Tremendous economic growth over the last few decades, supported by an ambitious national vision to develop the economy into one that is knowledge-based, has helped drive significant growth in the country’s nascent IT sector. Reports from the government support this assessment, highlighting that the ICT sector is on track to record 10% annual growth to reach QR24.7bn ($6.77bn) by 2016. “Investments in the sector have been manifested in a sustainable growth over the last few years,” Hessa Sultan Al Jaber, the minister for ICT, told OBG. “The ICT market saw a 6.7% rise in GDP contribution between 2012 and 2013, and spending is expected to increase by 7.6% to reach QR15.6bn ($4.3bn) in 2017.”
ACCESS & INFRASTRUCTURE: Household access to IT services in Qatar is among the highest in the GCC region. Nearly every segment of the population now has access to the internet through mobile phones or fixed-line connections. The number of the households with internet connections in Qatar is second to only the Republic of Korea among developing countries and is actually higher than some countries in more developed groupings, such as Singapore. The gross number of people with access to internet services has been growing rapidly, to reach 85% of the population as of 2013, compared with only 38% in 2008. Smartphone penetration in Qatar is also among the highest in the GCC region, supported by improved mobile infrastructure. Qatar’s two telecommunications companies, for example, have recently launched 4G services, creating a new market for 4G-enabled handsets.
The government has led the way with significant investments in infrastructure across the spectrum of IT services. Broadband penetration is now among the highest in the region, with services available through fixed-line, wireless and mobile connections. Under the auspices of the Qatar National Broadband Network, the country has also rolled out a strategy to install a fibre network that will one day connect 95% of all homes and all businesses in the nation through high-speed, 100-Mbps connections.
DEVELOPING USAGE: The impact of these investments is easily measured by Qatar’s position towards the top of a number of global IT related rankings. Driven by the National ICT Plan 2015 and Qatar National Vision 2030, the country was recently ranked 23rd out of 148 countries in the World Economic Forum’s Networked Readiness Index for 2014 and first for public procurement of advanced technology. As the sector matures, this support is being shifted to enable greater private sector participation and to spur innovation. Qatar Foundation and ictQATAR, which regulates the sector, are both investing in various programmes to support incubation of small technology start-ups and other educational and knowledge related facilities.
Despite the increased focus on content, however, IT usage in Qatar remains limited in comparison to more mature economies. Household surveys reveal that consumers generally use technology to access audio and video content and to engage across various networking sites. However, only a very small proportion of the population go online for more advanced purposes such as electronic and mobile commerce. The reasons for this vary but a lack of products and services tailored to the local economy is one barrier. There is also a general lack of trust in the security of information and transactions over the internet. However, the allure of online retail and IT-related services is helping to gradually shift these perceptions. Qatar’s economic indicators point to a very strong foundation for future economic growth, which will continue fuelling IT sector expansion.
EMBRACING THE DIGITAL ECONOMY: Qatar’s GDP topped QR200bn ($54.8bn) in 2013, with GDP per capita estimated to be over $131,000 in terms of purchasing power parity in current US dollars, according to the World Bank. This has positioned Qatar as one of the wealthiest countries in the world on a per capita basis. While revenues from oil and gas are still the dominant way this income is earned, the state’s ambitious plans of diversifying the economy have helped ensure growth across all sectors. Transport and communications now account for 3.2% of the country’s GDP. The World Economic Forum’s Global Competitive Index reaffirms these efforts to diversify the economy by ranking the country 13th overall out of 148 countries and first in the region on its Global Competitiveness Index.
HIGH PENETRATION, LIMITED USE: ictQATAR’s “ICT Landscape 2014” report notes: “Almost 100% of the population in the majority of the segments has access to computers and mobile phones, with the exception of blue-collar workers living in shared accommodations and transient labourers, who lag behind in computer and smartphone penetration.” Notably, smartphone penetration has overtaken all ICT devices except laptops and televisions. Over 92% of all households have a smartphone while over 98% of all Qatari citizens own a smartphone. Qatar now enjoys higher penetration rates for laptops, smartphones and tablets than a number of technologically advanced economies including Singapore and Korea.
Portability has been a boon for consumers of ICT in Qatar, with the use of mobile devices such as laptops, tablet computers and smartphones increasing within the population. Mobile phones, for example, are now used by nearly 100% of the population. The use of this technology is currently relatively limited in scope, however. The use of mobile phones, for example, is generally restricted to services such as phone calls, texts, basic internet browsing, social networking, watching videos and downloading apps. This is starting to change, according to ictQATAR, which reveals a gradual transition from basic access to the use of advanced online and mobile services.
NATIONAL ICT PLAN: The government has played a critical role in developing Qatar’s IT sector and has ambitious plans for furthering progress over the next several years. Qatar National Vision 2030 outlines a long-term development strategy focused on diversifying the country’s growth by developing a knowledge-based economy. The four broad guiding principles of the Qatar National Vision 2030 include “developing a thriving and sustainable national economy focus on human, social, economic and environment development”. IT is a critical enabling factor that supports each aspect of this objective.
An ICT Master Plan developed and rolled out in 2005 provides a framework for developing the sector. Regulatory reforms to unleash private sector participation in the industry, for example, have resulted in significant investments in developing Qatar as a potential IT hub. The reforms also led to tremendous growth in telecommunications infrastructure and use while at the same time driving down prices as competition has increased. Despite the advancements, however, the government, led by ictQATAR, identified three core areas that require additional attention: connectivity, IT skills and the business environment. While mobile and fixed-line broadband coverage is extensive, the speed of these networks stands to be improved. Furthermore, a large portion of the local and expat population is unable to actively participate in the digital economy because they lack the knowledge and skills to do so. Finally, ictQATAR noted that Qatar lacks the business environment required to nurture a vibrant ICT industry.
LOOKING AHEAD: The National ICT Plan 2015: Advancing the Digital Agenda tackles these three key issues, noting that, “Qatar is now at a critical juncture. If decisive action is taken and adequate resources are devoted to tackling the challenges outlined above, it has an unprecedented opportunity to accelerate its progress toward becoming a nation with a leading knowledge-based economy.”
The five-year plan outlines ambitious goals for the sector, including doubling the ICT sector’s contribution to GDP to $3bn; doubling the ICT workforce to 40,000 employees; covering 95% of all households and 100% of all business with high-speed broadband access; supporting 90% of the population in adopting ICT and internet services; and improving the accessibility and effectiveness of government services by pushing at least 160 to online platforms.
The national strategy also puts forth specific projects that will be implemented to meet these goals. These include infrastructure projects such as developing the $550m Qatar National Broadband Network, building a submarine cable system to improve international connectivity and a satellite programme for improved communications. The strategy also calls for modernising the legal and regulatory framework. Recent milestones include consumer protection policies and e-commerce regulations (see Telecoms).
ECONOMIC IMPACT: Driven by the National ICT Plan, Qatar’s IT market is now set to grow by 10% annually to QR25bn ($6.9bn) by 2016, according to ictQATAR. The International Data Corporation is even more bullish, estimating growth in IT spending to have increased by up to 15% in 2014. Market research data supports these forecasts, highlighting that the sales of IT services and computer hardware and software will continue to grow.
Computer hardware sales totalled some QR2.95bn ($808.6m) in 2014 and are expected to rise to an estimated QR4.26bn ($1.17bn) by 2018, representing a compound annual growth rate (CAGR) of 9.2%. Although penetration of IT hardware is already high, the introduction of new technologies coupled with high per capita income levels is expected to support continued growth. Software sales are forecasts to see even faster increases, rising at a CAGR of 13.2% from QR1.31bn ($359.35m) in 2014 to QR2.13bn ($583.83m) in 2018. Enterprise software to support business needs is seen as one of the biggest market segments due to the current rate of penetration, which is fairly low. The sales of IT services, however, is the most attractive prospect in the sector, with total sales expected to rise by a CAGR of over 14.4% from QR2.294bn ($627.78m) in 2014 to QR3.753bn ($1.03bn) in 2018. It is widely expected that this growth will emerge from demand for advanced IT services such as cloud computing, online security services, and enterprise services particularly for small and medium-sized enterprises (SMEs).
CLOUD COMPUTING: Cloud computing is firmly taking root in Qatar. “Qatar’s government ministries have recently approved the use of cloud services for the oil and gas sector and for the financial services sector,” Mohamed Helmy, country manager at corporate software company SAP, told OBG. “This sends an important signal to other IT firms: two key sectors that drive Qatar’s economy are opening up to advanced IT services. This will create a trickle-down effect across the industry for more advanced services. As Qatar’s economy continues to diversity, we are seeing strong demand from a wide range of industry verticals for real-time business analytics solutions that run on the cloud, including in tourism and hospitality, health care, education, sport and government services.”
Cloud services essentially leverage access to the internet to store data on external servers. This enables large-scale users, such as corporations or government bodies, to consolidate data and information and to develop applications that can share data across many departments or users. The service also enables smaller businesses and individuals to utilise powerful servers without having to invest in the physical infrastructure. Globally many services utilise “the cloud”, but in 2013 nearly nine out of 10 business in Qatar reported not knowing about such services, representing a significant untapped market.
In addition to ictQATAR, which is actively tackling these knowledge deficits, there are a number of other private players investing in developing cloud-based services in Qatar. SAP, for example, reports increasing demand for its cloud products as the perceptions of safety and usefulness change. The government, which is SAP’s largest client in Qatar, has already approved cloud services in the financial sector, for example. Similarly, telecoms provider Ooredoo and global technology solutions provider Cisco are collaborating to use cloud storage services to develop the “smart city” concept. Cloud services will continue growing as a number of public programmes, such as the national insurance scheme, develop.
E-GOVERNMENT: The state is also incorporating IT solutions and is rolling out a strategy to leverage cloud services to develop a comprehensive e-government framework. The Qatar e-Government 2020 Strategy, which was launched in 2014, outlines a vision of “embracing technology to create a more efficient, effective, accessible and transparent government that meets the needs of individuals and businesses”. According to ictQATAR, the strategy has three main objectives with specific targets to be met by 2020. The first is to better serve individuals and businesses by bringing 100% of government services online and ensuring 80% of all services can be completed from end-to-end online. The second is to create efficiency in administration by automating key functions and using common ICT infrastructure across 80% of all government functions. The third objective is to increase government openness through citizen participation and better access to data.
SMALL BUSINESSES: Qatar is also increasingly leveraging cloud storage solutions to support SMEs. ictQATAR has developed an ICT SME Toolkit that outlines how cloud services can benefit SMEs, which constitute 97% of Qatar’s private sector, according to Qatar Development Bank. Microsoft is one of the many global players eyeing this potential market. In 2014 the software giant committed to supporting up to 10,000 SMEs in Qatar by creating “a family of devices that will enable businesses to virtually engage with other industry players like banks, clients and other stakeholders through seamless communication”. There are also a number of local companies that are targeting SMEs with cloud services. Qatar’s Mannai Corporation’s ICT group, for example, is collaborating with Ooredoo and Microsoft to provide tailored cloud-based IT and communications solutions.
IT SECURITY SOLUTIONS: IT security is another growing segment in the sector. Qatar’s new cyber-crime law, approved in September 2014, outlines the legislative framework for IT-related security. Meanwhile, ictQATAR has been working with the financial sector to reduce the threat of cyber attacks.
In March 2015 the Cabinet approved the establishment of two new bodies to enhance cyber security. The move shifts some responsibility from ictQATAR to the Ministry of Interior, which will house the National Centre for Cyber Security. A separate Committee for Information Security will also be created to oversee the National Cyber Security Strategy developed by ictQATAR in 2014. This move will see ictQATAR retain its responsibility for developing policy, while the Ministry of Interior, which manages conventional security bodies, will enforce the rules.
THE NEXT FRONTIER: In addition to developing local IT infrastructure and enterprises, Qatar is also investing in enhancing its IT credentials internationally. In 2010, the government initiated its satellite programme with the creation of the Qatar Satellite Company, better known as Es’hailSat.
Es’hailSat has a long-term goal of developing a fleet of communications satellites that is owned and operated out of Qatar to support commercial and state clients. In March 2012 the company signed an agreement with Arianespace, a French space transportation company, to launch its first satellite, Es’hail 1. The satellite came on-line in 2013 to serve core markets in the Middle East, North Africa and Central Asia. ictQATAR reports that one purpose of the investment was to meet the broadband requirements for hosting the 2022 FIFA World Cup.
Es’hail 1 is reported to have sold most of its capacity, with Qatar-backed Al Jazeera news broadcasting network taking a lot of the bandwidth for its high-definition broadcasts. The company is already planning for the launch of Es’hail 2 in 2016, which is also expected to serve TV broadcasting requirements. Es’hailSat has further plans to eventually expand the fleet to a total of six satellites.
DEVELOPING HUMAN CAPACITY: As with many sectors in Qatar and the broader region, there is a gap between the development of new economic opportunities and the human capacity required to leverage them. “The biggest challenge for the industry going forward is human capital,” general manager of Cisco in Qatar Mohammad Hammoudi told OBG. “In a fast-growing economy you have to continually ensure that there is enough capacity to support businesses and expanding business opportunities.” ictQATAR is leading efforts to develop the skills required for Qatar to become competitive globally.
The Qatar National e-Learning Portal (QNEP), for example, is an online knowledge platform that provides access to courses in IT and business. Similarly, TumuhaTEC is another initiative that is working in close collaboration with schools, universities and employers to raise awareness of opportunities within the IT sector to build the sector’s future workforce.
QATAR SCIENCE & TECHNOLOGY PARK: Qatar Foundation is also leading efforts to develop a robust IT sector by focusing on spurring local innovation. The Qatar Science and Technology Park (QSTP) is a major initiative undertaken by Qatar Foundation Research and Development with the explicit goal of supporting Qatar’s post-carbon economy.
QSTP focuses on four key themes, which include energy, the environment, health sciences and ICT. Within the IT sector, QSTP serves as the country’s primary incubator for technology development with the aim of “fostering the environment required for accelerating commercialisation of research and supporting innovation and entrepreneurship”, according to park documentation.
MEEZA, a Qatar Foundation joint venture located in QSTP, offers clients an integrated IT platform with core services, ranging from data centre services, IT managed services and solutions, cloud services and IT security services, along with other services for enterprises. The firm’s first major break came at its launch in 2008, when it signed a QR125m ($34.26m) deal with Vodafone Qatar. MEEZA has since grown into a major provider of IT managed services in the country. In 2013 the company closed a deal to host the Government Data Centre. MEEZA is also looking to expand its reach to provide services abroad.
OUTLOOK: The IT sector in Qatar is becoming a major driver of growth in line with ambitions of transitioning towards a knowledge-based economy. The industry still faces a number of key challenges, however. One major boost for the sector would be to improve the population’s skills and knowledge of IT to maximise the value of Qatar’s cutting-edge infrastructure. Mobile broadband, for example, is still mainly used for basic browsing and networking, while only 3% of the population uses mobile connectivity for purposes like e-commerce. Similarly, businesses could make better use IT networks to support their bottom line. However, the government has actively identified these challenges and is addressing them.
A focused national vision for the sector is having a positive influence on initiatives and investments from the public and private sectors. Access to IT devices has expanded rapidly. The number of mobile phones owned by the average Qatari household has more than doubled from four phones in 2012 to nine in 2013, while the penetration of smartphones now stands at 65% of the population. In terms of computing, the average Qatari household owned more than three laptops in 2013 compared with only two in 2012. The penetration of laptops is almost universal in the country, estimated to be at 93% in 2013. Tablet devices are still at an early stage in terms of their addition to the market, but access has tripled from 10% of the population in 2012 to 29% in 2013.
There is also an increasingly vibrant commercial segment that is accessing and using IT to spur growth in business. International players like Microsoft, SAP and Cisco in Qatar have all developed centres in the country with plans of expanding their offerings. Alongside large-scale business developments, there is a growing emphasis on using cloud storage services in SMEs. ictQATAR reports that the IT market is set to grow by 10% annually to QR25bn ($6.85bn) by 2016, indicating positive prospects for the sector.
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