DUBAI: Dubai is looking to combine its highly developed IT infrastructure and its open business environment into a new growth sector, as it seeks to become a leading services outsourcing centre.
A recent report issued by the International Data Corporation (IDC) stated that the IT spend in the UAE would be at least $1.8 billion by 2013, a compound growth rate of 12.4 percent a year from the present level.
With the IDC estimating that outsourcing in the Middle East will reach 23 percent of company IT spending by the end of 2010, it is clear there is potential for expansion in the sector, one that Dubai intends to tap into.
Outsourcing has gone far beyond the simple answering of phones and providing helpdesk support for companies, now encompassing IT operations and infrastructure management, server consolidation, internet services, data storage, retrieval and delivery, applications control and much more.
According to Navneet Tandon, the vice-president of enterprise resource planning and services at Dubai-based systems integrator Raqmiyat, there is an increasing reliance on automation by companies in the region.
This in turn is opening up opportunities for outsourcing and managed IT services to enterprises across the Middle East and North Africa (MENA) zone.
"As the market proceeds towards natural maturation, we expect the IT services sector to pick up in 2010 as economic conditions improve," Tandon told local media on May 19.
"Enterprises are now more driven to invest in managed services, which allows them to focus on their core business, new product development and market expansion while leaving operational details to outside experts."
Among the leading sectors to have their IT services managed are the banking, financial services, government, retail, airline and health care industries, says Tandon.
One of the cornerstones of Dubai’s drive to capture a large segment of the outsourcing market is the Dubai Outsource Zone (DOZ), part of Tecom Investments, a subsidiary of Dubai Holdings. Initially launched in 2004 and having begun operations in late 2006, the DOZ now hosts more than 100 firms that between them employ some 7000 staff.
As one of the emirate’s free trade zones, the DOZ offers tenants tax-exempt status, allows for full ownership of their business, 100 percent repatriation of capital and no currency restrictions.
It also has the advantage of being integrated with Dubai Internet City (DIC) and other state-backed developments aimed at supporting the information and communications technology (ICT) industry at all levels.
While 2009 might have been a difficult year for some, the DOZ actually enjoyed a surge of activity, thanks in main to companies looking to consolidate operations and cut costs as the global economy slowed.
Deep into the last quarter of 2009, the DOZ posted a 23 percent increase in the number of clients, a flood-tide officials expect to continue through 2010 as the advantages of outsourcing become more apparent to newly cost-conscious companies, with up to 150 firms expected to be operating out of the zone by the end of the year.
While Dubai has stretched out to take an early lead in the IT outsourcing stakes, it is facing increasingly strong competition from countries such as Egypt, Jordan and Morocco.
Of course, looking to the east, Dubai must also contend with international outsourcing giant India, the long-time leader in the field both in terms of size and services offered.
It will be difficult for Dubai to compete with the lower cost and economies of scale that India can offer, meaning that the DOZ has to work to carve out a particular niche for itself.
Thus the zone is looking to attract local and regional companies, rather than US or European-based multinationals, aiming to develop as a MENA specialist rather than the one-size-fits-all option of India.
