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With its varied dialects, unwritten vowels and little punctuation, Arabic is a tough language to learn, and even harder to master, yet demand for Arabic translators continues to rise across the world.
This has proved a boon to Sakhr Software, a small, privately owned language software specialist in Kuwait. Its “natural language processing” technology, which surmounts some of the idiosyncrasies of Arabic, has allowed it to develop a suite of software and hardware translation applications.
“Our technology helps bring down language barriers,” says Fahad Al Sharekh, Sakhr’s chief executive since 2005.
Yet even Sakhr’s niche industry has felt the effects of the financial crisis. Revenues fell by almost 60 per cent to $7.5m last year, and net profits shrank by more than two-thirds to $3.5m, making it one of the worst years in the company’s history. “Pretty much all the regional demand is from the public sector, not the private sector, and IT wasn’t a priority for the Gulf governments when the crisis hit,” Mr Sharekh says.
Most of Sakhr’s revenues are still generated in the Middle East, but the Gulf slowdown has spurred the company to expand more aggressively into the US. “The US market is a challenge, but we see big potential for growth,” Mr Sharekh says. “We had to do it at some point, and we chose 2009 to be the take-off point. As the economy recovered and demand emerged, we wanted to be ready.”
Sakhr’s customers already include the World Bank, the US departments of defence, homeland security and justice, and defence contractors such as Northrop Grumman and Raytheon.
To broaden its product offering, the company bought Dial Directions, a Silicon Valley start-up that specialises in mobile voice applications, in mid-2009 for an undisclosed sum. Dial Directions primarily allows users to speak travel enquiries into their phone and receive directions by text, but its technology has allowed Sakhr to develop a real-time voice translation service for mobile devices.
Arabic Language Buddy, Sakhr’s speech translation application for BlackBerrys and iPhones, has now been downloaded more than 70,000 times, mostly by Arabic language students in the US.
Sakhr also wants to diversify its US client base into the business sector, targeting companies that wish to operate in its domestic region. “Given the Middle East’s current and expected future economic growth rate, Sakhr represents an ideal catalyst for corporate America’s expansion in the region,” Mr Sharekh says.
Growth in the US and a tentative rebound in IT projects in the Gulf have ensured that revenues and profits in the first half of 2010 already outpaced the company’s full-year results in 2009, he says.
The company says it has no debts on its books, and funds its expansion through profits, but is open to selling a stake to industrial or financial investors. Previous talks with private equity funds stalled when the crisis hit, but could now be reopened.
“We are more interested in added value capital, since we are cash-flow positive,” Mr Sharekh says. “We would be interested to see growth for the company inorganically along with a strategic or financial ‘smart’ capital.”