DUBAI UAE – The UAE and Saudi Arabia have emerged as the top countries in the Gulf Cooperation Council (GCC) for job outsourcing, according to a recent report by the Boston Consulting Group (BCG) in collaboration with Forward MENA, formerly known as Beirut Digital District (BDD) Academy.
The report, titled “MENA Talent Map: The Future of Outsourcing and Potential Opportunities for Emerging Countries in the MENA Region,” analyzed the evolution of job outsourcing and its expansion into more sophisticated roles, with a focus on opportunities in six countries within the MENA region.
It pointed out that the two Gulf countries are emerging as major players in the job outsourcing market, offering substantial growth opportunities for both local and international service providers.
Dubai — an outsource city
Ranked 16th globally for ease of doing business, the UAE is now the second-largest economy in the Arab world, with a gross domestic product (GDP) of around US$ 360 billion in 2020.
As one of the key markets or demand “hot spots” for job outsourcing, the country is rising as a strategic hub where entities can easily outsource parts of their value chains and source-in talent from third parties, thus facilitating high growth overtime.
According to the report, the total spending by UAE-based organizations on outsourcing services from local and offshore providers was estimated at over US$4.8 billion in 2018 and is expected to reach US$ 6.8 billion in 2023, with a compound annual growth rate (CAGR) of approximately 7%.
The report finds that the UAE is one of the largest suppliers of talent in the GCC. Local supply of outsourcing services (i.e., revenues from outsourcing services) in the UAE was estimated at USD$ 1.3 billion in 2018.
Customer support, finance and accounting, human resources, and KPO are the major jobs and job clusters supplied by the UAE.
Job clusters that have traditionally been prone to some level of outsourcing in the UAE include IT consulting and support (e.g., DEWA outsourcing IT services), CRM including call centers (e.g., Emirates outsourcing call centers), finance and accounting services, and HRM.
The UAE is striving to diversify its economy with its future agenda revolving around emerging themes like “sustainable economic development”, “innovation”, “digital transformation and security”, and “advanced science, technology and artificial intelligence”.
In terms of the nation’s future economic outlook, three job clusters were highlighted to help drive long-term strategies, which in turn signal strong growth potential for job outsourcing.
These are infrastructure management services, such as cloud engineers and cybersecurity analysts; software and applications development, that include software engineers but also application developers; and finally, data and artificial intelligence (AI), for data scientists and blockchain developers.
Saudi Arabia’s outsourcing prospects
Saudi Arabia is the largest economy in the Middle East, with a GDP of US$ 840 billion in 2020. It is one the fastest growing economies and its Vision 2030 sets ambitious targets for its economy and people.
In terms of the job outsourcing needs (demand) and talent pool (supply) Saudi Arabia is the second largest supplier of talent in the GCC. Local supply of outsourcing services (i.e., revenues from outsourcing services) in the country was estimated at US$1 billion in 2018.
However, the Kingdom is one of the key demands “hot spots” for job outsourcing. The total spending by Saudi-based organizations on outsourcing services (both from local and offshore service providers) was estimated at over US$2.3 billion in 2018 and is expected to reach US$ 5.7 billion in 2027, with a CAGR of about 10%.
Drivers of the high number of jobs outsourced and the demand for sourcing-in talent to Saudi Arabia include:
• Stringent governmental rules, restricting the flow of foreign manpower to the Kingdom, and creating offshore outsourcing opportunities
• Increased ICT spending, driving up the number of IT companies, and benefiting the outsourcing industry
• Rise of ambitious real estate and infrastructure developments, including Royal Commissions, SEZs, megaprojects, plausibly leading to talent shortages and creating outsourcing opportunities.
The projections imply undersupply by local players and inability to meet local demand. This demand-supply gap presents a significant opportunity for offshore job outsourcing service providers.
Job clusters that have traditionally been prone to some level of outsourcing in Saudi Arabia include finance and accounting services, HRM (e.g., STC outsourcing HRM), and specialized research and market intelligence (e.g., ministries outsourcing consulting services).
However, other job clusters present limited outsourcing opportunities such as IT consulting and support, and CRM including call centers.
Furthermore, competition to offer BPO services is increasing, due to large local and international service providers.
Saudi Arabia is striving to become a pioneering and successful global model of excellence on all fronts. Saudi Arabia is determined to both reinforce and diversify its economic capabilities, turning key strengths into enabling tools for a fully diversified future. It has set ambitious yet achievable targets, which express long-term goals and expectations and reflect the country’s strengths and capabilities. The Nation’s targets are enabled by ambitious national strategies (e.g., Vision 2030, 11 Vision Realization Programs) and by large-scale transformation projects (e.g., Giga projects like NEOM, Qiddiya, and Diriyah Gate).
Saudi’s future agenda prioritizes themes of “digital transformation”, “information security”, “culture and entertainment”, “environmental sustainability” and “technology and artificial intelligence”.
Analysis of Saudi Arabia’s national strategies identifies four job clusters to of particular significance to the country’s future economic outlook, and indicating strong growth potential for job outsourcing:
• Infrastructure management services (e.g., cloud engineers)
• Software and applications development (e.g., process automation specialists)
• Data and AI • Creative and design services (e.g., digital media specialists)