After developed markets like the US and Europe, the Middle East is rapidly emerging as the next big destination for India’s business process outsourcing (BPO) firms and software services providers.
A case in point is Serco Global Services. It signed a four-year contract with the government of Abu Dhabi this week to provide shared services to over 50 government departments within the United Arab Emirates (UAE).
It also has a presence in Saudi Arabia. So much so that Serco has established a strong foothold in the region with over 3,000 dedicated employees.
Last week, TCS bagged a deal from National Commercial Bank in the UAE to manage its core banking platform.
And last month, Cognizant won a contract from the Saudi Electricity Company; WNS bagged a new client in the Middle East for shipping and logistics, while Wipro clinched an outsourcing deal from Qatar Airways to provide aviation IT products.
In fact, among Indian firms, Wipro has won the maximum number of long-term, large deals from the UAE since signing an Arabia trading agreement in March.
The agreement made Wipro a preferred IT partner for outsourcing from the Middle East.
Wipro recently informed stock exchanges in India that its joint venture (JV), Wipro Arabia, has clocked a total contract value or TCV of close to $500 million in Saudi Arabia “over the last two years”.
Admittedly, the Middle East contributes a tiny portion to revenues of BPO firms and software companies, compared to 85% of revenues from the US and Europe. But experts believe that due to its small base, the Middle East is set to grow its outsourcing by at least 50% on-year for the next two years, much faster than India, whose size and scale of the market is similar to the Middle East.
Milan Sheth, partner and India leader for technology at EY said, “We have been seeing consistent deal wins from the Middle East.
Indian firms have recently started chasing contracts from this region seeing the huge potential for outsourcing, especially for engineering, finance and accounts, and technical helpdesk, in sectors such as banking, insurance, utilities and telecom. Going forward, we also see government contracts, especially for the oil and gas sector as huge potential gains from the Middle East.”
Bhupender Singh, CEO, Asia, Middle East and Australia, Serco Global Services, said, “The sincere government initiatives are helping the Middle East emerge as a preferred outsourcing destination. Be it the development of outsourcing zones that provide a purpose-built infrastructure, their investment in creating skilled labour or its geographic proximity to Europe, the region has put in significant efforts to prove a favourable BPO destination.”
That is not all. The business sector in the Middle Eastern countries is developing swiftly and they are fast realising the need for technical support as well as other services in local languages. With many local companies now open to outsourcing, things are looking very promising for the BPO industry in the Middle East, he said.
Several Indian BPO and IT companies are setting up local delivery centres in the Middle East and hiring senior executives from India, to serve the region well.
Keshav Murugesh, CEO, WNS BPO, said, “Increasingly, the Middle East is opting for more end-to-end managed services contracts. We see this as Round Two of outsourcing from this region.”
Sheth of EY attributes the spurt in growth from the region to a change in the hiring pattern of mass migrant labour from India and Asia for outsourcing services from large Arabian clients, such that they now prefer to “carve out” their business teams in the home office and ship work to Indian partner firms, which works out cheaper. They are also setting up subsidiaries of their central operations centre in the Middle East in India and Asia, he said.