GCC’s Localization Strategy Requires Rethinking Talent Development for Digital Capability Building

The Gulf Cooperation Council (GCC) region has long been a magnet for global talent, offering lucrative opportunities and a high standard of living. However, the region’s rapid economic growth has highlighted a significant challenge: the underutilization of local talent in emerging digital sectors. 

While the GCC has made strides in attracting foreign expertise, especially from the Indian and European subcontinents, its reliance on expatriates has widened the local talent gap and concerns about long-term sustainability. For instance, in 2023, non-Emiratis made up a significant portion of the Emirate of Dubai’s population, accounting for 92% of the total. The region’s localization efforts, primarily focused on placing locals in mainstream areas, have not fully addressed the digital skills shortage. This disparity threatens to hinder the GCC’s ambition to become a global technology hub. Moreover, wealth inequality among local populations remains challenging despite significant economic development. Some locals possess substantial wealth, while most face challenges and require an opportunity to work as professionals to contribute effectively to the economy. This inequality further challenges the region’s efforts to localize the digital workforce, as the wealth generation in the region has not yet translated to investments in transformation and innovation unlike in Silicon Valley or other innovation hubs.  

The recently launched Ministry of Economy report at GITEX x Expand North Star 2024 reveals that over 95% of UAE employers hire talent from abroad due to difficulties finding senior professionals across niche areas such as blockchain and AI/ML. Furthermore, 83% of the UAE firms are incorporating offshoring as a key growth strategy due to the talent crunch in the region. This highlights the dire need for the GCC region to reimage its overall talent strategy and focus more on empowering local talent to drive its economic future.  

The newly launched Dubai Labor Force Survey 2024 by the Dubai Data and Statistics Establishment further emphasizes the need for a robust digital talent strategy across the GCC. The survey aims to collect data to understand current labor market trends, including skill gaps and Emiratization levels, while bridging the digital skills gap and empowering local talent to participate in the digital economy. 

GCC’s Digital Talent Puzzle: Unpacking the Challenges

The digital talent gap in the GCC region is a multifaceted issue. Regional enterprises face the following challenges: 

• • Skills gap: The GCC region is experiencing a shortage of professionals skilled in emerging technologies such as AI and cybersecurity. This shortage can be attributed to several factors. For one, these are relatively new fields, and there are not enough professionals with the time or opportunity to gain expertise. Additionally, these fields are highly specialized and require a deep understanding of complex concepts, limiting the number of qualified professionals. According to a 2022 International Monetary Fund (IMF) report, 70% of the workforce in the Middle East and North Africa (MENA) lacks basic skills. Equipping the workforce with these skills could boost the region’s GDP by $67 trillion. 

• • Education mismatch: While the GCC has world-class educational institutions, the challenge lies in aligning its curricula with the rapid advancements of the digital economy. This mismatch results in graduates not equipped with the necessary skills and knowledge to meet the demands of modern technology-driven industries. According to the World Economic Forum’s Catalysing Education 4.0 report, investing in the skills of primary and secondary school children in the MENA region could add $266 billion to the region’s economy by 2030. 

• • Competition from other global hubs: The GCC region faces stiff competition from other global technology hubs such as Silicon Valley, Shenzhen, and Bangalore. These hubs have established ecosystems that attract top talent from around the world with their advanced infrastructure, innovation-friendly policies, and abundant opportunities for professional growth, making it challenging for the GCC region to compete for the same talent pool. 

The root cause of the talent gap lies in the misalignment between existing educational systems and the demands of the digital age. Traditional curricula often prioritize academic subjects over practical skills, leaving many graduates ill-prepared for the fast-paced and innovative world of technology. According to our Gulf Cooperation Council (GCC) Region Digital Services 2024 Market Insights™ report, regional governments and local businesses have started leveraging digital technologies to bridge the digital divide. However, the gap persists. 

From Gap to Growth: Tactics for Success

To bridge this gap, the GCC countries must shift their focus toward developing a robust digital talent ecosystem. This requires a multipronged approach, encompassing: 

• • Ramping up investments in STEM education: The region’s educational institutions should continue to invest and prioritize STEM subjects while incorporating practical training into their curricula. Partnerships with technology companies can expose students to real-world applications and mentorship opportunities. For instance, in 2022, TCS started collaborating with JSS International School, Dubai, to inspire students to pursue STEM careers. 

• • Targeted skill development programs: Governments should design targeted skill development programs to equip locals with the necessary digital competencies. Additionally, regional enterprises can partner with firms such as Avasant to provide specialized training to cohorts in cutting-edge technologies, including analytics, AI, cloud computing, and cybersecurity. Such firms provide practical training and employment opportunities for local talent, helping to bridge the skills gap and create a more inclusive and sustainable economy. For instance, in 2022, Bahrain announced its plans to train at least 20,000 citizens by 2026 with the skills and knowledge needed to combat cyber threats. 

• • Role of governments: Governments should continue to play a pivotal role through pointed talent initiatives, policies, incentives, and regulations. They must drive digital growth by offering tax breaks for tech investments, creating innovation hubs, and establishing strong regulatory frameworks to protect intellectual property and cybersecurity. Financial incentives like grants for startups and SMEs can also boost innovation and job creation in the tech sector. 

• • Public-private partnerships: Collaboration between the public and private sectors is essential for creating a sustainable digital talent pipeline. Technology companies can invest in training programs and provide internships to local students. Government agencies can offer incentives and support to encourage private sector participation. For instance, the Saudi Ministry of Communications and Information Technology has partnered with IBM to train 100,000 Saudis in AI/ML and cybersecurity by 2027. 

• • Entrepreneurship ecosystem: Fostering a vibrant entrepreneurial ecosystem can empower locals to create their technology businesses and contribute to the region’s economic growth. Local government can provide aspiring entrepreneurs funding, mentorship, and market access. 

The Path Forward

By investing in digital talent development, the GCC region can address its localization challenges and position itself as an innovator in talent management. The region’s strategic location, economic stability, and supportive government policies make it an ideal environment for nurturing a thriving technology sector. Avasant affirms, “Localization is not merely about placing locals in existing roles; it is about empowering them to drive the region’s future.” By rethinking its approach to localization and focusing on digital skills development, the GCC region can create a more inclusive and sustainable economy for generations to come. 

By Saugata Sengupta, Partner, and Vishal Garg, Lead Analyst