In January 2016, P5+1 world powers and Iran reached a historic deal ending decades of isolation, lifting sanctions in return for halting Iranian nuclear ambitions. This opened up a huge extension of the MENA economies for business which was previously inaccessible for western companies. Access to nearly $150 billion in frozen assets, ability to export oil without restrictions and a highly educated talent pool brought in a paradigm shift in the way MNCs looked at Iran.
However, this has not changed much for American companies where US sanctions still apply giving European, Australian, and Asian companies a head start. Mega deals announced in 2016 include Daimler’s joint venture for the production of Mercedes Benz trucks in Iran as well as Air Bus’s agreement to supply Iran Air with 114 planes. Most recently, Boeing signing a $16.6 billion deal to supply 80 aircrafts for civilian use marks the beginning of the trend that Iran is emerging as a market that even US companies cannot afford to ignore.
According to the World Bank’s ‘Ease of Doing Business” ranking, despite positive reforms related to trading across borders, Iran has dropped three spots over the past year but still outranks Egypt, Iraq and Libya. As a result of Iran’s economic landscape and labor market trends over the years, more than 50% of the country’s talent pool has an engineering degree or qualification, most commonly electrical, mechanical or industrial engineering. However, due to the declining oil and gas industry, today consumer goods, pharma and IT have emerged as Iran’s top hiring and growing industries.
Over the next five years, we will continue to see more companies enter the Iran market as well as grow their existing operations, with a focus on establishing new manufacturing plants.
What makes Iran an important market for Western companies?
- The drop in oil prices has pushed the traditional Middle East economies to implement serious austerity measures often in the form of layoffs. Iran on the other hand is a market with the capacity to expand
- Sluggish growth in emerging markets such as China makes global corporations look for newer growth markets like Iran
- A virgin market like Iran largely untouched for decades provides a great opportunity for their goods and services
- Iran managed to be a $394 billion economy, second in the region despite strict sanctions. Opening the market for business would further expand the economy
- Expected huge infrastructure investments in modernizing existing infrastructure
Despite being home to a highly educated talent pool and business opportunities, new entrants to the Iran market will face difficulties due to:
- Limited experience (70% of Iranian talent is under the age of 35)
- Lack of exposure and experience working in multinational corporate environments
- Language skills; fluency in English is rare
- Fluctuating Iranian Riyals
- Still cut off from mainstream international banking system like SWIFT. Though SWIFT claims to be reinstating Iran to pre-sanction levels, wire transfers to Iran are still prohibited.
Regional tensions and a new US administration pose a threat to the stability of the region and as a result some companies choose to tread light when it comes to Iran; but these companies represent a small percentage in comparison to the number of companies establishing their presence and having the first-mover advantage.
Hiring an Iranian national
Ever since the sanctions have been lifted, companies who previously managed the Iran market from their Dubai office are venturing into hiring locals to be based in Tehran. Hiring the right Iranian national or in some cases attracting Iranian expats to return to their home base, is crucial to the future success of any organization looking forward to building a presence in Iran. Due to usage of local language in doing business, getting jobs through references and networking, and the lack of quality profiles in job boards, hiring poses a major challenge to many organizations. Executive Search would be an effective methodology to hire hard to find talent.
InterSearch Middle East has helped a number of Multinational clients hire key members of leadership team in Iran. If your business is considering hiring in Iran, we could utilize our expertise and experience to find the right talent for your organization. Write to Summer Hamad at firstname.lastname@example.org for more information.