The IT Sector as a High-Potential Industry in the UAE
Are you interested in starting a business in the UAE? If you’re looking at starting a venture to provide support to commerce, tourism, defence, trade, banking, finance or other industries, the UAE’s IT sector offers you a wealth of opportunities for companies. IT is a varied discipline that has exciting growth potential in the future for this year and beyond.
The 2019 edition of the IMD World Digital Competitiveness Ranking global competitiveness report ranked the UAE as the most competitive country in the Arabian region and the twelfth among the most highly-competitive economies. These are prime conditions for incentivising foreign private sector investment in the country. What are the components of the Digital Transformation that are going to open up the most lucrative business pathways for enterprises looking to capitalise on the Emirati business landscape right now? Here are the reasons firms should be pursuing it at this time.
Trends in the IT sector will lead to its growth in the UAE
In the Middle East and Africa region, the UAE stands out at the top among its peers, according to recent research. In January 2019, Fitch Solutions released a report that found that the UAE has the most attractive IT sector in the region. They cited that “[t]he UAE’s IT market remains buoyed by economic diversification efforts mapped out in the country’s Vision 2021 strategy as well as with the demand from the enterprise, retail and construction sectors ahead of Expo 2020 Dubai.” Fitch noted that investments headed towards smart city initiatives, with Dubai being one of the leading destinations, were also spearheading this growth along with their work on diversifying their economies through developing in sectors beyond oil and natural gas exports.
Boston-based consulting firm International Data Corporation (IDC) reported that they expected the Emirati software and IT services (a category that includes consultancy services, education, hardware and software support and outsourcing, among others) sector to grow by eight per cent in 2020, despite slowed predictions for telecom as a whole. This area was projected to have the most robust development out of the entire telecom industry in the UAE.
What are some of the other trends to keep an eye on as the IT industry and the number of jobs it contributes grows in the next few years? One area will undoubtedly be Artificial Intelligence (AI), as the UAE is the country in the region to benefit most from its implementation with Price Waterhouse Coopers (PwC) projecting that AI will contribute 14.5 per cent of the country’s gross domestic product (GDP) by 2030. Along with AI, other trends to look at in the UAE are the cloud, especially the public cloud and cybersecurity.
Strong Government Support
IT, which the Emirati government refers to as ICT on their government website, is a sector where the UAE government is quite keen on developing its prowess further. They have made tremendous strides in the public sector in its aims to be at the forefront. The Emirati government has numerous initiatives to support the industry’s growth as part of its plan in sustaining this strategic sector. In 2008, the Telecommunications Regulatory Authority set up the ICT Fund to fund projects that help develop national competencies in this realm and they remain as a key supporter in this area of the science and technology industries.
The ICT Fund to support private sector businesses is just one of these projects as the authorities in the individual emirates also do their part to strengthen the country’s IT foundation. While its first step was to launch the eDirham card for the payment of government services in 2001, they rolled out the Mobile Government Initiative to offer government services across a plethora of touchpoints at all hours.
Their efforts to strengthen the technology sector have also blossomed into high-value niche areas, including the Emirates 2021 Blockchain Initiative that hopes to have half of all bureaucratic processes on the blockchain by that date. On a regional level, Dubai just announced the Dubai Future District, a series of ten initiatives that will support the New Economy, with IT serving as a crucial backbone for the new solutions that will arise from the innovations to come in the economy of the future that will have a wide reach.
Easy to Incorporate
One of the drivers of economic growth in the UAE has been its work to diversify the economy and a business-friendly environment. A critical part of it includes the more than forty Free Zones established across the UAE to make company formation more streamlined. Dubai Media City and Silicon Oasis in Dubai have been supporting the advancement of technology and economic growth since their respective inceptions in 2000 and 2005. The Free Zones offer tax benefits, as well as the right to apply for a visa in some cases depending on the circumstances of the creation of your entity.
There are plenty of thriving Free Zones to choose from, however, if you want to operate on the mainland, there are options for rapid company formation as well. We recommend you undergo a comprehensive analysis of your main financial and enterprise goals before choosing where you form your company. That will help you choose the right space, in the event of a Free Zone, or emirate if operating on the mainland. Your decisions will be dependent on those factors.
Ready to create your IT business plan to incorporate in the UAE?
The Europe Emirates Group is experienced in forming entities in the United Arab Emirates and can offer you expert guidance in creating your IT firm. The UAE is full of opportunities for innovation and newly-registered companies in the Middle East and it is still growing rapidly. If you have plans to invest in Dubai, Abu Dhabi or any of the other emirates, the chances are there for the taking. Should you want to take your next steps to achieve your goal, don’t hesitate to contact us.
CEO, Europe Emirates Group