knowledge-led economy. However, local developers fear that investors are still overlooking technology-led initiatives in favour of more traditional ventures.

SAP said it aimed to certify 2000 new consultants by 2015, increasing threefold the company's existing consulting capabilities in the region, while also accelerating and expanding its software to meet fast-growing demand across the Arab world. The training institute forms part of a $450m investment programme devised by the German firm as it moves to strengthen its foothold in the Middle East and North African markets.

Sheikh Ahmed Bin Saeed Al Maktoum, the chairman of Dubai Silicon Oasis Authority ( DSOA ), which develops and manages the free zone, welcomed SAP 's decision to put down roots in the emirate. "Dubai's strategy is underpinned by technology, which is supported by innovation, research and science as key pillars for the development of a knowledge-based economy," he said. "The signing of today's agreement further enhances Dubai's 2021 Vision."

Werner Brandt, SAP 's chief financial officer and executive board member, said the decision to establish an institute in Dubai was an acknowledgement of the growing power of the business market in the region.

"The institute will serve as a powerful engine to yield vital jobs, knowledge, innovation and infrastructure capable of progressively shaping MENA's business future," he said.

SAP is one in a long line of international companies that has chosen to establish a base at the DSO , the emirate's government-owned, free zone technology hub. The number of companies registered at the park now stands at 530, having risen by 43% last year. Areas of specialisation include software research and development, chip design and development, education and services.

But while expansion at the DSO and elsewhere is helping to promote IT innovation and expertise in the emirates, concerns remain that a lack of funding for technology-led ventures could produce consequences in the long term.

In mid-August, UAE daily The National published an article highlighting the difficulties a company named Infinitec faced when seeking a backer to produce a thumb-sized dongle that plugs directly into HDMI ports on existing televisions to allow them to run Android 4. "Dubai is not very start-up friendly," said Samer Geissah, a Dubai-based innovator who helped develop the device, known as the Pocket TV. "Unless you are in restaurants or real estate it becomes very difficult to convince somebody to give you money up front."

While the firm eventually obtained the capital it needed through the US fundraising website Kickstarter, its experience supports claims that some investors may be bypassing opportunities in IT, both in Dubai and elsewhere in the region.

The trend also raises concerns that Dubai could experience a brain drain in which its best and brightest take their skills and innovations offshore in search of a more supportive environment where financial backing is easier to come by.

Dubai has worked to build a vibrant IT sector that is matched by a population keen to adopt the latest advances in technology. Finding a way of persuading investors that they have a part to play in driving innovation forward and helping the UAE to capitalise on the ideas coming through will be key.

© Oxford Business Group 2012

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