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A USAID program implemented by

Building an Innovative IT Sector through Global Partnerships The Cisco Announcement ExpoTech, held annually in Ramallah, has become a mustFour years ago, Palestinian IT companies were still attend event, attracting global ICT firms such as Cisco, Intel, struggling to recover from the second intifada, which Microsoft, Google and HP. disrupted the few fledgling relationships they had outsourcing projects that were coordinated through managed to establish with international firms and Cisco’s Corporate Social Responsibility office in Israel greatly increased the perceived risk of doing business and engaged 20 Palestinian software engineers. Three in the Territories. The industry was fragmented, years later, that figure has doubled, and the contracts with no clear vision for sector-wide growth and are now financed directly by Cisco Israel’s Research development and little understanding of what role it and Development (R&D) department, as with the could play in the global marketplace. Despite USAID company’s other outsourcing relationships. “We’re efforts to engage the Israeli branches of large U.S.trying to bring not only money, but multipliers like based tech firms, the obstacles to working with know-how, knowledge, partners,” Palestine were considered too Mr. Hetzroni explains. great and the potential benefits “We’re trying to bring too small. For multinational firms not only money, but The contracts also brought muchlooking for emerging markets in multipliers like knowneeded credibility to the sector. which to invest, “Palestine was how, knowledge, Building on this momentum, simply not on the map,” says Gai partners.” CARANA Corporation’s Hetzroni, Senior Project Manager Enterprise Development and for Corporate Affairs at Cisco Gai Hetzroni Investment Promotion (EDIP) Systems Israel. Sr. Project Manager for Corporate project renewed outreach efforts Affairs at Cisco Systems Israel to other multinational firms with a That all began to change in 2008 targeted message—that Palestinian when John Chambers, CEO of companies are a viable resource for top-quality, lowCisco Systems, pledged US$10 million to seed a cost project management—and a successful model to sustainable model of job creation and economic back it up. This time, the firms responded. development in the Palestinian Territories. 80% of the commitment was intended for venture capital HP Gets in the Game financing, but Palestine had no venture capital funds By late 2009, managers at Hewlett Packard (HP) to administer the investment. The industry also had learned of Cisco’s positive experience with lacked the culture of collaborative innovation and the Palestinian IT firms, but they were still wary of entrepreneurship that fuels start-up companies. attempting a cross-border collaboration, unsure if the benefits would outweigh the risks. Recognizing The first phase of the initiative focused instead on 1


the potential opportunity, the EDIP project offered critical financial and logistical support to mitigate the uncertainties.

With financial assistance from EDIP, HP Israel initiated projects with two Palestinian firms, including EXALT Technologies, which possessed experience with mobile applications that HP lacked internally. The first By facilitating much of the start-up effort—including two pilot projects between HP Software and EXALT arranging a visit to Ramallah (obtaining the necessary were a success, and word quickly spread among the permits and accompanying the HP different departments at HP. The delegation around the city) and Indigo Division, which focuses “Thanks to USAID for prescreening Palestinian companies on digital printing solutions, showing us the right (providing detailed profiles for joined the pilot project as well, vendors, matching the HP managers to review)—EDIP despite fewer USAID resources right companies with the significantly reduced the time available to subsidize the contract. opportunities we had and expense associated with Today, EXALT is managing six available.” initiating a new partnership. Amir different projects for multiple Amir Banet Banet, Offshore Manager for HP’s departments—including HP Offshore Manager at Business Business Technology Optimization Software, The Indigo Division Technology Optimization for for Europe, the Middle East and and Scitex Vision—as sustainable Europe, the Middle East and Africa Africa, credits the project with business initiatives, without USAID at Hewlett Packard establishing the crucial first support. relationships that ensured the long-term success of the collaboration: “Thanks to Mr. Banet points to a number of benefits of working USAID for showing us the right vendors, matching with Palestinian firms over their counterparts in the right companies with the opportunities we had Asia and Eastern Europe, foremost of which is their available.” proximity. “For specific, highly technical tasks with a need for close collaboration and a regular on-site The availability of U.S. government financial support presence, Palestine has the advantage,” he explains. was also instrumental in reducing psychological With initial EDIP assistance to facilitate the issuing barriers for pioneering Israeli managers willing of permits, Palestinian engineers now travel to HP’s to break from the status quo. “There was some Tel Aviv offices up to twice a week to work directly resistance internally, but we were more confident with their Israeli colleagues. Mr. Banet also credits the with the USAID backing,” Mr. Banet added. Palestinian firms’ passion, eagerness to deliver a top quality product and level of engagement with their customers as keys to their success.

Palestinian programmers at work on the iLabs project. See Spotlight on Page 3.

For EXALT CEO Tareq Maayah, the contracts have transformed his organization: He has doubled his staff in the last year as the company has been entrusted with new and larger projects, moving from its core specialty of software development to new areas such as graphic design and user experience. Business is growing through word-of-mouth and referrals from HP. He credits CARANA with functioning as the catalyst for those essential first contracts: “There hasn’t been anything done by USAID that has had an impact like this initiative to give direct support to the private sector. This was very important in terms of building our reputation. Financial support is good, but the involvement of USAID reduced the risk [for Israeli

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firms] of making the decision to work with Palestinian companies.” EXALT recently began work on a new contract through HP’s U.S. headquarters and, if all goes well, Mr. Maayah expects to double his staff again in two years. Two years into the collaboration, Mr. Banet reflects on his initial skepticism of working with Palestinian firms, the impact of his first USAID-sponsored visit to Ramallah and the evolution of the partnership. He says, “My first visit to Palestine was shocking, in a good way, to see the level of infrastructure. I felt more secure about working with Palestinian companies. After that, they were more tactical visits to match new projects, get to know new companies. [Now] it’s like a regular working relationship.”

Microsoft Looks for Innovation HP wasn’t the only multinational technology company to take notice of the growing IT industry next door to its Israeli R&D facilities. With encouragement from USAID, software engineers at Microsoft’s Innovation Labs (or iLabs), a one-of-a-kind research center in Tel Aviv, expressed an interest in working with their Palestinian counterparts for high-quality, cost-effective outsourcing from a team with a fresh perspective. CARANA’s EDIP staff linked them with the Palestine Information and Communications Technology Incubator (PICTI), initiating a one-year pilot project to outsource several components of iLabs’ work. Under the guidance of Team Leader Ayman Saleem, the Palestinian programmers started a one-month training exercise to introduce them to Microsoft’s

Spotlight: HomeVideoX Project Apply face recognition to video and watch the potential emerge: Televisions and gaming systems that recognize people in the room and customize content accordingly. Home videos that automatically identify and tag subjects, making them searchable. Even TV viewing becomes interactive, as viewers link to more information about individuals on the screen. To demonstrate the capabilities of face-recognition algorithms from Microsoft’s iLabs, the Palestinian team developed and tested demo software called HomeVideoX, which uses still photos to identify people in video. Working in close collaboration with iLabs— including daily conference calls and regular on-site meetings— the Palestinian programmers conducted technical research that

The Palestinian iLabs team poses in front of a computer displaying the Mixer product they developed.

led to the demo concept, refined the specs, developed prototypes, designed the detailed features and managed the development cycle from start to finish. Along the way, the team developed the Video Splitter tool—essential for segmenting videos into still images so that the facerecognition algorithm is able to recognize the cast list of each movie—which was subsequently used in other vision applications from iLabs.

Created in just six weeks in time for TechFest 2011, Microsoft’s annual showcase of the most innovative products emerging from its research centers around the world, the HomeVideoX program was a tremendous hit that left visitors exclaiming “I want it now.” For more information on the HomeVideoX project, please see http://channel9.msdn.com/posts/ TechFest-2011-Facial-Recognition-inVideos

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With crucial support from EDIP, Microsoft is looking Azure cloud computing platform and web/mobile to create another five-person team in Ramallah to applications (apps). They then designed a new interactive, cloud-based online learning app that work on Bing Mobile applications. Together with the iLabs group, these engineers could allowed professors to upload ultimately form the basis of an PowerPoint presentations with “I see the future of independent Microsoft R&D facility questions to assess students’ the IT sector in this in Palestine. understanding of the material. vital project with Impressed with the results and Microsoft, which proves Ayman Saleem left a better-paying the Palestinians’ quick learning that Palestinians have position for the opportunity to curve, iLabs tasked the team with work with cutting-edge software developing a workable version of huge talent, skill and and expand the Palestinian IT Mixer, a prototype Bluetooth app expertise not only in the conceived at Microsoft’s Out-ofdeployment of IT services sector. “I have a mission here,” he says, “I want to build something the-Box Week. but also in the Research using state-of-the-art Microsoft and Development field. technologies.” Other successes followed. This is the real path The Palestinian R&D team has for development in Salesforce Spots an developed three new products Palestine.” Opportunity for iLabs to be marketed globally: As the momentum continued Mixer, which links users’ online Hassan Kassem to build with more and more profiles (e.g., Facebook) with their Chairman at PICTI collaborations between global IT registered Bluetooth devices to firms and Palestinian companies, recognize them when they enter the nature of EDIP’s role began to shift. Initially, the a room; Ark, which gathers online information about project had to overcome significant resistance to movies and television shows to make personalized convince international firms to partner with Palestine. recommendations, including an active learning Now companies are reaching out to USAID seeking component that adapts to user likes and dislikes; and a facilitator who can identify firms in the West HomeVideoX (see text box).

Spotlight: The intersection of IT and business Of the 52 participants in the cloud computing and CRM workshop at Hebron’s PPU, half were business owners looking for practical solutions for both their own and their clients’ needs. Rather than dwell on theory, the course was structured around a fictitious business association for the leather shoe industry—the largest employer in Hebron— with the goal of developing European sales channels for local shoemakers. Participants visited 10 shoe manufacturers

and designed a complete sales and order process using Salesforce.com applications. At the conclusion of the course, the largest Palestinian supplier to the shoe industry, Union Industrial Chemical Company, announced that it would fund the association, turning it from fiction into reality. Participants have already implemented Salesforce.com solutions at five other private sector firms, including: Galaxy Training, a provider of technical

courses including Microsoft, Cisco, and Oracle training, to manage marketing and enrollment; Intel Learning, a nonprofit organization that provides low-cost netbooks to students, to track laptop distribution; Royal Plastics, a manufacturer of PVC pipes and plastic furniture, to manage international sales and marketing; Trusted Systems, to oversee employee data for their client Hebron Hospital; and Avon Palestine, the make-up company, to handle recruiting and sales.

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Students pose with their certificates after completing Salesforce.com training.

Bank with the requisite human resources and IT skills.

“What we’ve done is open up the opportunity and given [Palestine] a head start on developing Arabic content. The Arabic-speaking market is mostly untapped for Salesforce.com, but has tremendous potential.”

In coordination with CARANA, the Salesforce.com Foundation designed a project to teach cloud computing and CRM at the Palestine Polytechnic University’s (PPU) IT Center of Excellence. The initiative began with a 10-day continuing education workshop. Based on the success of this pilot [see spotlight], the PPU has decided to expand it to a semester-long course that will be integrated into its standard IT curriculum.

One such organization is the Salesforce.com Foundation, the philanthropic arm of Salesforce. com, a leader in cloud computing and Customer Relationship Management (CRM) applications. The Foundation, which works with non-profits in more than Isabel Kelly 100 countries, became interested International Director at in working with Palestine after Salesforce.com Foundation learning of other collaborative projects. “We were inspired The Salesforce.com Foundation also awarded by the HP outsourcing project, which had initial US$500,000 in free licenses to three Palestinian firms, underpinnings as a philanthropic endeavor but was and brought in partner Idealist Consulting which, with ultimately aimed at a commercial engagement,” financial support from EDIP, will help develop the explains Isabel Kelly, International Director of the Salesforce.com Foundation. firms into certified Salesforce.com partners. As demand for CRM services grows, so will the need for CRM consultants and certified Salesforce. com administrators and developers. Once certified, individuals can implement Salesforce.com in Palestine, develop Arabic language apps for the Salesforce.com AppExchange platform, or serve as support agents for Salesforce.com customers throughout the Gulf region.

Ahmed Sahed looks to the future after receving his Salesforce.com training certificate.

“What we’ve done is open up the opportunity and given [Palestine] a head start on developing Arabic content. The Arabic-speaking market is mostly untapped for Salesforce.com, but has tremendous

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potential,” Ms. Kelly notes. Ahmed Saheb, one of the workshop participants, agrees: “As a fresh graduate looking for a job, this is a good opportunity. I think it’s my future.” Cisco’s Vision Realized The success of the Salesforce.com initiative illustrates a change in how Palestinians have come to view IT over the past four years—from a sector in and of itself to a solutions provider for a range of industries. This awareness was essential in order to proceed with the second part of the Cisco initiative envisioned back in 2008: a program to build an ecosystem of innovation and develop start-up firms to access venture capital financing. Cisco’s space at EXPOTECH 2010. To this end, Cisco teamed with EDIP to form the Bedaya (“Beginning”) project, including the Bedaya Venture Program (BVP), which supports the boasts not just one but three venture capital funds: development of start-up companies into sustainable Sadara Ventures, Abraaj Capital and the Siraj Palestine business ventures; the PULL program, in which global Fund. Thanks to CARANA’s work in the sector, entrepreneurs visit Palestine and the fundamental ecosystem offer opportunities for partnerships is beginning to change, and “[Palestinian companies] with local companies based on multinational firms are taking understand better what specific business needs; and a notice. “[Palestinian companies] it takes to work in capacity building initiative to understand better what it takes international markets enhance PICTI’s ability to provide to work in international markets now. They don’t talk these services in the future. now. They don’t talk like they like they used to about used to about ‘you need to invest ‘you need to invest in Ayman Arandi is co-founder of in me because I’m the underdog,’ me because I’m the Iris, a Palestinian start-up offering instead they talk about their underdog,’ instead touch-screen technology solutions, competitive advantage, they they talk about their which grew out of a graduation understand the business side competitive advantage, project at An-Najah University. Mr. of things,” says Gai Hetzroni of Arandi applied to Bedaya expecting they understand the Cisco. the program to connect him with business side of things.” buyers and facilitate sales. What he Palestinians have noted the Gai Hetzroni received—particularly in sales and improvements as well. As Sr. Project Manager for Corporate marketing training—was much more EXALT’S Tareq Maayah explains, Affairs at Cisco Systems Israel profound. “We’ve shifted how we “The ICT sector [in Palestine] look at solutions from a technical is maturing. We know now what to a business problem solving kind of services we are able to provide, within what perspective,” he explains. “We have achieved in four segment of the IT industry, and how to present months with Bedaya what would have taken at least ourselves. We used to think we were outsourcers, one year [of trial and error] on our own.” but now we understand how to define ourselves: We have top human resources capable of working on More than three years after John Chambers innovative projects.” announced the Cisco investment, Palestine now

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Building an innovative IT sector through global partnerships