A business case for culture, access value

17.11.2004
Von Computer News

The Dubai Outsource Zone (DOZ) project being set up by Dubai Internet City (DIC) as the first dedicated free zone in the world for technology outsourcing, thinks that the plan behind the game is more than just state-of-the-art infrastructure or world-class facilities. It is the intangible benefits that UAE enjoys as a cosmopolitan, multi-nationality work environment that is expected to hold the project together strongly, according to the top officials. These initiatives will also provide a platform for the non-resident Arab in the technology sector a chance to get back to his roots to be part of the technology evolution of the region. Even as the Asia-Pacific region with countries like India, Phillipines and Malaysia play ball with outsourcing, will UAE stand a chance? DIC firmly believes so.

The first thing that Dr Omar bin Sulaiman, director general of DIFC and CEO of Dubai Internet City tells you when he talks about his plans for DOZ is that this initiative is not just about cutting costs and competing.

?It"s more a strategic play for UAE to position itself as an another key location for outsourcing and disaster recovery," bin Sulaiman said. "It?s not about competing with India or Malaysia or the Philippines."

The DOZ cluster was launched in June 2004 and began as a plain Back Office Outsourcing (BPO) initiative, but has now transformed into a full-fledged effort for technology outsourcing.

?The DOZ is now seeking to support outsourcing across segments like technology, R&D, BPO, call center operations and HR and payroll administration. Besides focusing on offering the opportunity to be part of DOZ to Middle East companies, the park will also liaison with major Indian outsourcers and others from the emerging countries to set up their second overseas base in Dubai,? bin Sulaiman added.

The park is expected to be physically ready next year, but small components have already been initiated from the DIC premises. The first phase of the park when ready will have 150,000 square feet of space for companies to occupy. DOZ will also offer a flexible model that can scale to support the small, medium and large establishments.

The benefit of access

It is public knowledge that the outsourcing game is in large part about cost competitiveness and lower operational costs, but DOZ says a location offering better access value is as important.

?The first reaction that people have when we talk of Dubai as an outsourcing location is that it is expensive," bin Sulaiman said. "But we believe that one has to consider the total ecosystem of an outsourcing activity including talent, infrastructure, accessibility, an international workforce, etc.?

The easy access Dubai enjoys to both the EMEA and Asia-Pacific region is also expected to boost the initiatives on this front. Interestingly, the DOZ says the interest levels have been high from potential investors.

?We initially looked at the U.S. and Europe market for business, but now we are putting together a much diversified plan," said bin Sulaiman. "The big benefit that Dubai will offer is a tax-free environment, 100 percent repatriation of capital, a one-stop-shop for all services and the best infrastructure. This industry looks at cost sensitivity, but we offer access value and remain competitive as well,? he added.

So far India has been U.S.-focused in the outsourcing game while the country?s access to the Europe and Middle East market has been limited. DOZ is planning to position itself as a player to tap both the regional market for outsourcing as well as presenting itself as the second location and an alternative Disaster Recovery location for Indian outsourcers who want a stepping-stone into this region.

Another segment is to also target the MNC?s in the region to use the park for setting up their in house outsourcing teams.

?Most large MNC?s set up teams to manage work that is in sourced from their other regions. We are in talks with a number of MNC?s to look at establishing there in sourcing centers at DOZ,? bin Sulaiman said.

The value of language and people

Perhaps one of the biggest draws for UAE as a country is its large component of expatriate population and the DOZ initiative plans to harness exactly this for generating interest among large outsourcers.

UAE, especially Dubai has a large pool of people from different nationalities and countries. So language skills, especially English, European languages and Asian languages besides Arabic, is a big draw.

According to market estimates, this region has enough manpower in terms of graduates (across nationalities) passing out of universities in the region and DOZ has put together a cost calculation based on expected costs of hiring talent from the local and regional market.

The regional pool refers to graduates available in the region and hailing from countries in the Levant (Jordan, Syria and Lebanon), Africa (Egypt, Libya, Algeria, Morocco, Tunisia and South Africa, Middle East (Iran and Turkey), India, Pakistan, Sri Lanka and Asia. The particular languages skills available in UAE include Arabic, English, Hindi, Urdu, French, Spanish, Italian, German, Farsi, Tagalog and Russian among others.

?A single location that combines the best of infrastructure with the pool of talent and language capabilities is certainly a place that needs to be taken into consideration, and we are already seeing high interest levels among companies. It is now a time when we go out to harness this,? bin Sulaiman said.

Besides business coming in from Europe and Asia, regional outsourcing is also expected to be a big market with a number of Arab speaking countries (especially Saudi Arabia) that have a captive and growing IT market.

?For countries in the Middle East, it will make more sense for them to outsource to a region that is familiar with the culture, language and business practices. Dubai as a base for such outsourcing is undoubtedly a good place to begin,? said bin Sulaiman.

?It is interesting to see how UAE is playing a role both in fostering an international corporate and business as well as allowing people to lead lifestyles that leave room for their culture," he added. "Coupled with corporate growth, an environment like this can be a big winner for businesses. Knowledge workers will certainly find this a stimulating environment to work in."

Side bar

Modulating attrition; evolving new employment models

According to DOZ, the labor laws of the free zone add benefit to both the companies as well as the employees. The labor laws in UAE are such that it keeps a check on extensive people movements because of visa issues connected with it.

"Despite of the fact that employees working within the free zone enjoy the benefits of a structure that allows knowledge works to move, there are laws to keep employee turnout under check," said bin Sulaiman. "Particularly in the outsourcing industry this is a big bonus. Employer interests are protected to a large extent, and employees can also work within the permitted structure to enhance their careers."

Another interesting effort bin Sulaiman considered is building interesting employment models that add value to their presence in DOZ. Talking about interesting models, With the UAE and its tax free environment bin Sulaiman said companies investing in Dubai could even look at a base in UAE as an incentive for offering a positing in UAE as part of their global job-rotation choice.

?Clearly Dubai offers a chance for global business and we are particularly telling companies, both large Indian and other outsourcing players, that this place could become a key part of their success and reward planning," said bin Sulaiman. "Companies could offer a posting in Dubai for their key employees for temporary periods as part of their efforts to rotate their work force. The companies can use Dubai as their hub for training as well.?

Building a venture investment infrastructure

From the looks of it, clearly Dubai?s efforts in building a technology market has moved on from stage one. According to market analysts, this market is clearly set to enter stage II where it moves from pure marketing and sales to a more technology support and service oriented platform. DOZ hopes to take this to the next level and initiate a venture capital investment climate especially among the nonresident Arab community.

?This is similar to what happened with India and China," said bin Sulaiman. "Most of their nonresident community saw an opportunity to be part of the technology evolution that was happening in their countries and became part of it through venture capital investment. I believe we are already seeing interest in this area and over the next two years there will be significant changes on this front.?

Market studies conducted in the region show Dubai positing a 23 percent growth and currently ranks number three among the top choices for outsourcing.

?Even as market figures clearly point towards a boom in the UAE market across industry sectors, we at DOZ believe this effort will be a showcase of how this country has used culture and a multinational environment to be an effective business tool,? bin Sulaiman said.