Dubai – world-class infrastructure and services, skilled labour and flexible regulations. It no wonder that the Emirate is all set to become one of the world's leading offshore hubs.
Since the establishment of the United Arab Emirates (UAE) federation in 1971, economic development in the country has been characterised by remarkable achievements that have far exceeded what might have been expected of a young country in a developing region.
The Emirate of Dubai has been at the vanguard of this economic growth. In fact, Dubai's transformation is one of the great economic success stories to have come out of the developing world.
This tremendous success is the result of its effective policy of economic diversification. Despite oil and gas production being the primary source of revenue to the UAE economy, this sector today contributes less than 10% to Dubai's GDP. The trade, tourism, construction and financial sectors are among the fastest growing in the country, with trade accounting for 16% of GDP and tourism accounting for 12%.
Having achieved a high rate of economic growth, Dubai is now transferring the momentum of its development to new knowledge-intensive industries. It is using the very same advantages and competencies in traditional sectors to power its growth in knowledge-intensive sectors.
Chief among these strengths are political stability; a favourable business environment; telecom and transportation infrastructure reliability; high levels of language skills; the availability of a high-calibre and cost-effective talent pool; safety and security; and market access.
Dubai's quick progress in sectors such as trade, tourism, logistics, banking and retail has been powered by these advantages.
These very factors give Dubai considerable potential for develop competencies in a sector that is playing an increasing role in the global economy: offshoring. Dubai has the potential to develop into one of the world's best offshoring locations.
In 2004, Dubai announced the Dubai Outsource Zone (DOZ), the world's first 'free zone' dedicated to the offshoring industry. DOZ offers a combination of cost-effectiveness, a world-class infrastructure, political stability, a very pro-business environment and quality talent which makes it an ideal offshoring destination.
Substantiating DOZ's potential is a location assessment research study by AT Kearney in 2003 which ranked it as the third best offshore location in the world.
The research takes into account Dubai's strength in attracting cost-effective talent from a skill-rich region spreading across the Indian subcontinent, Philippines, the Levant, Africa, the Middle East and Iran.
Situated close to India – a country with approximately 80% of the offshoring industry – DOZ seems to face huge challenges in making its mark in this competitive industry. DOZ's strategy, however, is not to compete with its neighbour but to complement it by offering a disaster recovery location for India-based Business Process Outsourcing (BPO) operations.
According to an AT Kearney report, multinational companies are increasingly seeking several offshoring locations to ensure business continuity. The advantage of offshoring to multiple locations is that, in the event of a disaster, such as the flooding witnessed in July 2005 in Mumbai, the same tasks could be passed on to a ready workforce in Dubai without disruption. DOZ, just two time zones away from India, serves as the perfect disaster recovery centre, allowing outsourced functions to be taken over immediately by a team based in Dubai.
Dubai suffers from few environmental challenges or adverse weather conditions. It is also one of the most secure locations in the world. Business Monitor International ranked the UAE as the fourth most politically stable country in the world. Dubai's risk rating of 87 is much higher than the regional average of 66.6, the emerging market average of 64.7 and the global market average of 67.5.
DOZ also seeks to capitalise on its location and its easy access to talent to support mid- to high-end IT and BPO services in sectors such as finance and accounting, customer care, HR, transaction processing, IT, graphics, engineering, back office operations, R&D, and oil and gas.
As a fast-growing, cosmopolitan city, Dubai has a large pool of talented workers, offering a strong value proposition to the outsourcing industry. The UAE has vast numbers of expatriates from India, Pakistan, South-East Asia, the Arab nations and North Africa, the USA, the UK, Australia, the Levant and South Africa.
While 85% of Dubai's residents speak English, approximately 200 other languages are spoken in the city. Key among these are Arabic, Hindi, French, Turkish, Russian and German. DOZ companies can offer easy access to multilingual talent from Russia, the Arab nations, India and South Africa who do not require accent neutralisation or cultural training.
With the realisation of a project to build a 125,000,000ft² education cluster, currently called Academic City, Dubai expects to produce 45,000 graduates a year by 2010. The academic cluster will house over 30 international universities as well as local institutions, and it plans to attract students from the UAE, India, the Arab nations, North Africa and Europe. This influx of young talent is expected to make a substantial contribution to the pool of skilled but cost-effective talent in Dubai.
To facilitate easier access to this rich source of talent, DOZ will be located within the learning cluster. In addition, DOZ is geographically positioned to offer its companies easy access to high-quality talent from its surrounding region which produces 9.5 million graduates a year.
To ensure cost-effectiveness for offshore ventures, DOZ seeks to considerably reduce living expenses for workers with low-cost housing within the zone. It also offers facilities that will cut down transportation costs for its workers as well as provide retail and entertainment outlets in close proximity.
High attrition of talent is a problem faced by outsourcing companies across the globe, particularly in large offshoring destinations where many companies have to compete for employees from the same talent pool. DOZ, however, offers a solution to this problem with strict regulations to help the industry flourish in the region. When setting up in a new location, outsourcing ventures tend to accumulate countless indirect costs in setting up a business and operating it. DOZ cuts down on these costs by providing a one-stop shop for a range of business support services.
Support services offered by DOZ are aimed at reducing set-up and operational hassles for offshore service providers and helping them concentrate on their core business.
Speedy incorporation and trade licensing, a fast-track visa service to hire staff quickly and easily, as well as facilities management, hospitality and event management services enable companies to focus resources on value-adding functions.
Key features of DOZ's infrastructure, construction of which has already started, include a plug-and-play centre that will provide a ready infrastructure for BPO service providers to set up their operations and start providing their services. It contains a pre-built infrastructure for outsourcing companies equipped with the latest technology which enables companies to get their business up and running fast.
In addition, the development will include a research centre for companies that offer outsourced R&D services and a networking centre to facilitate collaboration and business opportunities within the community. A significant feature of the master plan is a residential complex to be built by private investors.
The DOZ master plan also includes sports, leisure and retail facilities that provide professionals with the convenience of living and working in the same locality. In addition, this inexpensive residential facility will reduce personal relocation costs.
DOZ's custom-made telecommunication facilities include reliable and redundant high-bandwidth connectivity, IP telephony, automatic call distribution (ACD), interactive voice response (IVR) and predictive dialling systems, satellite communication services and technical and infrastructure support. These facilities form part of an infrastructure which helps offshore service providers start operations quickly with minimal upfront investment.
Work on the first phase of the infrastructure is scheduled for completion by the first quarter of 2006. It will create 250,000ft² of built-up area. The second phase will add another 200,000ft², to be ready by early 2007.
More than 60 leading offshore and onshore companies have expressed a strong interest in establishing facilities in DOZ. These include local companies with interests in BPO, back-office operations, banking and HR outsourcing. Some others include US, European and Indian companies looking to relocate their existing operations from some of the established outsourcing destinations of the world to DOZ. A leading US-based financial institution has expressed an initial interest. DOZ is targeting a share of 5% of the global outsourcing industry.
With offerings that include world-class infrastructure, a range of business enabling services, access to skilled talent, huge cost savings, business-friendly regulations and a strategic geographical location, DOZ is all set to become one of the world's leading offshore hubs.