How will a war in the Middle East impact hiring offshore Software Developers?

As tensions continue to rise in the Middle East, businesses must consider the impact of potential conflict on their operations, particularly when it involves offshore software developers.

As tensions continue to rise in the Middle East, businesses must consider the impact of potential conflict on their operations, particularly when it involves offshore software developers and technical teams. The Middle East has emerged as a notable hub for tech talent, contributing significantly to the global pool of software developers. However, a war in this region could have serious implications for businesses relying on these skilled professionals. Let’s explore how the continued escalation could affect the leading international developer hubs and the companies that depend on their expertise.

Current Hiring Trends For Technical Talent 

According to the Bureau of Labor Statistics, employment of software developers in the U.S. is projected to grow 22% from 2020 to 2030, much faster than the average for all occupations. Meanwhile, international hiring trends also reflect a growing reliance on diverse global talent pools to address skill shortages.

In the Middle East, hiring trends for technical talent are on the rise, with a projected increase of 15% in demand for IT professionals by 2025. This growth is driven by the region's expanding tech hubs and digital transformation initiatives. As local economies increasingly focus on innovation, there's a heightened demand for offshore software developers, cybersecurity experts, and other tech specialists. This trend highlights the Middle East as an attractive destination for tech talent seeking new opportunities and looking to contribute to the region’s technological advancement.

The Top Tech Hubs in the Middle East and Potential Impacts of the Conflict for them

Tel Aviv, Israel

Tel Aviv is home to the most founder-nurturing unicorn startups in Europe alongside London. Tel Aviv has produced the 5th highest number of unicorns worldwide. Local retention is also high, as 76% of 2nd generation companies were also founded in Tel Aviv.

Internet stability in Tel Aviv has been impacted in different ways since October 7th, with two networks (autonomous systems) in the Gaza Strip going offline a few hours after the attacks and several times since. There has also been a significant uptick in cyberattacks targeting Israel, including a 1.26 billion HTTP requests DDoS attack.

Cyber attacks targeting Israel since the start of the conflict

Since early this year, Israel has experienced a significant increase in cyber attacks, with a major surge occurring on October 7 and October 8, 2023, following attacks by Hamas. The most intense of these were DDoS attacks aimed at Israeli newspapers. Notably, on October 8, one attack involved blocking 1.26 billion requests in a single day, as reported by Cloudflare. Additionally, attacks on October 7 blocked 346 million requests, with another 332 million requests blocked the following day.

The recent spike in cyber attacks in Israel has raised alarm within the U.S. FinTech community. Many American FinTech firms rely heavily on Israeli technology for advanced cybersecurity solutions. These increased cyber threats not only put these collaborations at risk but also highlight potential vulnerabilities that could be exploited worldwide. In response, U.S. FinTech leaders are taking extra precautions and shifting their hiring strategies to include more U.S. based technical talent, aiming to bolster their cybersecurity defenses and safeguard their operations and sensitive financial data.

Dubai, United Arab Emirates

Dubai has established itself as a prominent tech hub in the Middle East, attracting a significant number of developers and focusing on key industries such as technology and financial services. In 2023, IT outsourcing made a substantial impact on the UAE's tech economy, generating $1.2 billion—almost half of the total tech exports valued at $2.9 billion in 2021. 

This success is supported by a strong IT infrastructure, including 32,000 software development companies and 328,000 offshore software developers across the country. The key trends in the ICT sector include AI, big data, IoT, cyber security, cloud services, software, and hardware.

Regional conflicts could lead US based companies to reconsider their investment and hiring strategies in the UAE. As tensions in nearby areas rise, the risk may deter these companies from expanding or initiating new projects in Dubai, potentially slowing down the region's tech sector growth. Despite Dubai's efforts to maintain a stable and attractive business environment, the uncertainty might prompt some American firms to scale back on hiring local technical talent, focusing instead on more stable regions.

Riyadh, Saudi Arabia

Riyadh, the capital of Saudi Arabia, has been making significant strides in the technology sector. The city is home to numerous tech startups and is a central part of the Saudi government’s Vision 2030, which aims to diversify the country’s economy, with a strong emphasis on technology and innovation. The Software market in Saudi Arabia is projected to grow by 3.30% (2024-2028) resulting in a market volume of US$1.64bn in 2028.

The threat of conflict in the Middle East could make U.S. based companies hesitant to invest in Riyadh’s tech market, particularly in hiring technical talent. Fears of instability might lead these companies to view Riyadh as a higher-risk area, possibly slowing down their investment and expansion plans. This could limit job opportunities and affect the growth of the local tech industry, as professionals might look for more secure careers elsewhere, impacting Riyadh's tech ecosystem.

Amman, Jordan

Amman, Jordan: Jordan has been working to establish itself as a technology hub in the region. Amman, the capital, hosts numerous tech startups and entrepreneurial ventures, aided by a young and tech-savvy population.

Businesses in Amman, Jordan began feeling the international impacts of the conflicts in  October of last year when Houthi Rebels started attacking ships in the Red Sea in support of the Palestinians. The attacks disrupted shipping in a waterway that normally carries about 12% of the worlds trade, and analysts have warned that a regional war could stoke inflation if it continues for an extended period.

Though we haven’t been able to see any significant statistics about how a conflict could affect how US companies plan their off-shore technical hiring in the region, general sentiments suggest that they are proceeding with caution for outstanding talent based in Jordan.

Doha, Qatar

Doha is known for attracting various international companies due to its growing tech scene and supportive business environment, facilitated by initiatives like the Qatar Science & Technology Park and Qatar Financial Centre, which aim to foster innovation and attract foreign investment. 

Qatar does not explicitly align with countries planning to engage in military actions against Israel. In fact, Qatar has acted as a mediator in the Israeli-Palestinian conflict on several occasions and maintains a working relationship with Israel, particularly in facilitating aid to Gaza. However, Qatar also has relations with Iran and other regional players often in opposition to Israeli policies, balancing its ties within the region carefully.

If there is an escalation in tensions in the region, only time will tell how they will position themselves, but most US based companies are anticipating a neutral stance and are continuing to pursue top technical talent from the region. 

Beirut, Lebanon

Before recent upheavals, Beirut's tech scene was emerging as a dynamic hub, attracting significant interest from U.S. based companies looking to hire offshore technical talent. The city boasted a vibrant community of skilled IT professionals and developers, supported by robust educational institutions and an entrepreneurial spirit that fueled innovation and startup growth. This made Beirut a favored destination for American companies seeking cost-effective yet highly skilled tech workers for software development, digital services, and IT support. However, the political and economic instability has posed challenges to maintaining this growth momentum, impacting the availability and stability of the tech workforce in the region.

Amid ongoing uncertainties in the region, many U.S. based companies are changing how they hire offshore technical talent. They are now focusing on supporting their current workers in the area while also hiring more tech staff within the U.S. This approach helps them keep their operations smooth and manage risks from regional instability, ensuring they can continue to grow even during uncertain times.