Bloomberg News

SAP Targets Slice of Middle East Spending Amid Expansion Plans

June 11, 2013

SAP AG (SAP) seeks to gain from a surge in public spending in the Middle East as the largest maker of business-management software looks for contracts in industries such as defense, education and health care.

“These are areas where we are investing heavily and trying to gain more traction,” Sam Alkharrat, managing director for the Middle East and North Africa, said in an interview in Dubai. The company plans to open offices in Abu Dhabi, the capital of the United Arab Emirates, and Libya, and may expand in Algeria and Iraq, he said.

Governments in the Middle East, particularly in the Gulf Cooperation Council, are boosting spending to create jobs and propel economic growth. The investments are creating opportunities for Walldorf, Germany-based SAP, which hired 200 people in the Middle East and North Africa last year and plans to add about 100 jobs in the region in 2013, Alkharrat said.

International companies are targeting emerging markets as the euro zone fights to emerge from recession and the U.S. economy struggles to pick up. Saudi Arabia’s economy, the Arab world’s biggest, expanded the most among G-20 nations between 2008 and 2012 after China and India, according to the International Monetary Fund.

Saudi Defense

The Saudi government is spending more than $500 billion to boost non-oil growth and stave off political unrest. SAP counts Saudi Basic Industries Corp. (SABIC), the world’s biggest petrochemical maker by market value, among its clients in the kingdom.

“By any level of statistics that you look at, Saudi Arabia is half of the Middle East region’s IT spend,” Alkharrat said. “The central government is spending more money on defense and information security after the cyber-attacks and due to the critical situation in the region. There is a lot of money being spent on things like unemployment.”

In December, Saudi Arabia blamed unidentified people based outside the kingdom for a cyber-attack against state-owned Saudi Arabian Oil Co. aimed at disrupting production from the world’s largest exporter of crude.

SAP is working with “several defense entities” in the region on systems, Alkharrat said. “In the MENA region, there hasn’t been a whole lot of automation done.’

To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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