Dubai Internet City - Distant Destination?
Date: Sunday , October 27, 2002
THE CAFETERIA AT DUBAI INTERNET CITY (DIC) could surely claim the prize for being the most unique food court in the world. Where else would you find so many nationalities sharing such easy camaraderie? Whether it's the dapper-looking guy from a Fortune 500 striking deals over falafel and fruit cocktail, or an eager Emarati whose dishdash can't quite camouflage his acquired American drawl, or a team of young, Indian techies hungry to grab a piece of the lucrative IT pie-the place epitomizes the essence of the DIC.
To a first time visitor of the DIC, the casually-dubbed “Silicon Valley of the Middle East” gives the impression of an Arabian condominium, an archetypal reflection of convention and the latest trends. Even as the assembly of tall, ethnic pillars overpowers, the smart glass buildings, sprawled over acres of lush green, reassure that modernity indeed stems out of tradition-which is probably why no matter how global Dubai becomes, it remains perpetually rooted in the local.
The CEO of Dubai Internet City, Dr. Omar Sulaiman, proudly asserts, “Yes, we do have attitude; it's this attitude that has helped us attract 800 companies, 8500 'knowledge workers,' and nearly 50 nationalities to the free zone within just two years of operation-an incredible success rate, don't you think? DIC is now the only ICT development center in the world that has all the leading global ICT (Information & Communications Technology) brands under one roof.”
So, what is this attitude that typifies the world's first and only zero-tax, free trade zone for e-commerce? Dr. Sulaiman explains, “The way we did it was simple, straightforward, and smart. We founded our vision on the psychological fact that every person, every business entity, and every corporation has wishes. We approached companies, discovered those wishes, and built on them.”
“Having said that, I must tell you that global entities do not come to us merely because we are nice people with the right attitude. They come because they find the DIC a viable proposition providing easy access to other markets out of Dubai, and the opportunity to benefit through close proximity to media companies at the Dubai Media City, and education and training companies at the Knowledge Village. It's not just a physical environment that we've aimed to create here-it's a thriving, pulsating milieu where thoughtful minds meet,” says Dr. Sulaiman.
The Dubai Internet City has quickly become a paradise for some and a paradox for others. Hari Padmanabhan, President & CEO of Insyst Technologies, was one of the first few to book space at the DIC when the concept was announced. Having already had an established presence in Dubai well before the DIC was conceived, moving into its premises reflected well for Insyst in terms of customer credibility. He commends the DIC's attitude towards its “partners” (note: not “tenants”). “There is a strong intention, desire, and communication that tells you ‘hey, we want to do something for you, to service you.’”
Most partners agree that a presence in the DIC definitely engenders a palpable shift in clients' attitudes. “DIC lends dignity. Today, there is this distinction between IT companies that are in the zone and those outside the zone. If you are a DIC partner, nobody asks you some of the questions that would otherwise be asked.”
The rationale is simple, says Venkat Raman, Channel Sales Director, Microsoft Great Plains. “When you want to perform an act, it's always good to seek a stage. DIC is like that stage, where you perform and get people to look at you. I'd rather be on this stage than in one of the streets of Bur Dubai, Riyadh, or Kuwait.”
More than a single USP
It's not just the 100% tax-free ownership that makes the DIC package hard to ignore. A one-stop shop for all government-related services nullifying bureaucracy, 100% repatriation of capital and profits, no currency restrictions, stringent cyber-regulations, protection of intellectual property, a flexible attitude pandering to partners' requirements, and instant brand recognition all add up to its USP.
What's more, the DIC offers a strategic base for ICT companies across five time zones, from Egypt to India, from Africa to the CIS-a region that has nearly 2 billion consumers and a combined GDP of $1.1 trillion. Plus, it's the backbone of a rapidly growing economy. While advanced economies in the past 10 years have shown a GDP growth rate of 2.8% per year, the Middle East GDP grew at 3.5% per year, with UAE's GDP specifically growing at 5.6% per year. In the IT segment, the entire Middle East market grew by 21% in 2001, with the UAE sector expanding by 23%. The GCC personal computer (PC) market grew 20% year-on-year in 2001 and is expected to expand in the UAE alone by almost 40% by the end of 2002.
Cutting-edge technology provided at Dubai Internet City is a key factor influencing businesses to migrate or establish their presence in the knowledge hub of the region. Farid Faraidooni, Director of Telecom, Dubai Technology, Electronic Commerce, and Media Free Zone Authority (TECOM), explains, “Whatever the requirement, Dubai Internet City offers the flexibility, scalability, and the technology needed to deliver the solutions of tomorrow today.”
Even while all indicators have proven the DIC to be exactly what the region needed for a long time, it is difficult to ignore the sceptics who reject the notion that the DIC is the answer to every ICT organisation wishing to conduct business with that side of the world.
Padmanabhan, however, points out that it is simple logic that one needs to be in the marketplace to address the marketplace. “You cannot sell in this marketplace sitting in India; you won't understand the way this place works, and your customers won't not buy from you. Ours is a people-oriented business. While the product is important, the more vital component is the service and support. Even if you have the best product in the world, it would be hard to succeed unless you provide support locally.”
While most DIC partners concur that when a customer sets up base at the DIC he incurs only marginal costs in terms of capital expenditure, there are others who opine that the price is steep for securing a mere DIC identity.
The DIC management justifies the high costs for the level of service it provides. “If you expect a visiting visa to be processed and delivered at your doorstep within four hours, there is a particular challenge in that and people tend to forget the indirect costs they would otherwise have incurred. It's a fact that telecommunication services cost 20% higher outside the free zone. We are here to facilitate companies to conduct their business seamlessly. All this is difficult for a common man to understand because he doesn't look at it from a macro level,” explains TECOM's Chief Planning and Business Development Officer, Deepak Padmanabhan.
Raman is on target when he says, “How do you determine that something is expensive? Only when it's compared with something. And, that comparison should be between apples and apples. I don't see another entity like the DIC around, so drawing such a comparison is impossible.”
Why is it, then, that a substantial number of companies withdrew from the DIC last year?
Verma explains, “A number of them were local software companies that could not sustain the cost of the infrastructure and their business. Their market was local-centric, for which they did not need the high bandwidth, or an office in plush buildings facing a fountain.”
Misplaced expectations, false notions of Dubai being a money-spinner with opportunities and currency lining its pavements, and the let’s-go-’n-pick-it-up attitude were some of the misconceptions that forced companies to shut down soon after they set up shop.
Besides that, the market is accused of not being mature enough to accept start-up companies. Durgaprasad observes, “A Wipro, Infosys, or Satyam with a trail of successes behind them has a better chance of survival in this region. Unlike the U.S., where a consortium of well-qualified professionals is accepted and given a chance to succeed, this region definitely demands a good professional pedigree even to be acknowledged.”
“You cannot come to DIC and complain that DIC is bad because your business is bad. A lot depends on your business model, its clear-cut value addition that can be easily perceived by the customer. If you can't sell from Dubai, you can't sell from anywhere else in the world,” insists Raman.
The very fact that the DIC refers to its companies as Business Partners reflects its emphasis on the partnership element, explains Dr. Omar Sulaiman. “We actively support the growth and welfare of companies in the community, irrespective of size or reputation. Among our new initiatives is a Partner Relations Department that assists companies in exploring business opportunities, expanding operations, and setting up new businesses in the region. We're open to partnerships with any company, small or big, depending on the value they bring to the relationship.” A case in point: DIC's recent partnership with Vxceed, a small India-based software solutions company, for developing a Total Procurement Management solution.
It is common knowledge that the Middle East has been regarded with a less kindly attitude in the past, to the extent that the more developed countries nullify any work experience in this region. Have organizations like the DIC erased such jaundiced perceptions?
Padmanabhan explains, “We have over 8,500 workers working at the free zone, and we expect that number to grow to 23,000 by the end of next year, and close to 50,000 in three years' time. Does this place attract first-rate talent? Just take a look at the number of resumes that we are inundated with from software professionals in the West-all of them are beginning to look at the Middle East as the next best thing on the IT map.”
The stability of the Middle East is also a factor that adds to this region's USP. “In the U.S., if Greenspan sneezes, the entire economy catches a cold; whether it's a boom or a bust, it happens across the country. In the Middle East, there is a lot more stability; there is less drama and, although your business may not grow spectacularly, it surely does grow.”
Hashim Al Dabal, Vice President, Group Finance, The Executive Office, says, “The initial phase of purely developmental activity is over, and we're now evolving to a level where development will be judiciously balanced with commercial factors. Getting a payback is not our only focus. We continue to be light on our feet when it comes to planning so that the overall vision of HH Shaikh Mohammed is achieved on a reasonably commercial basis.”
Apart from being client-friendly, the DIC is leaning towards becoming more investor-friendly, seriously examining some initiatives to allow investors to participate in future infrastructural developments and other ventures.
Padmanabhan chastises DIC's tenants for not really taking advantage of all it has to offer. “DIC authorities have instituted monthly meetings where partners are given an opportunity to air their views-and that's not all. Every problem is comprehended as a genuine situation, and solutions are sought with hardly any time delay; a progress report is also provided at subsequent meetings. So there is this free and totally transparent communication here, which is very unique in this region.”
Raman believes that the DIC ought to work towards securing more international accreditation, and market itself aggressively in Western countries, sending out more emphatic messages to the outside world that DIC companies are synonymous with quality, and DIC contributes to that quality enhancement. “DIC could have tie-ups with other governments in the region to promote the easy exchange of expertise, and facilitate growth in the region, not just in the UAE,” suggests Menon. Perhaps, Padmanabhan's comment best captures what the DIC epitomizes: “When you come in to work each morning, you're in no great hurry to go home, you feel happy to be working here, with an inclination to spend more time. And, with the technologically advanced 160 luxury villas, shops, cinemas, and restaurants currently in development, DIC offers what I need. It will only get better.”