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Small and medium-sized enterprises (SMEs) are the driving force behind the Middle East’s economic development. In the UAE, SMEs account for 94% of all organizations operating in the country, and they contribute more than 50% to the country’s gross domestic product (GDP). In Saudi Arabia, since the inception of Vision 2030, the number of SMEs in the Kingdom has more than doubled, reaching 1.14 million by the end of 2022.
While the COVID-19 pandemic’s impact on Middle Eastern SMEs was less severe due to regional governments’ strong response, this does not mean that they are not vulnerable to the global economic pressures. Inflation and supply chain disruptions have had a cascading effect on bottom lines, with almost every component of operating a small business steadily increasing. And given that the region is globally connected, many businesses must pay higher prices for imported materials, finished products, and services.
Meanwhile, Middle Eastern consumers are concerned about their personal financial situation, personal family matters, and climate change. Most shoppers are engaging in cost-saving behaviors to mitigate the pressure from rising prices.
Additionally, the skills shortage in the region shows no signs of abating. According to a recent Zurich study, 52% of UAE employers believe there is a talent shortage. Similarly, a PwC survey found that 75% of the employees polled in Kuwait, 60% in Qatar, 58% in Saudi Arabia, and 46% in the UAE believe their country has a shortage of people with specialized skills. On the positive side, respondents in the GCC region are also confident that their employers are prioritizing upskilling to improve the situation.
Against this backdrop, small business owners need to keep employees trained and supported – a difficult task when internal resources are increasingly stretched. SMEs also want to nurture innovation, refine their offerings to keep customers happy, and ultimately expand and diversify. But all too often, the image of a small business entrepreneur eager to innovate and succeed against big players is being replaced by one forced to constantly raise prices, train a revolving door of staff, and swallow profit margins to stay afloat.
In the current climate, updating technology might be the last thing on a small business owner’s mind. But if approached correctly, it could be the golden ticket to success. Modern digital capabilities hold enormous power when it comes to easing workloads and improving experiences. On the talent retention challenge, consistent research and interactions with customers prove that optimizing the employee experience is key, and the workforce of the Middle East seems to value flexibility and hybrid working arrangements.
PwC’s Workforce Hopes and Fears Survey 2022 revealed that 63% of employees in the Middle East believe they are capable of performing their job remotely. However, 28% of respondents are working full-time in person, highlighting the complexity of adjusting work models to suit all employees. Interestingly, 43% of Gen Z respondents say they prefer a remote or mostly remote full-time arrangement, with only 15% opting for full-time working in the office or other workplaces.
Some big-name brands have already reneged on their flexible work arrangements, including Snap, Disney, and Uber, which cited a hindrance to creativity, connection, personal growth, and engagement as reasons for the reversion. SMEs should not follow that lead if they wish to remain competitive in the job market. Indeed, many could do more with their digital strategies to better suit the needs of the modern employee.
When remote work was mandated, many SMEs rolled out off-the-shelf video-conferencing software, but they have since stalled on optimizing hybrid work arrangements. Whenever simple solutions are shoehorned into environments to address scenarios and processes they were never designed to handle, the job completed is mediocre at best. Staff should be empowered to work across locations from personal devices in a way that integrates naturally with their lives. This should allow them to collaborate with colleagues before, during, and after meetings, without worrying that “Big Brother” is watching.
Leaders should also avoid deploying multiple apps for staff to do their jobs. Not only does this lead to application overload and burnout, but it often results in them reverting to unsophisticated workarounds to get their jobs done. The knowledge exchanged through these apps invariably leaves the business when turnover occurs, and already time-poor employees are forced to train even more to get up to speed. We saw the unfortunate consequences of this arrangement play out last year when an HSBC employee was fired for using an unencrypted messaging app to communicate with a colleague.
Leaders should also leverage automation to free employees from laborious tasks such as transcribing meeting minutes, or compiling routine reports, and from taking on the work of multiple employees. SMEs often don’t have the resources, headcount, or budgets to dedicate hours to low-value administrative work. This time could instead be spent developing new services, engaging with clients, and ultimately boosting the bottom line. Automation can also improve experiences for customers. For example, in a customer service setting, a digital sidekick enabled by artificial intelligence (AI) can transcribe a call in real time, while the employee gets straight to the heart of the query. This saves time, and also lets customers feel understood, which is a key concern in the current climate.
Digital prioritization doesn’t also require a huge upfront investment and an overhaul of existing processes and systems– a reality that might not be possible in the current environment. The cloud can become one of the most valuable allies for SMEs. The continued growth of the cloud industry in the Middle East gives organizations the ability to start small by investing in features designed for a specific purpose before expanding that solution more broadly.
At the end of the day, despite the huge opportunities in this region, SMEs are being confronted by a number of headwinds. By reviewing their technology roadmaps, leaders can begin navigating immediate challenges and setting themselves up for success in the future without going back to square one.