A strong talent base and infrastructure upgrades make for attractive prospects in the IT sector

The ICT sector is Jordan’s fasting growing industry, rising by about one-quarter a year and providing more than 80,000 direct, indirect and induced jobs – equivalent to more than 6% of the labour force – according to the Information Technology Association of Jordan (int@j). Since the country opened itself to ICT development in the late 1990s, the sector has grown into an economic powerhouse, and now contributes about 12% of GDP.

From 2000 to 2008, year-on-year growth in the ICT sector was roughly 25%. The sector attracts an average of $150m a year in investment and has some 540 active companies in telecoms, IT, online and mobile content, outsourcing and games. Liberal regulations on the sector mean Jordan’s skilled ICT workforce enjoys some of the best connectivity in the region.

IT export revenues totalled $324.44m in 2013, and the major export markets included Saudi Arabia at $86.31m (26.60%), the US at $69.74m (21.49%), Iraq at $41.14m (12.68%), Nigeria at $23.13m (7.12%) and the UAE at $20.57m (6.34%), according to int@j.

According to the Innovative Jordan conference, between 2011 and 2012 Amman ranked first in the region in terms of the number of tech deals funded and second for the amount of funds invested.

Reach-ing Higher

In 2012 the Ministry of ICT (MoICT) drafted the National ICT Strategy 2013-17, a policy document to steer the sector’s development and increase its contribution to growth. Drawn up in conjunction with int@j, the sector’s main advocacy group, and representing more than 200 firms in IT, telecoms, outsourcing, internet and mobile business, the strategy was approved at the beginning of 2013.

The creation of int@j by King Abdullah II in 1999 was part of the REACH initiative, the kingdom’s first ICT development strategy. This five-year plan focused on increasing industry competitiveness and forging partnerships between the public sector and ICT companies. Partly as a result, from 1999 to 2007, ICT revenues expanded from $60m to $1.4bn and the total number of ICT jobs rose from 1000 to 17,000, as per int@j data.

REACH gave way to the National ICT Strategy of 2007-11, which targeted internet penetration, job creation and revenue growth. The focus on employment continues under the current strategy, but the emphasis has now shifted towards infrastructure development and improved links between IT and other economic sectors.

Infrastructure

At the core of the current strategy is the National Broadband Network (NBN), to which the state has committed $209m to finish in the next two years. By connecting all public schools, universities, state agencies and hospitals to a nationwide fibre-optic network that was launched in 2003, the NBN will facilitate a host of e-learning and e-commerce projects in the kingdom. It will also boost Jordan’s existing operators of WiMAX, a wireless communication system that provides fixed internet capacity and higher speeds. Local operators entered the market in late 2009, occupying a 17% share of the entire broadband market.

The strategy’s other goals are manifold. These include deepening cooperation between the sector and other high-value-added industries, and supporting the development of electronic content in Arabic – Jordan produces roughly three-quarters of global online content in that language. To facilitate a better working environment for the ICT sector, it also calls for greater intellectual property rights, support for more efforts in international marketing, regulation of radio-frequency spectrums and further development of ICT skills at universities. In numerical terms, its aim is to raise total internet penetration from 73% currently to 85% by the end of 2017, while increasing the number of jobs in the sector by around 4000 to a total of 20,000.

Growing Talent

Given its many universities and quality of education, Jordan has been able to produce a large and skilled IT workforce. However, the challenge of staying ahead in this fast-paced sector is pushing some private organisations to offer further skills training for the IT workforce. At the behest of int@j and other sector players, the kingdom is working with private providers to better prepare its workforce for the world of IT. For many years, private local IT firms have conducted their own training for new graduates, but many of these, once trained, have taken their skills to more lucrative markets in the Gulf, Europe or the US.

Several new programmes are thus under way to train and retain the local IT workforce. One such initiative is int@j’s public-private partnership (PPP) with the MoICT and the Ministry of Labour to take advantage of the existing state-sponsored Graduate Internship Programme (GIP). GIP placements last for 18 months, during which time the government subsidises half of a graduate’s salary of $420 a month for the first year, after which the subsidy is reduced to one-quarter for the remainder of the internship. From 2012 to mid-2013, more than 1200 graduates and students took advantage of this programme, according to int@j.

The association has also facilitated partnerships with major IT groups such as Google to host Jordanian tech entrepreneurs. The developers of Sowt, a local social networking platform that promotes discussion and dialogue through short audio posts, were recently invited to spend three months in Silicon Valley to work with Google to help develop their application.

Reversing The Cycle

The success of tech start-ups like Sowt is helping to address Jordan’s steady exodus of IT developers to other markets. Of the roughly 5000-6000 IT graduates in Jordan each year, about 3000 go abroad for better wages. However, increasing numbers are looking to stay home and take advantage of available on-the-job training and internship programmes. “Amman is a great place to launch start-ups due to its location, infrastructure, low cost of living and liberal legislation,” Omar Al Sharif, managing director of tech incubator Oasis500, told OBG. “More and more fresh graduates are seeing that their skills can be put to use in increasingly creative ways closer to home.”

International Connectivity

Jordan is connected to a mix of copper, fibre and wireless technologies that link its homes and businesses to the internet. Indeed, its web infrastructure is among the region’s most advanced, with many links to neighbouring nations that help regional business to interconnect.

Jordan’s first foray into the world of international fibre-optic cables came in 1999, when it connected to the Indian-owned, 27,300-km Fibre-Optic Link Around the Globe, or “FLAG”. Nearly a decade later, Amman was included as a node in two major terrestrial fibre lines running through the region: the Regional Cable Network (RCN) and the Jeddah, Amman, Damascus, Istanbul (JADI) line. Given Jordan’s location almost directly in the middle of the RCN line, Amman received a capacity boost and became an ideal location for a regional IT centre. The 2530-km JADI link is the main competitor with the RCN line and, by joining together existing infrastructure, aims to create a terrestrial alternative to the submarine cables that run under the Red Sea.

Local Connectivity

At home, Jordan has made a number of upgrades to its domestic infrastructure. Subscribers to ADSL services – disseminated via the copper telephone wire network over which Jordan Telecom Group has a monopoly – reached 198,826 in the fourth quarter of 2013, up from 193,553 in the first quarter. Overall internet penetration rate also rose in 2013, from 4,435,144 users (69%) in the first quarter to 5,320,248 (73%) in the last quarter, according to the Telecommunications Regulatory Commission (TRC). Orange Mobile announced in late 2013 that it would launch broadband services with maximum download speeds of up to 100 Mbps over very-high-bit-rate digital subscriber lines and fibre-to-the-home networks. These upgrades are currently available to residential and corporate customers in certain districts of Amman.

Logging On

The steady growth of internet penetration is a success story for the country’s ICT sector. Between 2000 and 2013, the percentage of individuals with access grew from 2.6% to 73%, or about 5.3m of the country’s roughly 6.5m people, as per TRC statistics – an encouraging figure for Jordan’s expanding tech start-up sector (see analysis). Mobile broadband, by far the fastest-growing access method in Jordan, continued to dominate internet subscriptions in the kingdom in 2013, increasing from 1.12m in the first quarter to 1.5m in the fourth, according to the TRC. Such dominance has come at the expense of other protocols: in the last quarter of 2013, Jordan had just 386 fixed-line customers, while WiMAX, leased-line and TV-cable lines all showed steady but moderate numbers.

Gaming

In recent years the kingdom has developed a strong gaming community, of both developers and players. As the country’s tech start-up sector grows, gaming companies have diversified to emerge as one of the region’s primary engines of platform development. One such firm is Mixed Dimensions (MXD), founded in 2009, which provides tools for platform building, gaming companies and developers of interactive 3D online applications, and embodies the global viewpoint that defines many of Jordan’s tech and game start-ups. The company’s flagship production, a 3D asset tool called GameDraw built for the Unity gaming engine, is used by more than 16,000 game developers in 110 countries, and MXD recently completed the prestigious Alchemist Accelerator programme in Silicon Valley, further entrenching its global footprint.

Attractive Destination

Ever since the local internet portal Maktoob was sold to Yahoo for $175m in 2009, Jordanian tech start-ups have been building the sector into one of the region’s most productive tech incubators. Numerous accelerators have cropped up in Amman to capitalise on Jordan’s potential for tech entrepreneurship. It is not just local companies that are taking off; many firms from around the region have come to the kingdom to make use of the country’s central location and excellent infrastructure. Oasis500, a tech accelerator in the classic Silicon Valley sense of the term, has helped grow hundreds of firms since opening in Amman in 2011. Taking advantage of Jordan’s quality internet infrastructure and liberal regulations, the company provides grants, as well as office space and legal advice, to start-ups producing everything from e-commerce sites to cooking apps. Oasis500 provides support to both local and global firms; 20% of accelerator participants are non-Jordanian.

Growing Profile

Other initiatives are aimed at unifying the local ICT industry. The Gaming Lab, an initiative supported by King Abdullah II to meet the needs of developers and companies in game design, partnered with mobile operator Umniah and AppCircus, an events and online incubation platform, to host a conference in early 2014. The delegates, including all of the kingdom’s major telecoms operators, agreed on the need for better collaboration between developers. At the core of the conference was a new platform called Apps 4 Amman, which has the goal of creating various apps related to tourist attractions, restaurants, traffic guides, cinemas, hospitals and entertainment venues, among other things. “We all need to work together to create an ecosystem that boosts the app industry in Jordan,” Carles Ferreiro, co-founder and CEO of Dotopen, a Barcelona-based mobile platform, told delegates. “The potential for business is huge, as [in 2014] alone trading in this industry is expected to reach $100bn.” The Jordanian start-up ecosystem draws life from the kingdom’s embrace of social networking platforms – indeed, Jordan has a Facebook user per internet ratio of 79%, the second-highest in MENA after Egypt.

Cloud

The kingdom is looking to expand services and infrastructure in several key areas of the ICT sector with direct and indirect state assistance. To improve national cloud computing standards, in May 2014 the MoICT collaborated with Microsoft to launch a national cloud platform (NCP). In the first phase, state entities will be provided with a consolidated data centre powered by cloud technologies and located in the National Information Technology Centre, linking more than 90 state entities over a private network. Later phases will use the platform as a virtual data centre for start-ups and small and medium-sized enterprises (SMEs). “The launch of a consolidated data centre powered by cloud computing services is part of several steps we have recently taken to help the government enhance performance levels, as well as to support the e-governance programme,” Azzam Sleit, the minister of ICT, told the press at the announcement of the partnership. The MoICT reckons that the NCP will lower costs and operational expenses by 15-20% during its first year of operation and by 40-45% in later years.

E-Solutions

The deployment of the NCP signals a willingness by Jordan to tackle a long-standing issue in the country’s IT sector: the ease and availability of platforms for e-commerce. To help facilitate growth in the country’s tech start-ups, the kingdom needs new platforms for e-commerce, such as the ability to pay for applications through mobile providers. According to Oasis500, e-commerce in the kingdom suffers from a lack of platforms, leading to lower demand and keeping the preferred payment method for goods purchased online as cash on delivery. Jordan’s internet users spent an estimated $370m on products, services and online bill payments in 2011, a 92% increase from $192m in 2010, according to Arab Advisors Group. “Internet transactions and paying online for apps is an issue in Jordan,” Abdelmajeed Shamlawi, CEO of int@j, told a recent conference of developers in Amman. “People do not trust online payments and this is relevant for the entire Arab region.” The potential market for e-commerce in Jordan is enormous: estimates indicate that by the end of 2016, the volume of e-commerce in the MENA region will amount to $16bn, according to a 2012 index compiled by AT Kearney, a consulting group.

The kingdom is also looking to e-commerce platforms for the introduction of e-education. One such project, slated for 2014, is a three-year partnership with Barcelona’s Universitat Oberta de Catalunya, with the aim of developing education standards through a range of e-learning initiatives.

In 2012 the Ministry of Health signed a deal with the Hakeen e-health programme for a digitised database of health records. With more than 30 public hospitals and about 700 health centres in the country, the implementation of the agreement over the next seven years will be a big step forward in Jordan’s plans to build up its e-health standards and connect the public system.

Outlook

With ICT among its fastest growing industries, the country has seen its tech start-up ecosystem emerge as a regional leader ever since the sale of Maktoob to Yahoo in 2009. Liberal regulation and state-funded initiatives aimed at keeping talent in Jordan will help grow the industry into one of the permanent engines of the economy. “IT is not at all saturated,” Mohammed Helal, Dell’s country manager for Jordan and the Levant. “There will be very tangible growth in areas like mobile apps and localisation, where Jordan can serve as a staging ground for the rest of the Middle East.”

With its ICT infrastructure already healthy compared to other countries in the region, initiatives such as NBN (see Telecoms overview) will more deeply entrench its ability to give developers the support they need, while other upgrades will form the framework for further developments in segments of the IT sector, such as e-health, e-commerce and e-learning. At stake for Jordan is its own success in churning out and retaining highly talented developers. Additional tech accelerators, such as Amman’s Oasis500, should go far in establishing a tech culture that is already one of the most attractive in MENA for developers, and thus help curb brain drain to the Gulf. Given its central location and advanced infrastructure, the kingdom is well positioned to retain a fair slice of the IT market in the region and build its credentials in the international IT community.