Software Development in the Middle East: How Companies Overcome Skill Shortages

The first half of 2023 was challenging for Middle East software development, as investments dropped by more than 21 per cent, following the consequences of the war in Ukraine, a rise in interest rates, and a global decline in economic growth.

Nevertheless, there is a growing interest in the region regarding future technologies and the digitalization of everything. With this momentum comes challenges: how to develop the software project with limited local human resources, and how to be cost effective given the gradual rise in salaries and expectations of engineering candidates in the Middle East market.

This article breaks down which areas of development remain the most promising in the region and how Middle Eastern companies are finding talent in a world of increased demand for experienced software engineers.

Top tech trends for software development in the Middle East

In this section, we examine the state of the Middle East’s tech industry and startup ecosystem, focusing on sectors at the forefront of innovation. We support technology trends with investment data to identify the most promising business domains in the region. 

Fintech

The emergence of buy now, pay later solutions, cashback applications, and online payment gateways have defined 2022 tech development trends as new fintech startups received hundreds of millions dollars investments according to Forbes. Buy-now-pay-later platform Tamara became the highest funded in Saudi Arabia, raising $116 million, while Tabby platform, which also offers split purchases and coupons, raised over $130 million and its valuation rose to $300 million.

A study by Wamda Capital also found that fintech remained the most active sector in the Middle East and North Africa (MENA) in the first half of 2023. It attracted nearly $660 million in funding, with more than $560 million of that amount attributing to buy now, pay later startups.

Super apps

A super app integrates multiple services and features into one ultimate application. It often starts with a core service, such as messaging or e-commerce, and then expands its features by partnering with or acquiring other companies.

One example of a super app popular in the Middle East is MNT-Halan, the Egyptian microfinance lending and payments company that was valued at $1 billion in a $400 million funding round in February 2023. It has a diversified portfolio of services such as business and consumer loans, mobile wallets and cards, and an e-commerce platform for home appliances and the FMCG sector.

Ride-sharing platforms

Uber began its spectacular career in New York City in early 2010, when the company used only three cars. Since then, Uber has established itself as a major player in the ride-sharing industry, including in the Middle East. Its highly successful concept has been adopted by other companies to similarly create localized services, i.e. products whose design, aesthetics and functionality match the preferences of audiences in a region.

One of the most well-known ride-sharing platforms in the Middle East is Careem [which is now a super app with food delivery and mobile payment options]. It became the Middle East’s first unicorn, a startup with a valuation of at least $1 billion, when Uber purchased the company for $3.1 billion in 2019. Later, in 2021, Careem’s CEO predicted that more billion-dollar startups could emerge in the Middle East, however growing the talent pool and finding people who are able to expand the business in the region would be a challenge.

Food tech

Food tech sector in the Middle East is represented by restaurant management systems that help food businesses digitally manage their orders, menus, and payments. In addition, there is a growing presence of cloud kitchen (or virtual kitchen) platforms, which provide delivery-only restaurants the necessary managed infrastructure and software with minimal overhead.

Investors have been pouring money into the food tech sector. One particular example is Kitopi, a cloud kitchen operator, which raised $715 million in two Series C rounds, bringing the company’s post-investment valuation to $1.55 billion. With a network of 80 cloud kitchens and 3,500 employees, the platform serves 200 brands like Papa Johns, Shake Shack, Jollibee, and Nathan’s Famous.

E-commerce and marketplace

The e-commerce and marketplace sector showed significant growth in the first half of 2023, attracting over $198 million investments, up from $128 million in the same period last year.

The sector stands out as one of the most prominent in the region, and e-commerce projects are constantly opening up new opportunities for growth. For example, Snoonu became the first Qatari e-commerce startup to raise a Series B round. The company provides shopping and delivery services with a variety of restaurants, groceries, and retail store options.

Other local innovators in the Middle East’s thriving e-commerce industry include MaxAB, a B2B e-commerce and distribution platform serving traditional retailers in Egypt and Morocco, and Sary, a marketplace that connects mini-supermarkets, restaurants, cafes, and hotels with a network of fast-moving consumer goods wholesalers.

Is there demand for software engineers in the Middle East?

The British company Hays, a global provider of recruitment services, has unveiled a comprehensive study covering recruitment market trends and salary levels in the Gulf region. According to the study, in 2022, the tech industry in the Gulf Cooperation Council countries showed the highest hiring activity among all industries in the region. The consistent influx of local and foreign investments, as well as the wider adoption of new technologies across industries, are likely to support the hiring surge in 2023 and beyond.

​​However, 59% of the surveyed employers noted that in 2022 there was a shortage of experienced technical specialists in the labor market. Furthermore, 25% of employers cited skills shortages as the most critical challenge in achieving their strategic goals in 2023.

The talent deficit is mainly observed in data-related positions such as Data Scientist, Data Engineer, and Machine Learning Specialist. Another field that is overwhelmed with demand is cybersecurity, where the shortage of Chief Information Security Officers, Security Engineers, and Security Analysts is forcing companies in the region to compete for these professionals by offering higher salaries and more appealing benefits packages. Software engineers are also highly requested, and their salary growth has been the highest since the pandemic.

There is also a mismatch between tech companies and job seekers in terms of salary expectations, as software engineers anticipate an average increase of 15% or more, while most employers are planning an increase of up to 5%.

When it comes to outsourcing, 14% of companies across all sectors said they plan to hire contractors or freelancers in 2023, and another 14% indicated they plan to hire temporary contract workers. The main reasons for hiring contractors and temporary workers include meeting increased product demand (42%), enhancing flexibility in staffing costs (40%), and accessing specific skills for one-time projects (38%).

Where do companies from the Middle East find and hire developers?

As remote and hybrid working options are becoming the new standard, companies are increasingly looking at hiring models that provide an alternative to hiring local software engineers, allowing them to close skill gaps faster.

We cover the platforms frequently used in the Middle East to find and hire engineering talent, tapping into both local and international talent pools.

Local hiring

Tech companies use this method to build their core software development team and culture with full-time employees. In-house staff members tend to be more motivated—they explore a software solution in detail because they are committed to developing it and growing the company.

However, this hiring option can be time-consuming because, in addition to candidate requirements, companies must create a detailed onboarding and professional development plan for in-house engineers and match the company’s long-term goals with each candidate’s skills to ensure their expertise will be helpful in future projects. In addition, as we’ve already mentioned, there is an imbalance between the number of qualified professionals in the local market and the challenging situation with finding the right candidates due to the rapid growth of the industry.

Employers can find full-time software engineers by posting jobs on online boards such as Indeed and Bayt, which are popular in the region. In addition, they can connect with potential candidates and announce job openings on LinkedIn.

Project outsourcing

When a hiring company decides to outsource software development, it contacts an agency, evaluates the quality of the talent, and agrees on the project requirements and development strategy. Then, an outsourced team works on the project remotely.

Tech companies use this hiring technique when they want to focus on their core business aspects by assigning development to external vendors, usually managed by the hiring company’s CTO or product owner.

However, outsourcing limits communication and knowledge transfer between the company and the agency. If the agency does not maintain clear documentation, the company may encounter some features or scripts that are unclear to them.

Tech businesses can browse software development companies on Clutch or G2 and find software development agencies with the required domain expertise.

Staff augmentation

Staff augmentation is a hiring solution for companies that need to ramp up their software development by leveraging additional talent or find niche skills unavailable in the local market. This option utilizes vetted software engineering contractors employed by development agencies and helps companies not worry about operational and administrative costs.

The augmented engineers you select become your full-time team members, managed directly by you. Staff augmentation is a secure and flexible solution because it typically offers standardized, locally-compliant contracts, risk-free trial periods, secure intellectual property transfer, and data protection.

However, staff augmentation requires building strong communication and workflow between in-house and remote teams to ensure remote contractors have access to sufficient project information and management updates.

Tech companies can quickly hire software developers, QA engineers, data engineers, and business analysts using YouTeam’s talent pool of contractors.

Hiring a freelancer

Hiring freelancers is suitable for short-term projects, small tasks, and companies with limited budgets. The main advantage of hiring freelancers is that there are numerous platforms with a substantial talent pool of engineers ready to start the project.

However, unlike in-house engineers and contractors, freelancers are often responsible for several jobs, and the quality of their work may not meet a client’s expectations. In addition, freelance developers are often involved in multiple projects at once, so employers don’t have the same control over a freelancer as they do with a contractor or in-house employee.

Tech companies can post a job, browse profiles, or let recruiters handpick freelance software engineers on UpWork.

Why are developers from Eastern Europe the best choice for Middle East companies?

Let’s discuss the advantages of hiring developers from Eastern Europe. First, some statistics. We looked at Coursera’s 2023 Global Skills Report, which evaluated the skills of 120 million registered learners in 100 countries. The education platform compiled an average score by country in the areas of business, technology, and data science. Five Eastern European countries – Slovakia, Ukraine, Bulgaria, Belarus, and Poland – are among the top 25 countries in the overall ranking, making them countries with cutting-edge skills.

Looking at Europe as a whole, European learners are prioritizing data science skills such as artificial neural networks and deep learning, which play a crucial role in the emerging AI market.

Eastern Europe is a mature outsourcing region that shares the same time zone as the Middle East, allowing for fast and coordinated communication between teams in these areas. In the past decade, countries like Ukraine, Poland, and Romania have emerged as a “tech talent goldmine”, which continues to thrive even in the face of Russia’s full-scale invasion of Ukraine.

Eastern Europe has become a mainstream outsourcing destination for software development for several reasons: 

• It offers an attractive cost-to-quality ratio, with software developer rates ranging from $35 to $75 per hour.
• Eastern European developers are fluent in English. They have a solid technical background, problem-solving and critical thinking skills.
• They have comprehensive experience working with global tech companies and startups.  
• The region is historically recognized for its technical education, rooted in the robust Soviet educational system. Modern education continues this tradition, focusing on theoretical computer science, telecommunications, artificial intelligence, and software engineering.
• Tech talents in the region are highly competitive and constantly strive for knowledge.

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How much does it cost to hire a software developer in Eastern Europe?

The following spreadsheet contains median monthly salaries in Ukraine and Poland, according to DOU (as of June 2023), and average monthly salaries in the Gulf region, according to Hays Middle East (as of Q4 2022). These numbers show that developers from Eastern European countries offer relatively lower rates compared to those in the Middle East. However, please remember that several factors can affect salaries, including location, business size, and industry.

Next, we explore the median hourly rates of contract developers registered on the YouTeam platform. The figures below represent software engineers with all levels of experience who listed technology as a key skill.

Why should companies in the Middle East choose YouTeam to speed up software development?

YouTeam is the first network of pre-vetted software engineers employed by hundreds of development agencies from Eastern Europe and Latin America. It is an all-in-one platform that provides clients with standardized contracts, automated payroll handling, data protection, and most importantly, the flexibility to scale the development team up or down. YouTeam experts take care of finding matching candidates, building the vetting process customized to the hiring company’s specific needs, and helping with onboarding.

The process of hiring web developers with YouTeam is as follows:

1. You request a call and describe your project requirements and vision of the ideal candidate.
2. Your Matching Expert creates an Ideal Candidate Profile that meets your criteria, such as tech stack, industry experience, personal qualities, and professional development interests.
3. YouTeam finds matching developers among hundreds of partner agencies. Our experts pre-screen talent to create a shortlist of candidates that closely align with your Ideal Candidate Profile. It takes 48 hours to present the first candidates to the client.
4. You receive and review your candidate shortlist and select which software engineers you want to interview.
5. The final stage is contract signing. YouTeam provides locally-compliant contracts and invoicing to simplify the payment process and protect clients from developer rotation, as well as secure IP transfer to prevent sensitive data leaks.
6. YouTeam offers free replacements, a 1-month risk-free trial period, and a money-back policy.

Conclusion

The high internet adoption rates and thriving software industry in the Middle East have led to current trends in app development that span fintech, e-commerce, ride-sharing platforms, and super apps that integrate multiple services into one ultimate application.

However, the labor market in the Middle East faced a talent shortage in 2022, as 45% of employers reported a lack of experienced professionals. In addition, software engineers’ salaries in the region are steadily rising, forcing companies to consider software development outsourcing as a cost-effective and flexible solution. In this article, we have suggested that talent from Eastern Europe, one of the most respected outsourcing destinations, can fill the skills gaps of Middle Eastern companies, as European engineers have a solid knowledge base and are located in the same time zone.