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Thu 31 Aug 2006 08:00 PM

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Outsourcing hub

Dubai Outsourcing Zone is targeting the banking & finance sector in a big way. With its opening just a few weeks away, its executive director offers a glimpse into how it will help financial institutions save money

When the Dubai Outsource Zone (DOZ) development was first announced in the summer of 2004, Dubai Holding, the company behind the project, never dreamed it would be such a success so soon. Demand for space within the zone from both regional and international companies has already far outstripped expectations and 10,000 people are set to be operational from the facility by the end of next year.

Ismail Al Naqi, executive director of DOZ, explains that the zone is being built in a series of phases, with a new phase being constructed each time 50% of the capacity in the current phase has been filled. Just to give an indication of the success of the project, the company had originally planned for phase one — a complex of just five buildings — to satisfy demand until 2008.

What has in fact happened is that both phase one and two have been completed and the developers are currently in the process of building phase three. By the time this is built, the capacity of DOZ will be 10,000 people and the target is to fill that capacity by the end of next year.

The entire DOZ project is spread over 3,000,000 square feet — phase one has five buildings in an area of 300,000 square feet, while phases two and three have four buildings each spread over 250,000 and 200,000 square feet respectively.

“It’s growing at a very high speed,” says Al Naqi. “Dubai Outsource Zone is already being recognised as a regional hub. Our main target is to be the leading regional outsourcing destination. This is going to contribute a lot of the growth of Dubai,” he claims, adding that DOZ could help companies to focus on their business more, increase their efficiency and reduce costs.

Al Naqi believes DOZ is an ideal outsourcing destination for companies — strategically located just 15 minutes drive from Dubai Airport and five minutes from Dubai International City which, when complete, will offer affordable housing options.

The facility is being built in the heart of another larger development, Dubai Academic City, which Al Naqi claims will supply a ready pool of labour to companies within DOZ.

The zone will also provide companies with custom made telecommunication facilities, including reliable and redundant high bandwidth connectivity, IP telephony, Automatic Call Distribution (ACD) and satellite communication services.

But with India, the world’s biggest outsourcing destination and a cheap and tried and tested option such a short distance away, why would companies choose to establish outsource facilities in Dubai?

Al Naqi believes that for companies wanting to establish outsourced facilities, Dubai offers a number of advantages that India lacks — particularly in terms of the country’s infrastructure and the skill levels of its workforce.

“We are trying to complement a lot of the weaknesses of India,” he claims, adding: “India has a lot of weaknesses today, the infrastructure is not as good as it is supposed to be and it does not support a multilingual capability.”

“You have a big attrition rate, a high employee turnover. It’s not an expat friendly environment where you could have executives move from the US or Europe,” Al Naqi claims, pointing out that such executives will find it “much easier” to live in Dubai. He is quick to add, however, that the DOZ is not being built with the aim of making Dubai compete with India as an outsourcing destination, but rather, he says, DOZ aims to attract a different clientele — the high-end market.

“Dubai caters for the high end market and this is what we are trying to do,” Al Naqi states. “India is all about the mass market — it caters for everything whereas we’re trying to focus here on a niche market. Here in Dubai we are not trying to target the entire value chain. We don’t want the low end call centre business because it does not add much value to Dubai,” Al Naqi goes on to say.

DOZ is being touted as an ideal base for both captive and third party outsourcing operations providing mid to highend services in areas such as banking, finance, accounting, IT, payroll processing, research and development (R&D) and design.

It will also serve as a centre for disaster recovery facilities for offshore call centres located elsewhere in the world. DOZ hopes to attract business from the lucrative markets of Germany, the UK and the US. It also hopes to target service providers in India and to match them up with Western companies seeking to outsource parts of their operations — such as call centre or back office processing services.

Indeed, DOZ has already successfully matched a major Indian service provider with a top US transaction processing company whose clients include Visa and MasterCard. “We made the match making between the company in the US and the company in India,” says Al Naqi, adding that “this is one of the things we do”.

“Already the DOZ is known to the US market and a lot of companies come to us with their requirements,” he states. “What we try to do is match them with the right vendors,” he adds.

Al Naqi says that DOZ is in talks with several major Indian service providers about setting up facilities in the zone: “We’ve been talking to all the big companies, like Wipro and Tata Consultancy Services (TCS) and most of these companies have made a visit to Dubai and they are very keen on Dubai and a lot of them will be operational from the zone by 2007.” A number of local companies have opted to establish captive offshoring facilities in the DOZ — captive offshoring being where a company ‘outsources’ the carrying out of certain processes to a subsidiary within its own organisation, or to a sister company.

Among these is du, the UAE’s soon to be launched second telecom operator, which has built a multi million-dollar state-of-the-art call centre facility in DOZ. Around 400 agents will operate from the facility, which is the biggest call centre to have been build at DOZ to date and will be operational by early next year.

Osman Sultan, CEO of du, told IT Weekly this month: “We are a UAE company and as we grow we will have facilities across the country, but this first call centre location in DOZ is in an operationally convenient and attractive location.”

Other big names that plan to set up captive offshore operations include Mashreqbank, Arab Bank and the Jumeirah International Group. Also, Arab Bank is to outsource its entire back office processing operations for the Gulf region to a shared services facility in the zone. Named the Arab Company for Shared Services (ACSS), the facility will be the first of its kind to be set up by a Middle East bank and will be completed at a cost of around US$21.8million by next summer. The facility will be used initially for the processing of fund transfers and trade finance products as well as retail and commercial loans and in the future it will house the bank’s IT centre. At present the bank’s back office processing is carried out at separate processing facilities at a country level with operations in the bank’s offices in the UAE, Bahrain, Qatar and Yemen.

Mohammed Azab, senior vice president and area manager for Arab Bank in the UAE who will be manager of the ACSS facility, explains that establishing a captive off shore facility at DOZ would enable the bank to fully centralise its back office processing operations.

“Our back office processing centre in DOZ is part of a strategic move to create a dedicated unit for the processing of products and services to our customers in the Gulf region,” he says. “It leads to improved controls; instead of dealing with four or five countries you will be moving and controlling in one single location.”

According to Al Naqi, Mashreqbank plans to set up a “huge data centre” which will serve the needs of its clients. “They are investing in building their own facility and they are basically looking into building the data centre,” he says. “So they have the control, it’s not like they have inherited the building. It’s a building designed just for a data centre and this requires a lot of specific details — from water proofing to electricity to AC to redundant telecom services, and they can find all that in DOZ,” he adds.

He claims that DOZ is in talks with several other regional banks with a view to setting up similar operations, including ABN Amro and Standard Chartered. Al Naqi also reveals that the Jumeirah International Group plans to open a call centre and business processing outsourcing centre where it will process financial transactions that have been carried out at its hotels across the world. The third party outsourcing facilities that will be opening at the DOZ can be split into a number of broad categories. First there are contact centres, then business process outsourcing (BPO) centres, research and development (R&D) and also data and disaster recovery centres.

DOZ’s goal is to eventually capture 5% of the US$350 billion global outsourcing market and with several international companies already having decided to open outsourcing facilities at the site — including some that are relocating from other outsourcing destinations — it looks as though that goal could become a reality.

Although many names are yet to be confirmed, Al Naqi can already reveal that the likes of the Levant Capital Group, TechFlow, Futech, Encreate and ValueManage and InfoSpan have already reserved their plots in the zone. The latter, a US company which services the call centre needs of other companies, plans to open a 250 seat contact centre at DOZ that will be operational by the first quarter of next year. It will be the firm’s first call centre outside the US and it chose Dubai as the location because it will be servicing European clients and wanted a workforce with multi lingual capabilities.

IT services providers Encreate and ValueManage provide remote management for the IT infrastructures of its customers, a “very high tech activity” according to Al Naqi. Meanwhile TechFlow, Levant Capital and Futech will all run BPO facilities from the zone. “Dubai Outsource Zone is keen to attract companies in the high-value skill intensive outsourcing sectors in areas such as finance, accounting, payroll processing, engineering, R&D, and deign,” Al Naqi comments. “Because of its infrastructural strengths, DOZ also serves as an ideal centre for disaster recovery facilities for outsourcing operations located offshore elsewhere in the world,” he says.

The zone is set to officially open in September, with phase one due for completion by the end of this month, phase two by September and phase three by June next year providing 750,000 square feet worth of building space. Whether this will be enough to cater for the massive demand for outsourcing facilities in the UAE over the next few years however, remains to be seen. It could well be that by next year, DOZ’s management are already planning for phases four, five and even six.

"We don't want the low end business."
“[DOZ] is already recognised as a regional hub.”

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