News Middle East

Taking the plunge: OSS in Saudi Arabia and the UAE

28 May 2019

Saudi Arabia (KSA) and the United Arab Emirates (UAE) were comparatively late adopters of outsourcing & shared services (OSS), with companies previously choosing to maintain complete control of their business functions. However, over the last decade and a half, increased competition, business volatility and the relentless pressure to reduce operating costs have made outsourcing a more attractive strategy for businesses based in the UAE and KSA.

Industries are also being confronted by disruptive technologies which are accelerating market transformation and modernisation on a global scale. In order to remain competitive, Middle Eastern (ME) businesses are now no longer merely hiring contractors to complete tasks and fill skills gaps but partnering with specialist OSS providers to optimize efficiency and productivity. As a result, OSS has quickly become highly popular throughout the Middle East and a recent white paper by Deloitte revealed that in 2018, onshore OSS providers in the UAE and Saudi Arabia alone generated revenue exceeding US$ 2.3 billion, a figure they predict will almost double by 2023.

Of all the Middle East and North Africa (MENA) countries, the UAE has the largest OSS market and is the most popular destination for international IT and shared service outsourcing, with Saudi Arabia coming a close second. Within the UAE, 36% of OSS revenue is generated through the financial services industry, reflecting global spend patterns. Public sector (UAE government organisations) generates a further 16% of OSS turnover, while travel, hospitality & leisure, and the telecoms industry (operators) respectively account for 12% and 6% of UAE OSS spend. The remaining 30% is dominated by industries such as oil and gas, retail, services and construction.

Analysts estimate that in 2018 the onshore IT Outsourcing (ITO) segment was worth approximately $976m in the UAE alone. This reflects the UAE position as a regional hub with excellent international communication links, easy access to skilled labor, and liberal trade and infrastructure regulations. The comparative figure for onshore ITO in KSA was $807m, largely focused in the construction and government sectors.

With growth in demand expected to continue throughout the region, OSS companies who have taken the plunge in these markets look well set to reap significant rewards in the coming years.