A survey conducted by the global aid agency MercyCorps recommends that the Palestinian high-tech industry turn its marketing efforts toward just one market, that of Saudi Arabia.
There is no point comparing the wide-ranging Israeli information and communications technology (ICT) industry to the Palestinian one. The Palestinian high-tech industry, based primarily in Ramallah, comprises 143 companies associated in [the Palestinian Information Technology Association] PITA, an organization that works in coordination with the Palestinian Authority's Communications Ministry. Almost all of these companies are engaged in software development, while a number of smaller companies provide support and data storage services. They serve the Palestinian government’s ministries and agencies. There are some 5,000 employees in the Palestinian high-tech sector, which produces about 8% of the Palestinian gross domestic product (GDP).
By comparison, there is something like 3,000 [ICT] companies in Israel, and 500 of them bring in revenues of more than $20 million per year. The number of employees in the Israeli high-tech industry is in the order of 120,000, and it's one of the major growth engines of the Israeli economy.
Unrealized growth potential
Experts in the field reckon that the Palestinian [high-tech] industry has a considerable growth potential. The Palestinian population is relatively young and has access to the industry. Close to 2,000 college graduates in the West Bank and Gaza complete their studies each year in the high-tech related subjects. However, many of them abandon the sector, as they cannot find jobs in the industry. The weaknesses of the Palestinian sector originate in the limited communications infrastructure at its disposal, the small-scale local market, the difficulties in raising funds and the absence of contacts with and access to the world markets.
About 500 Palestinian software engineers are employed by Israeli companies under an outsourcing arrangement. Yet, the major growth potential lies in the Arab world, and it’s toward that market that the efforts should be directed. The Palestinians can take advantage of the relatively high level of their high-tech professionals to promote software development and localization services — that is, adaptation of [software] products to the Arab region, the Arabic language and the Arab culture and way of life.
Jordan as a starting point
Jordan should serve as the starting point in the efforts to change direction and turn toward the Arab world. The Palestinian and Jordanian high-tech industries are more or less on par, although the wage level in Jordan is lower than that offered in the territories — which is liable to be to the disadvantage of the Palestinians in the competition for the Jordanian market. Be that as it may, besides the geographical proximity, the residents of the West Bank and Gaza have close family and cultural ties with the Palestinian population in Jordan, which is in the majority there. Thus, Jordan could serve as a starting point in the endeavor to enter the Arab markets, first and foremost, that of Saudi Arabia.
Saudi Arabia is the largest country in the Gulf Cooperation Council (GCC), with one of the highest per capita incomes in the region — of over $20,000 a year. There is also a great demand in the Saudi Arabian Kingdom for a variety of information technology products.
Giant international conglomerates have already discovered the Saudi market, and the [MercyCorps] report thus recommends that the Palestinians, too, turn toward the peripheral market of Saudi Arabia, where they are certain to find a vast and promising customer base.