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Middle East companies look to emerging, not developed markets for best practice: research

Business leaders in the Middle East look to emerging markets for growth lessons and best practice more than developed markets, according to research commissioned by Tata Communications.

The study, which surveyed 1,600 business leaders and was conducted by independent research company Vanson Bourne, found that 71% of respondents stated that preference and 34% expect to increase their investment in emerging regions in the next year.

In terms of the rest of the world looking to this region, 11% of global respondents stated the UAE as an opportunity for rapid growth.

Respondents from the Middle East identified India as offering the most growth opportunity to them with 32% of the survey selecting this option. 29% of respondents from the region chose the United Arab Emirates as offering most growth. 18% of Middle East business leaders believe Turkey offers rapid growth opportunities and 10% chose Egypt as the market with most potential.

Furthermore, when asked which of the FTSE Emerging Market Index countries they considered to be most progressive, 42% of respondents from China, India, South Africa and the Middle East selected China. This compares with the 27% who selected India and just 1% who indicated that they believed Russia to be most progressive. 5% of the survey believes the UAE to be most progressive, with 20% of Middle East respondents selecting this.

The study also found that 87% of business leaders from both developed and emerging markets are actively engaging in emerging markets, despite 56% acknowledging that they associate emerging markets with political instability. 37% of companies in the Middle East are currently looking at operating in emerging markets, compared with 61% of Chinese and Indian companies.

The most popular choice of a target market expansion is China with 51% of global respondents stating that their organisation is looking at expanding there. 39% selected India and 33% Brazil as likely target markets, with 13% identifying the UAE as a market under consideration. The respondents most likely to select the UAE as an expansion destination came from the Middle East (32%), Singapore (20%) and India (19%).

The main driver stated for moving to emerging markets is the potential to capitalise on growth opportunities, with 63% of business leaders surveyed selecting this as a reason. In line with the focus on growth, competitor activity is also a factor with 44% of the overall survey selecting this as a reason for moving into emerging markets.

“For companies to capitalise on that potential we need to see greater levels of investment in the infrastructure that is essential to support it. That will inevitably require more focus on developing talent and innovative thinking in markets that can have less educational investment in those areas,” said Vinod Kumar, MD and CEO at Tata Communications.

“It is clear that businesses are prioritising communications and digital infrastructure as a critical part of their operations. The ability to manage those communications and to ensure reliability and security requires a level of global, and in particular, emerging market experience,” he added.

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