GCC countries are developing tech champions to accelerate the growth of their digital economies and establish the region as a significant player in the global tech industry. However, for some GCC tech companies, the path to success is challenged by hurdles in several areas– namely, innovation and talent. According to the latest report by Strategy& Middle East, part of the PwC network, entitled Think Globally to Succeed Locally, to overcome these fundamental obstacles to growth, tech firms need to think differently, evolve away from regional standards, and adopt a global approach.
“We are seeing the regional tech sector become increasingly more advanced, with a swathe of new supportive regulatory regimes, policies, and initiatives to encourage private sector innovation. However these aren’t enough. GCC tech firms need to change the way they think and operate” said Diana Dib, Partner with Strategy& Middle East.
“Most tech firms in the GCC will recognize that talent and innovation are two of the greatest hurdles,” said Chady Smayra, partner with Strategy& Middle East. “But they can attract talent through structural changes like long-term equity incentives and hybrid working models. They also need to effectively source and internalize product and services IP. These are integral to tech companies’ ability to innovate and require a rethink of their corporate structures”, he added.
Finding and hiring tech talent, such as machine learning engineers, data solutions and supply chain architects, to work for GCC companies is proving difficult. Yet there are opportunities on the horizon. The slew of layoffs from major global tech companies presents an occasion for GCC tech companies to entice tech workers to the region.
When it comes to innovation, GCC companies are slow to develop proprietary digital solutions and intellectual property (IP). Their P&Ls are still over reliant on traditional IT and white-labeling solutions sales. A looming bear market, however, means the chance to acquire targets amid lower valuations and unappealing initial public offering markets.
When building their talent model, regional tech companies should adopt three global practices.
- First, they must follow in the footsteps of global tech players by offering equity-based long-term incentives and stock purchase programs tied to company performance.
- Second, organizations must satisfy changing employee expectations around where and how they want to work. For many, this means adopting a hybrid working model. Tech champions can do so while ensuring the business runs effectively, productively, and securely by, for instance, setting up satellite and regional offices.
- Third, companies should offer enticing career advancement and development opportunities. They can join forces to create clusters of innovation, enable intercompany mobility for talent, and use artificial-intelligence-based systems to match employees with internal roles that fit their interests and needs.
For many tech companies, sourcing new intellectual property is a priority – and that can be done by tapping into innovation hubs, with the right combination of strategic investments, M&A, partnering, IP licensing and monetization deals.
“Most tech firms in the GCC have an opportunity to accelerate their innovation capabilities by capitalizing on innovation hubs, centers of excellence, and digital labs,” said Fawaz BouAlwan, Principal with Strategy&.
GCC tech firms can also establish corporate investment funds or corporate venture arms to help secure IP, attract talent, and gain exposure to new sectors.
In parallel, these companies need to press ahead with an appropriate corporate structure and geographic footprint to enable their talent and innovation models.
Aspiring GCC tech companies have an opportunity to reimagine how they do business by thinking differently, taking a global approach to talent and innovation. Success in these areas, alongside a solid corporate structure and location strategy, can enable these companies to grow into tech champions.
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