The Middle East is losing out in the battle for talent and a strategic approach is required to ensure the region develops, attracts and retains the best people to maintain progress, says a study.

The competition for talent is fiercer than ever in the global economy, and the new Heidrick & Struggles survey underlines the challenge facing Middle East countries as they strive to attract and nurture the best employees.

Saudi Arabia and Egypt rank in the bottom five of the Global Talent Index, the new 30-country survey conducted by leading executive search firm Heidrick & Struggles and the Economist Intelligence Unit. Worse still, their position in the table is forecast to remain static over the next five years.

Ayman Haddad, managing partner for Mena of Heidrick & Struggles, one of the top five global search firms, said: “Regional economies have enjoyed significant GDP growth in recent years but this latest global research shows there is no room for complacency.”

He added: “Heidrick & Struggles’ currency is talent, connecting the most talented people with the world’s leading organisations. We’re strengthening our operations in the Middle East, a region we’ve served for a decade, with new offices in Dubai and Beirut. This study provides organisations with an accurate view of where talent is located, now and in five years’ time, to help them make better decisions about their human capital requirements.”

The Global Talent Index is the first survey of its kind. Countries were chosen based on a representative geographic spread and the quality of available comparative data. Egypt, Saudi Arabia and Iran were selected from the region.

Seven separate measures were used to assess each country: demographics, quality of compulsory education, quality of universities and business schools, quality of the environment to nurture talent, mobility and relative openness of the labour market, trends in foreign direct investment, and propensity to attract talent.

Haddad said: “The survey confirms that talent follows where money leads, but the good news for the region is that emerging markets are hot on the heels of developed nations.”

According to the Index, the US will retain its position as the world’s biggest talent hotspot in 2012. But it is facing increasing pressure from China, expected to move to sixth position in the next five years.

India will rank tenth, the same spot it occupies now, thanks to its rapid demographic growth, the mobility of its workforce and its healthy labour market flexibility.

The situation in the Middle East is slowly improving. Egypt and Saudi Arabia will both move up one place over the next five years in the overall rankings; Egypt will overtake Brazil and Turkey.

Saudi Arabia will rank ninth in 2012 for the quality of its universities and business schools. The kingdom’s relatively high disposable incomes are also a plus, and will help its score for attractiveness to talent rise from 23rd place to 20th over the next five years, the study said.

Egypt is seeing improved foreign direct investment (FDI) and will move from 11th to seventh position based on this specific rating between 2007 and 2012, it said.

Ayman Haddad said: “FDI is important because with it comes technology imports and managerial best practice. Educational standards are equally crucial. The index shows that it is not the size of the potential talent pool that matters but how it is nurtured. With its young and rapidly growing workforce, this is an important lesson for the Middle East.”

The Global Talent Index is a joint effort between Heidrick & Struggles, one of the world’s leading executive search firms, and the Economist Intelligence Unit, the top provider of industry, country and management analysis. – TradeArabia News Service