A conflict hit the region at the end of February. Hiring contracted in March. Then it came back. The interesting part is not that the market recovered. It is that the recovery did not look like the market that came before it. The same shock that paused hiring also sharpened it.
Simmi Dixit sat down with Peter Hogg to trace what changed. Dixit has spent two decades on the region's workforce decisions. Hogg has spent 21 years in talent acquisition and now leads it for a regional conglomerate. Between them they name three shifts. Volume hiring gives way to precision. AI moves onto both sides of the interview. Localization turns from a number into a strategy. This is a reflection on what they said.
The region rebounded faster than the headlines suggested
Hogg is direct about the outlook. The region has taken bumps before, through COVID and through recessions, and it has held. He describes it as well led and built for a future outlook rather than for today or tomorrow. He lives there, he feels secure, and he expects the rebound. He also thinks foreign media find it convenient to doubt the region's resilience.
The market data tracks his read. Dixit notes that employer activity has returned to roughly 80% of the market after the March contraction. An EY GCC pulse survey taken after the conflict found 90% of businesses confident in business continuity. Investments are frozen or on standby, but nobody is leaving. The government moved in the same direction, liberalizing investor visa rules and consolidating them under a single digital portal. That is a signal a government sends when it is not worried about the future.
Dixit lands on the phrase she keeps reading in market reports. The mood is disciplined optimism. Confidence sets the direction, and a sharper eye for value shapes the spending. Hogg adds the forward marker that sits under it. Dubai's government has stated an aspiration to become 50% agentic. He reads that not as cutting humans out of the economy but as a plan for where the work is going.
Annual headcount plans no longer survive the market
Dixit calls this the biggest operational shift. Annual planning cycles are collapsing because the market moves too fast for them. Business priorities change. Capability needs change. In some sectors cost pressure overrides the plan entirely. The old rhythm of setting a headcount number once a year and hiring against it has stopped working.
The agendas also pull against each other. Dixit lists them plainly. Accelerate AI adoption. Improve productivity. Increase localization. Hold costs flat. Businesses are asked to do all of it at once, while still absorbing the losses from the conflict.
Hogg's answer is a change in how plans are held. A business still needs a plan, annual or five year, for growth or efficiency or new sectors. What is new is the need for a plan B and a plan C running alongside it. He calls it an agility overlay. In leadership teams and boardrooms, the direction is set, but the time goes to the pivot. The real work is deciding what to do when the plan meets a market that has moved.
There is a communication point inside this that Hogg thinks businesses often miss. Protecting the business is how you protect the people in it. When leaders frame cost decisions as inward or selfish, they lose the connection, even when it is there. He watched this handled well at Schneider Electric during COVID.
The compensation picture has shifted underneath all of this. Hogg is clear that pay is always key, especially for expats who arrive with a compensation mindset. But he has seen the curve flatten, because the region has become more attractive on its own terms and more attractive geopolitically relative to Europe and the UK. In a time of distress, other things gain currency. Wellbeing. Flexibility. The human-centered parts of the offer that signal whether someone is valued. As he puts it, good people will always do right by the company.
Dixit adds the structural gap she now spends much of her time fixing. Organizations are trying to fit new capabilities into legacy grading structures. An AI ethics lead has no job family. A prompt engineering function has no salary band. The reaction is usually to improvise or overpay to win the person. The better move is to fix the architecture first, then place the role, rather than force it into a box that does not exist. Precision hiring, she argues, only absorbs into an organization once the structure underneath it is right.
Hogg warns against filing this under soft HR. New roles are arriving even inside talent acquisition, AI auditors among them, with no five-year pedigree behind them. Skills-based hiring changes how the recruiter goes to market, how the company structures people, and, hardest of all, how the business prepares to receive someone whose background looks nothing like the rest of the team. Dixit's line for where this leaves the resume is exact. The CV is becoming a lagging indicator.
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AI now sits on both sides of the interview
Hogg tells a story on himself. He recently spoke to a recruiter about a role for which he was a candidate. She told him there were 300 applicants and she intended to review every one, and would get back to him at some point. The number did not surprise him. Some of those applicants may even have been bots. He cites a figure that 16% of applicants now are agents or AI. What stayed with him was the method. The teams he manages could not answer a candidate that way.
Candidates need to understand that the top of the funnel is now highly automated, and in his view should be. He walks through the journey in the teams he runs. AI writes the job advert. The candidate applies. AI stack ranks them. A video interview follows, assessed by AI. Interview questions are generated by AI. The efficiency is real, and so is the objectivity, the speed, and often the quality of early feedback. His question back to candidates is simple. How do you feel about that, and if you do not feel good about it, look into it.
The other side of the equation is that recruiters now read work done by AI. Hogg has seen interview presentations obviously generated by a chatbot and poorly done. CVs arrive over-sanitized, with certain skills overemphasized. Dixit's phrase for it is AI hiding AI. The recruiter's job becomes seeing through it, sometimes using AI to do so.
Dixit brings in a frame from Gary Bolles, who leads the Future of Work at Singularity University. Two views usually get set against each other. One says AI creates abundance and new roles and is good for human potential. The other says AI automates existing jobs and forces mass reskilling. Bolles asked why both cannot be true at once. Jobs get redesigned. Some go away. And a set of human skills stays needed. Adaptability. Creativity. Empathy. Problem solving.
Hogg's resolution is a division of labor across the funnel. At the top, trust the science. Assessment, psychometrics, cognitive and behavioral testing, and AI reading a large data set all belong there. Lower down, human judgment returns. Panels collaborate. People are watched in real scenarios. That is where cultural fit, leadership potential, resilience, and empathy get read, and those cannot be faked in a hard moment. His shorthand, delivered to Dixit: if you have 300 candidates, use the science.
He points to the Mercer Global Talent Trends report, with 12,000 respondents, where the top priority for business leaders is redesigning work to incorporate AI and automation. He calls it a proactive handshake with AI. Not just adopting it, but deciding how to drive it, coexist with it, and optimize it as humans. The second HR priority in the same report is designing talent processes around skills, which is the overlay that sits on top of the AI and skills architecture.
Some work is moving to AI the way it once moved offshore
AI is not only screening candidates. It is becoming one. Dixit notes that G42 in Abu Dhabi has publicly said it will recruit AI agents into enterprise roles. She then describes a company she spoke to that rebuilt its customer service function. It went from 40 people to 12.
The 12 who stayed handle escalations, exceptions, and relationship work. AI took the repetitive part: reading across policy and answering routine questions. The shape of the team changed, not just its size.
Hogg reaches back 20 years for the parallel. This is the offshoring and outsourcing debate again, now with AI as the destination. The questions are the same. How do you set the entity up for success, and how do you audit and monitor quality. As a customer, he has met the AI that is genuinely helpful and the AI that makes you want to pull your hair out. His point for businesses is to know exactly where their customers stand on that experience before routing the work.
Dixit closes the section with a change in how to measure the AI investment. Do not count how many CVs got screened. Measure it against your HR priorities and your time to offer for critical roles. The AI strategy is now part of the HR strategy, not a project running beside it.
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Localization stopped being a number to hit
Dixit came to the region 16 years ago and long saw localization as compliance. She now sees it turning into workforce strategy. It is no longer about filling a quota. It is about managing local talent so it serves the business.
Hogg makes two points. On the mainland, Emiratization targets are aggressive and carry heavy penalties for missing them, so sourcing, attracting, and retaining that talent becomes a function in its own right that has to be taken seriously. Beyond the targets, he frames it as a diversity story. Organizations need to reflect the communities they serve, which means the right proportion of Emiratis inside them. The same logic applies to nationality, age, and gender. Companies that fit their context do better.
He gives an example that has nothing to do with quotas. Demand for Chinese talent has risen with Chinese investment and a growing Chinese population and customer base. The strategic instinct is the same: deploy toward the shift to become a beneficiary of it rather than a victim of it. The same is true of Emiratization. Not, he adds, that the point is only strategic. The Emirates has been good to them, and they will do right by it.
Dixit extends it to Saudization and to her own bet on local talent as Saudi nationals develop. Hogg calls the doubt about that talent a myth ready to be busted. He makes one final structural point. Much local talent is brought in at the junior end with the hope of developing it upward. The task is to find ways to insert it higher in the hierarchy and develop it toward the most senior roles. Dixit's summary is that localization, AI transformation, and leadership succession are not separate KPIs. They are one connected conversation.
Teams are getting smaller and denser
A question from the audience asked whether the future of talent strategy is building internal capability or continuously buying specialized talent from outside. Hogg's answer is that both matter, and that the base is investment in people. Invest in them and they are worth more, they stay longer, and they travel the extra mile. Candidates at every level now ask what development an organization actually offers, and it is hard to fake. He cites research from a company called Weliba that linked employee experience to stock price for listed companies. Miss it at your peril, is how he puts it.
Dixit adds the framework shift. The old model was build, buy, borrow. Internal discussions now carry a fourth B. The bot. Build, buy, borrow, bot.
The pattern underneath is consistent. More capability-dense teams, smaller in size, higher in skill intensity. Hiring a larger workforce is not the answer. Hogg adds a caution against a common myth, that the region has a massive skills shortage. Some areas are tight, but there is still a large net inflow of talent, which keeps talent available and motivated to come while also pressing on static wages. Dixit notes the labor laws are adapting quickly, pay transparency among them, in a market that once treated payroll data as too sensitive to share.
What the reset really changed
The shock did not shrink the market. It changed its shape. Hiring moved from volume to precision, which forced organizations to fix the structures that new roles fall through. AI moved onto both sides of the interview, which pushed the science to the top of the funnel and human judgment to the bottom. Localization stopped being a number and became a way to design the workforce. The through-line is that these are not three separate programs. They are one decision about how a smaller, denser team gets built, run, and led. That is the reset.
