Bahrain is investing in its IT industry in a bid to emulate its success in the financial services and manufacturing sectors.
While Bahrain’s government invests in creating an environment for overseas IT firms, there is also a growing local IT startup community.
The Bahrain Economic Development Board is looking to overseas companies to set up shop on its shores. “We have good financial services and manufacturing sectors, but IT is a sector that has not seen the same growth,” said John Kilmartin, head of ICT at the Board.
“Given the geographical limitations in terms of land size, IT is an obvious sector for Bahrain and the government wants to grow it.”
The organisation is seeking to attract foreign companies that want to trade across the Middle East.
Bahrain gives companies access to the Gulf Cooperation Council’s political and economic group, which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
“From a market perspective, Saudi Arabia would probably be the big one for us, along with Iran,” said Kilmartin.
Companies in the region buy their IT from similar sources to Western enterprises, but with India playing a bigger part, said Kilmartin. “The number of Indian companies active in the GCC is huge,” he added.
“We want foreign IT companies to set up here, and we are also working with local and regional startups to build our own companies.”
Financial services and manufacturing are currently Bahrain’s biggest sectors in terms of selling across the GCC.
IT companies based in Bahrain will have the advantage of selling to other GCC countries over companies based outside the region, said Kilmartin.
Analyst firm Gartner says IT spending across the Middle East is expected to reach $212.9bn in 2016 – 3.7% up on the previous year.
The region’s cultural and language differences make it even more of an advantage to have a local presence. “If you are selling to consumers or a government in the GCC, you have to be sure to get the dialect right, but that is probably not so critical if you are selling to business,” said Kilmartin.
It is a very brand-conscious place and people are happy to buy from the multinationals, but local companies have an advantage in their ability to communicate in local dialects and an understanding of local culture.
“As a company, you have to remember that the countries in the GCC are all different,” said Kilmartin.
Huawei is one multinational IT firm that has based its Middle East operation in Bahrain, where it has about 500 staff. The Chinese networking company has some flagship contracts in the region, including a deal to transform Dubai into a smart city, which is managed from Bahrain.
Incentives for large companies
Kilmartin also identified a local startup scene as an important incentive for large companies to move to Bahrain. This was the opposite in the West, where large IT firms attract startups, he said.
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Benefits for startups in Bahrain include lower costs to set up, access to talent, good connectivity and a large trading group.
Zaman Zaman, CEO at Bahrain-based IT company and app developer Level Z, said the organisation, which launched in August 2016, is now developing its first app – a cloud-based intelligent queue management system.
Level Z takes ideas for apps and turns them into reality if it believes they have good commercial prospects.
Zaman, who has worked in the startup sector throughout his career, said Bahrain is a good place to begin an IT business. “The amount of IT talent in Bahrain is growing, we have a young population, high mobile penetration, high-speed internet and it is tax free,” he said.
It was also easy for Level Z to gain a licence to operate in Bahrain, said Zaman.
He said the trade agreement between GCC countries is also attracting companies to set up in the region.
CIOs across the GCC are taking notice of the local startup scene, said Zaman. “CIOs are now looking at startups as free research and development,” he added.