Through strong government support, an attractive business environment and innovative free zones, Dubai has established itself as a leading regional centre for information and communications technology (ICT). Growth of information technology (IT) services is poised to accelerate as demand for off-site business solutions, especially in certain sectors, rises in line with the broader economic expansion of the region as whole.

The ICT sector is a key part of Dubai’s vision of becoming a commercial centre for the Gulf. Creating a business-friendly environment that attracts international firms looking to base their regional operations has positive knock-on effects for everything from real estate to retail, and is a central focus of the government’s development strategy. The emirate has already had some significant successes in this regard, and it is home to the regional headquarters of a number of major players, such as Microsoft, Google, Hewlett-Packard, GE, Oracle, Cisco and Siemens, among others.

Sector Overview

 Heavy emphasis on advanced infrastructure has become a hallmark of Dubai, and investments in internet connectivity may well be one of its most successful undertakings. The availability of fibre connections across the emirate is among the best in the world, and additional investments by the government and private firms in 4G long-term evolution (LTE) wireless networks, as well as ground and air transportation, mean Dubai is well positioned to capitalise on both regional growth and increased local demand. “The UAE market is ripe with opportunities in data centre infrastructure as well as information management, business process outsourcing and technology solutions,” Andrew Horne, general manager of Xerox Emirates, a joint venture between the Mohamed Hareb Al Otaiba Group and Xerox, told OBG.

For the UAE as a whole, internet subscriptions were up 4.3% to 1m in the first half of 2013 alone, while penetration of mobile subscriptions and smartphones was estimated at 168% and 61-73%, respectively, setting the stage for growing consumer revenues. As a regional centre for all types of industries, demand for IT solutions also has expanded in terms of both quantity and scope, and many IT firms are responding by rolling out new data centres and business solutions services.

Broader sector growth throughout the MENA region will also be important for many of the firms located in Dubai. Leading IT research firm Gartner found that IT spending in MENA was up 5.5% to $192.9bn in 2013 as compared to the previous year. It also predicts that regional expenditure will continue to increase at a rate of around 5% per annum through 2016, with devices and software driving most of the growth.

Free Zones

 Key to attracting foreign investment and creating an environment conducive to the expansion of the IT industry are the emirate’s sector-specific free zones, Dubai Internet City (DIC) and Dubai Silicon Oasis (DSO). Both zones allow for 100% foreign ownership – whereas outside the free zones a business must be at least 51% owned by an Emirati – and 100% repatriation of capital, and impose no taxes on companies that operate within their jurisdiction.

The older of the two, and one of MENA’s largest ICT clusters, DIC was founded in 1999 and is managed by the government of Dubai-owned TECOM Investments. It is the regional home for many international companies, as well as a number of smaller local and regional firms. Within the ICT field, DIC also customises its operations and buildings to fit the needs of several sub-segments: software, internet and multimedia, telecoms and networks, IT services and regional headquarters.

DIC is situated next to two other free zones – Dubai Media City (DMC) and Dubai Knowledge Village (DKV) – both of which provide important business opportunities. DMC is home to many clients and partners of companies in DIC involved in digital media, while DKV is a centre for training that focuses on IT and human resources. In total, more than 25,000 people work in DIC and it has an occupancy rate of 90%-plus. DIC also maintains a significant portfolio of land rights and is currently in the design phase of further expansion.

Launched in 2005, DSO was built as more of a campus than a business park per se, and it includes residential buildings, schools and shopping facilities. Its aim is to create an environment where large companies, start-ups, venture capitalists and universities can all work together. Incorporating education is a major goal of DSO, and in addition to a direct partnership with Rochester Institute of Technology, a US engineering university, it sits next to Dubai International Academic City, which is home to more than 20,000 students and 21 of the UAE’s 37 international university campuses.

Cloud Service Growth

 ICT as an industry is set to grow in the region, and all indications point to cloud-based services leading the pack. Market intelligence firm International Data Corporation recently released a report forecasting 43.7% annual growth for cloud-based service in the UAE through 2016.

In a sign of things to come, the world’s largest internet exchange provider, DE-CIX, opened UAE-IX, the region’s first carrier-neutral internet exchange, in Dubai in late 2012. UAE-IX provides a foundation for growth in cloud-based services in the region by ensuring access to data with less lag time than services abroad, and it is already serving as a destination for networks in the UAE, Saudi Arabia, Qatar, Kuwait and Turkey.

Local telecoms companies du and Etisalat are moving quickly towards providing cloud-based services and have entered into strategic partnerships to do so. Though competition for cloud-based services will continue to grow, their sizeable existing customer bases give them an advantage. In June 2013, du joined with Dubai-based encloud, a cloud computing specialist, to boost its managed services division. The partnership will give encloud access to du’s large customer base, while du will gain immediate cloud-based service capabilities, enabling it to offer a whole range of managed services to its enterprise clients.

Officially launched in June 2013, Etisalat’s cloud platform, Cloud Compute, was developed in partnership with multinational Pacific Controls. Unlike the highly regulated local telecoms market, however, competition in managed ICT services looks set to be fierce, and the operators’ success is not guaranteed. Household names such as Oracle and IBM, as well as countless other local and regional providers, have already entered the market, ensuring businesses will have many options to choose from and that the IT solutions on offer will need to be tailored to each customer at a competitive price.

Currently, many of the cloud-based services are targeted at small and medium-sized enterprises (SMEs). Qais Gharaibeh, UAE managing director for software company SAP, told OBG, “Many of the SMEs operating in Dubai have reached a certain point in their operations maturity where they have to look at ways to achieve operational efficiencies that enable them to scale towards a new stage of accelerated growth to capture the great opportunity ahead.”

Many leading companies are also starting to look at cloud services as a way to cut capital expenditure costs, which will further open up the market and bring with it new challenges. A major concern with cloud-based services throughout the world – especially in emerging markets such as MENA – is security of information. Providing services that protect client data will be a top priority for du, Etisalat and others, and the success of such efforts may determine how much information and business will end up on the cloud in the future.

The federal government also has a role to play here, as there are several legal hurdles that currently limit the recourse a cloud user has with a service provider. These will likely need to be addressed before large businesses move critical functions to the cloud.

Tailored Services

 Beyond providing new and innovative services, many companies, including du and Etisalat, have shifted their attention to tailoring their products to meet the demands of specific industries. Telco du has even taken the step of reorganising its corporate structure, clearly separating its consumer and business divisions, and has pegged government, real estate, construction, hospitality, banking, as well as oil and gas as areas of specific focus, in line with regional demand forecasts of corporate spending on IT. Peter Sondergaard, senior vice-president and global head of research at Gartner, said, “IT demand is quite selective in large Middle East organisations. We expect strong IT demand from vertical industries like banking and government in 2013. As the Gulf economies continue to develop the non-oil GDP part of their economies, increased reliance on IT will help to spur this growth. A detailed understanding of vendor offerings and user needs are critical to fulfilling business needs.”

Incubating Talent

 Dubai has a strong reputation as a business-friendly environment, but until now it has not been seen as a prime location for start-ups. Through two initiatives housed in DIC, First Steps and in5, the government is trying to change this and convince local and foreign entrepreneurs to view Dubai as place to start and grow a business.

Officially named the in5 Innovation Hub, in5 was launched by TECOM in May 2013 to offer an environment that cultivates and assists entrepreneurs in the very beginning of their development. Promoted as an ecosystem, it brings people together under one roof, provides mentorship in many different specialties, offers training and networking opportunities, while also serving as a vital link to potential investors. As Majed Al Suwaidi, director of business development at DIC, told OBG, “In more established places, it is hard for people starting out to be seen by investors. We believe in5’s role is to ensure that the money available in the region is funded in the right direction. We are a hub for technology and innovation, and our goal is to attract more of the investors that we know are here and act as a bridge between them and the next great idea.”

Catering to both small local businesses and foreign companies looking for low-risk entry to Dubai, First Steps Business Centre in DIC provides desk and office space as needed. Home to more than 140 businesses, it has proven an attractive option for local firms that may not have the financial capabilities to lease a full office at DIC, but see the benefits in having a presence in the centre. It has also been used by larger international firms as an extremely low-risk way to enter Dubai before deciding whether to expand to a full office.

The government is not the only actor in the development of IT start-ups in Dubai, however. Regional digital media company Intigral recently launched one of the first private IT start-up incubators in the emirate. Through various partnerships, it will offer many of the same services as in5, matching entrepreneurs with mentors and providing connections to potential investors. Throughout the region, IT start-ups are growing in number and in value. According to global consulting firm Frost & Sullivan, the number of IT start-ups in MENA has risen eightfold since 2005, with investment of $124m in 2012 alone.

Local Digital & Mobile Content

While traditional media sources such as newspapers and television are still important in Dubai, a young and growing tech-savvy population and high internet penetration rates are creating more and more demand for online content. Until now, most of this content has been in English, but as the successful launch of aggregator services such as Tasharuk, Akhbarak and others has shown, there is significant demand for developing Arabic-language materials on the web. Despite being the world’s seventh-most-spoken language, Arabic only makes up around 3% of all online content, of which a large proportion is user-generated tweets and Facebook updates. As the region develops, so too will its appetite for digital and mobile apps, videos, news and more.

21st- Century Government

 Not content to merely encourage the use of innovative ICT services in the private sector, the government of Dubai has been at the forefront regionally in creating an administration that fits the needs and demands of its tech-savvy population. Samer Abu Ltaif, Gulf regional general manager for Microsoft Gulf, told OBG, “The public sector in Dubai is one of the most innovative in the world when it comes to adopting cutting-edge technology in line with global trends. Supporting the plan for Dubai to become a Smart City, the approach to technology innovation in the country is entrepreneurial and creative, in the sense that any new technology is reviewed to understand its potential benefits to businesses and the lives of citizens and residents of the UAE.”

Launched in 2000, Dubai’s Smart Government initiative has drastically changed the way the emirate’s government operates and how people and businesses alike can interact with it. “The aim of the government employing e-services and capitalising on the support of private partners is to get closer to the citizens and businesses,” Ahmad bin Humaidan, the director-general for Dubai Smart Government, told OBG. “Simplified and customer focused services are mutually beneficial for the providers and the customers.”

According to the UN’s 2012 “eGovernment Survey”, an assessment of the use and potential of ICT in the 193 member states, the UAE rose 21 places from 49th in 2011 to a position of 28th in the world. The country was also ranked fifth in Asia and was highlighted several times for having one of the simplest online interfaces and for comparing favourably to eighth-ranked Norway in terms of the services provided.

At the second annual GCC Government Social Media Summit in September 2013, Amer Al Hamayda, head of the content unit at Dubai eGovernment, said, “Each department was asked to come up with criteria and guidelines to ensure that access to all government services was available on smart services within two years.” This directive is part of a larger transition from eGovernment to what is being billed as “mGovernment”, or mobile government, and will call for nearly all government services to be accessible via smartphones 24 hours a day. At present, smartphone applications such as mPay, for example, already allow users to pay everything from police fines to toll road charges from their phones, and have been released by the government as the first steps toward this long-term goal.

The implementation of these objectives will bring about many challenges and opportunities over the next 24 months for both the government and private partners. At the top of the list of concerns for all stakeholders in successfully bringing government services to a mobile audience will be security of information. Beyond that, reliability, accessibility and user experience will all pose challenges as well. The government will not be acting alone, however, and partnerships with private firms will create opportunities for both sides – in addition to the final end-users – to benefit if this initiative is implemented successfully. “In the GCC, we are witnessing significant growth in IT spending and this has been caused largely by an increasing organisational recognition of the benefits of adopting electronic services,” Suhail bin Tarraf, CEO of Tanfeeth, a GCC-focused business services consultancy group, told OBG.


Changing trends in IT solutions and consumer habits have had an impact on the demand for hardware in Dubai. In the past, several computer assembly plants operated in the UAE, building local-branded machines from components manufactured abroad. As brand-name computers have dropped in price, however, the demand for these machines has fallen and production has all but ceased in the UAE.

This may be set to change, however, with regional online retail company’s launch of a new low-cost tablet that was designed in Dubai, known as the QTAB. Priced significantly lower than brand-name tablets, the QTAB could prove to be attractive in a region where the sales of tablets outpace those of personal computers. This could mark the beginning of a new phase of hardware development in Dubai, moving up the value chain from production to design. While high-value design operations are an exciting possibility, Dubai also has a successful business re-exporting machines throughout the region. Tax advantages and inexpensive air transport to destinations across the developing world have supported robust trade in this segment.


Two global ICT trends are set to be the driving forces behind the growth of the industry in Dubai: increased mobile-focused consumer demand and the move towards IT as a service for business. The UAE is a global leader in mobile subscription and smartphone penetration, and LTE networks are available and being promoted by both telcos. Demand for regionally and locally specific applications and content in multiple languages is set to grow, especially Arabic. Most of this demand will be met by large, established companies, but increasingly start-ups, and even individuals, could begin to play a role in the market as well.

For business customers, managed solutions and cloud-based services will steadily replace the traditional model of software and hardware sales in Dubai and throughout the region. As recent events have already shown, companies will need to enter into strategic partnerships to obtain the know-how necessary to meet the changing demands of the market. Given its solid IT infrastructure and the presence of a number of regional headquarters for major sector players, Dubai seems well placed to benefit from the growth of IT services going forward. However, it will also face stiff competition from other centres in the region, and companies will have to continue innovating to maintain its status.