Arabs got talent, and they need technology to make its best use. But how much of reliance is enough?
Even as West Asian economies make efforts to move away from overdependence on oil, they are running against time to overcome another challenge – maintaining the technology-talent balance.
For decades a large number of expatriate workforces have kept the region’s well-oiled industrial machine running. Now, the advent of cutting-edge technology presents an opportunity of a lifetime, to optimize and considerably reduce reliance on imported labor.
The region merely needs to leap from its reputation of being end-users to become innovators in a manner that localizes employment. This is already beginning to happen, albeit at some costs.
Since the onset of the oil windfall, the region’s reliance on the outside workforce to build its infrastructure and set up industries has been a win-win situation for both sides. While millions of surplus labor from South Asia built their homes and educated their children with money earned in the Gulf, numerous skylines sprung up across the region, and goods and services became easily available.
Even though this equilibrium isn’t under imminent threat, a new wave of reforms is beginning to re-orient the old economic order across the region. Hi-tech lies at the core of this – promising to boost efficiency and further this transformation.
Striking the right balance is the key though, which consulting firm Korn Ferry describes as the “talent blind spot”. In other words, the challenge for business leaders is not to get distracted by the compelling promise of transformative technology.
According to a Korn Ferry report, by 2030, the UAE alone is likely to experience a skilled labor gap worth $40 billion, making up five percent of the economy. So, despite the thrust on technology, these economies cannot rely on it completely.
“They see technology as the best way forward to meet their business demands and that means the people problem goes to the bottom of the list,” Korn Ferry’s Danny Lenders told a business weekly. It is obvious that at least some business leaders may be underestimating talent as an organizational risk, something they could ill-afford.
Industry observers say gaps remain in terms of business dynamism and labor market efficiency in the Middle East and North Africa (MENA) region.
According to the World Economic Forum Global Competitiveness Report, 2018, this factor, alongside limited technological and ICT readiness, hinders the region’s capacity to innovate and that “the quality of the country’s human capital remains a key constraining factor”.
“The segmentation of the labor market into different groups of workers, with little mobility among them, adds to the rigidity of the economy in most countries in the region and reduces the utilization of available talent,” the report said.
Citing another example of Saudi Arabia – which happens to be MENA’s largest market – the report said that the country’s labor market efficiency (102nd in the world) is “impaired by a number of constraints and regulations that segment the market and decrease the overall level of efficiency and talent utilization”.
WEF hasn’t been the only one pointing toward a mismatch in talent utilization in the region. A GCC-India Corridor report by investment bank Alpen Capital was even more explicit in its findings.
“A limited pool of local talent, increasing emphasis on nationalization of jobs and high attrition rates are hindering the growth of labor-intensive sectors in the GCC,” it said in its 2017 report.
Abu Dhabi-based social scientist, Dr. Farid Azzi, chooses to call this phenomenon innovation deficiency, which according to him is a well-observed, noted and documented in the Arab world. He attributes this to structural as well as cultural reasons. Much of the Arab countries’ economies are rentier or semi-rentier economies which don’t motivate economic diversity and thus innovation, according to Dr Azzi.
According to him, lack of economic competitiveness, the distortion between the job market and system of education, and the lack of resources allotted to innovation, research and development have led to this situation.
Dr. Farid also points to a lack of scientific culture within the populace, consumerism and youth marginalization as possible reasons. “There exists a widespread fatalistic attitude accepting western technological and scientific domination,” he says.
Nevertheless, companies have started embracing technology across their value chain as part of their digital transformation strategy. Technology adoption is making giant strides with artificial intelligence (AI) becoming a buzzword all over the region.
Observers believe that the current climate of AI support and investment is potentially a game-changer for the Middle East, with several Gulf Cooperation Council (GCC) countries leading the change.
A survey conducted by Artificial Intelligence & Intelligent Automation (AIIA) Network, says 40 percent of industry professionals from leading government entities in the region have allocated an AI budget of about $500,000–$1 million. Twenty percent of the respondents allocated a budget of $1 million and above.
Some timely government support has built momentum to this end. In October 2017, UAE Vice President and Ruler of Dubai, Mohammed bin Rashid al-Maktoum, launched a “One Million Arab Coders” program – an educational platform offering free programs for those interested in developing digital skills.
The objective behind this initiative is to train one million young Arabs in computer programming, position them at the forefront of the fast-moving industry and teach them coding – the language of the future.
Similar programs have been launched elsewhere in the region to make the youth aware of the opportunities. Entrepreneurs, on the other hand, are focused on the root cause and are seeking solutions.
The talent deficit is there in the West as well, however, a lot more is being done to address this issue relative to the Middle East, leaders such as Omer Farooqui, Founder and Chief Innovation Officer of the tech-education startup, Coded Minds believe.
For Farooqui, it’s a matter of going back to school and making a new beginning in the changed circumstances. “I truly hope this is fixed soonest as I fear the children of today will not be ready with the relevant skills at hand for the job requirements within as soon as the next decade,” he said.
While it may be difficult to replace a South Asian construction worker with a local one, but at some stage, technology will empower them enough to tilt the balance in their favor.
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