Shortage of qualified employees and inflation raise concerns in the region |
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Dubai: Outsourcing spend in the Gulf countries is expected to touch $503 million (Dh1.84 billion), an increase of 21.8 per cent compared to $413 million (Dh1.51 billion) in 2008 despite the ongoing financial turmoil and stiff competition, said an industry expert.
"The UAE is expected to retain the lead with 25 per cent increase to $225 million followed by Saudi Arabia with 20.62 per cent to $193 million, Jyoti Lalchandani, Vice-President and Regional MD, International Data Corporation MEA and Turkey, said.
He said that big challenges likethe shortage of qualified staff, inflation, cost per unit, and the telecom costs are limiting the growth of outsourcing among the Gulf countries. Any outsourcing firm has to benefit from cheaper costs.
"When we have countries like Egypt, India, Philippines, Eastern Europe etc.., you are always going to be left behind," Jyoti said.
He said on the long term, Oman is a potential place for outsourcing. It has an open market environment and very stable economy. The costs are much lower when compared to other Gulf countries. Egypt is the most attractive place given the skills and cost factor.
"Of all the countries in the Middle East, Egypt has the strongest position in the outsourcing market. It possesses a well-educated workforce with strong multilingual capabilities, which makes it very attractive to European companies," according to Yankee report.
The report said some regions in the Middle East, like Abu Dhabi and Oman, are coming on strong in the outsourcing space. But others, such as Jordan and Dubai, face longer odds in competing for a piece of the outsourcing pie.
Oman and Bahrain are making strong bids to attract outsourcing to their countries. Saudi Arabia, which has the largest domestic IT market in the region, is also well positioned to potentially become an outsourcing hub for the entire region.
The report projects Oman as a potential winner, Bahrain as a potential long-term winner while Dubai is projected as a loser.
Although Oman only announced its intention to become a regional hub for IT-enabled services at the end of 2007, the Sultanate has already put important basic requirements in place plus Muscat has the advantage of cheaper cost of living than Cairo.
"Bahrain has the ambition to be a BPO outsourcing hub, focusing on specific and relatively narrow BPO market segments.
"Following this strategy, Bahrain expects to create 100,000 new jobs in outsourcing during the next decade. However, a drawback is that Bahrain lacks the basic infrastructure; for example, it has no technology parks in operation, although two parks are under development. The pitch is similar to Dubai. However, Manama, the capital of Bahrain, is significantly cheaper to live in than Dubai," the report said.
"Dubai faces major challenges in convincing enterprises and IT service providers that it is a smart shore location of the Middle East. These hurdles include skyrocketing real-estate rental prices and are now on a par with prices in European cities, Dubai also suffers from limited public transport, but the high cost of bandwidth could leave Dubai totally uncompetitive," according to Kershaw LeonardKershaw Leonard
, a global recruitment company.
The report said Saudi Arabia lacks a domestic workforce with strong IT skills. Therefore, the potential for Saudi Arabia as an outsourcing hub is more of a long-term play. In the shorter term, it needs to take advantage of the size of the domestic IT market to build outsourcing expertise as Abu Dhabi is doing.
Jyoti advises Gulf countries to adopt subsidised telecom rates to attract business and they have to bring inflation to minimum from the current double-digit growth. Regulatory laws need to be more open like issuance of visas. The UAE is more attractive to foreigners due to its open policy while Saudi Arabia is more rigid," he said.
© Gulf News 2009
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You think the dubai rental prices are outrageous you should try finding a place to live in Abu Dhabi.... but agree something needs to be done... [Report Abuse | Email to a Friend | Reply to this Comment]
I don't know to which european city this comment is referring to, but the rental prices in Dubai are just insane. almost double london price, and this without any of the benefits of living in london such as transportation and commodities. So I think it is time for Dubai to back down to earth!!! [Report Abuse | Email to a Friend | Reply to this Comment]