Outsourcing in Dubai

In 8-9 years, it’s a remarkable way in which the Middle East and North Africa region has become familiar with the term outsourcing and its allies. In this short while, it has gained immense popularity, which encouraged new concepts such as the Dubai Outsource Zone.

I read about this and according to global market research firm International Data Corporation (IDC), spending in information systems outsourcing, which started with a small base in the UAE, has increased by nearly 7.5 times recently. Services related to hosting infrastructure also made striking advances, rising by 69 per cent in 2005. The firm predicts outsourcing spending, which amounted to around 15 per cent of the total information technology services market, will reach approximately 23 per cent of the spending by 2010.

The added interest in the region comes just in time when doubts have been cast over the outsourcing success in various hubs such as India and the Philippines. Being an Indian, I’m thoroughly aware that India has been described as "the poster child" of the global off shoring industry, and clearly its success has encouraged other countries to tap into this growing industry. By 2007, worldwide spending on globally sourced resources (near shore and off shore) with external providers nearly surpassed $50 billion for information technology (IT) and applications services, 10 times what it was in 1998. This represents a shift from between two and three per cent currently to between 7 and 10 per cent of total worldwide external IT spending, said Luis Leamus, Gartners president, executive programme, Europe, Middle East and Africa (EMA). I’m happy to see that expansion is happening fast, and the IT outsourcing industry is predicted to grow at about 28 per cent a year. However, the advantages to banks and insurers of using offshore call centres are diminishing as wage costs rise in markets such as India, according to a new study.

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I had a talk with Mr. Eric, CEO of Greenfin Solutions, and he agreed that today there is a strong need for outsourcing as an estimate of about 11 per cent of the total service sector in the US and Europe can and probably will be outsourced by 2010 of which the financial services sector is a very important part. He said: "Research in the UK suggests that the financial sector is planning to increase outsourcing of processing at a rate of 34 per cent a year over the next four years."
Even China, a country once recognized as a net gainer of outsourcing services, is expected to outsource some of its business processes, said Lambert. In Singapore and Malaysia too, research indicates that 50 per cent and 80 per cent of businesses respectively are planning to outsource over the next five years.