With the Middle East emerging as a data centre hub, Pieter Meissenheimer of Portman Partners takes a deep dive into the challenges and opportunities for recruitment in the region’s data centre sector.
The Middle East is expected to be one of the fastest-growing data centre markets globally in the coming years. The growth is being driven by governments looking to diversify their economies away from oil and gas dependencies. The Middle East’s central geographic location and rollout of 5G networks is already powering cloud adoption and AI in the region and attracting overseas companies; demand is outstripping capacity. To keep pace with demand, build more data centres and effect change quickly, countries in the region are competing for highly skilled talent.
Government policies and competition
There have been recent predictions that data centre investment in the Middle East will double from USD 4.86 billion in 2022 to USD 7.94 billion, by 2028. Governments in the Middle East are racing to invest in and build data centres to power their economies of the future. Saudi Arabia’s Vision 2030, the UAE National Agenda, Qatar’s National Vision 2030, and Oman’s Vision 2040 are all strategies designed to reduce reliance on oil and foster innovation and sustainable economies.
As a result, demand for cloud computing, AI, and other digital and IoT services has surged. Over 70 colocation data centres have been built and UAE and Saudi Arabia appear to be winning the race each having more than twice the number of data centres than Oman, Kuwait, Bahrain, or Qatar.
Within the UAE, Dubai and Abu Dhabi are the largest data centre makers and they are also ranked among the top 20 smartest cities globally (Institute for Management Development’s Smart City Index) with Abu Dhabi already having achieved 98% internet penetration ready to support its strategy of targeting artificial Intelligence markets, especially in fintech and healthcare.
These new data centres use the latest technology to ensure these countries are at the forefront of the industry. Already companies such as Amazon Web Services, Google Cloud, and Microsoft Azure have been attracted and have established a significant presence across the Middle East. The region intends to become a global leader in this space.
Infrastructure and sustainability challenges
The Middle East’s ambitions, however, faces significant hurdles. Electricity or water for cooling are scarce, and land is an issue. The deserts are vast but devoid of infrastructure to support data centre growth. Also 90% of power in the Middle East is still fossil fuel based. Many AI, cloud and IoT companies are socially and environmentally conscious so they want green-powered data centres, built ethically, or they risk global reputational damage.
Heavy investments in, and joint ventures with, European companies to expand solar capacity in the region are ongoing but need to accelerate to meet rising demand. Last year there was a 57% increase in solarand wind capacity across the Middle East and, according to Zero Carbon Analytics is set to triple between by 2027. UAE, Iran and Jordan are the forerunners in the race to diversify their power supplies, compared to Oman, Qatar and Lebanon, whilst the Gulf sovereign wealth funds with US$3.7 trillion in assets are also looking to invest in renewables. Currently solar power is both dominant and cheap, representing 92.7% of installed renewables, and UAE’s solar energy is 50% cheaper that the global average. The pace of switching, especially in those countries with the finance and capability to create these new energy sources, is growing and will determine who wins the race for global dominance, but for today it is a significant stumbling block to building data centres.
To increase data centre capacity, those companies whose large gigawatt data centres were delayed by the lack of infrastructure have instead had to begin building two or three smaller sites, and at great pace. The talent pool needed to build and operate these new data centres quickly, and to a world leading quality, is increasingly scarce. People are being poached from one firm to another because the local pool of highly skilled talent is too small.
Recruitment, education and the future workforce development
The issue is finding the right people with the right skills at the right time is an issue. At the start of a project construction engineers are needed along with mechanical and electrical engineers. Once built, Data Centre Operations Managers, Sales Specialists, Consultants, and Operations Engineers are essential for maintaining 24/7 operations, managing the facilities, and driving sales and customer acquisition. But defining the strategy for tomorrow requires people who can see the future – bright, knowledgeable, experienced industry leaders who know how to align strategies with the region’s economic and political aspirations.
Currently, leadership teams are predominantly expatriates. We do see some roles at manager level or in financial teams being filled by local workers. But overall, we are seeing a lack of experienced strategy and leadership. Young managers can be trained, but it will take time. Until then businesses will continue to attract talent from further afield.
Unfortunately, local talent remains scarce primarily due to the historically underdeveloped education system, particularly in STEM subjects. In Dubai, for example, around 90% of IT workers are from overseas. To address the talent gap, there is a drive to enhance STEM education across the region.
Since 2015, Saudi Arabia for example, has been investing heavily in education. But by 2019, less than half of students read well enough to participate fully in society, twice the number in OECD countries.
There are few universities with high-ranking STEM programmes, so Dubai for instance will pay for students with good enough grades to study at top global universities such as Oxford, Cambridge and Stanford. They are then obligated to return and work in the country for ten years.
In the UAE, some 30% of students are now studying STEM subjects, and the Arab world in general is producing more educated STEM professionals than its Western counterparts, which, at 26%, is lagging. Educational reforms are continuing but it will be some time before the local workforce is ready to power the industry.
Visa and expatriate dynamics
Currently the expat workforce remains crucial to the Middle East’s data centre dreams, but obtaining the necessary visas and navigating regulations can be cumbersome. It doesn’t always go as smoothly; the slightest thing, such as infections, can prevent a successful application or renewal. And the laws have been tightened. Visa renewals were every five years; now they are every two years with no exceptions. That can be a hurdle for continuity in projects.
Despite these challenges however, the lucrative salaries, coupled with the tax-free compensation packages, continue to attract skilled professionals from around the world. It is especially attractive for single people. For those with families, the move can be a little more complicated.
Contracts also need to include private education and medical care expenses, because without these additional incentives life can become prohibitively expensive. Some people recently left the region to return home, only to discover that life there had also become too expensive so they returned. Many stay for years enjoying the lifestyle, especially since some cultural restrictions have eased – alcohol for instance is permissible, if not cheap.
Conclusion
The data centre industry in the Middle East is on a path of rapid growth and transformation, driven primarily by strategic government policies to diverse local economies away from its historic reliance on oil and gas and into the new era of digital technology. However, overcoming challenges related to sustainability, infrastructure, and most importantly talent acquisition will be critical to this growth.
Government initiatives to foster local talent through improved education will over time enable the region to become self-reliant. But that will take time. Meanwhile, for those businesses looking to grow or move into the region, the race is on. Expats remain central to the fulfilment of the region’s long-term economic goals which are fundamentally reliant on data centre capacity.
So for now businesses will need to be informed and prepared to create the right the type of package to attract the best leadership talent with experience in strategic roles to support their plans, and to help build a robust and resilient data centre industry.
