What the billion-dollar OSS market means for software delivery in the UAE
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What the billion-dollar OSS market means for software delivery in the UAE

What the billion-dollar OSS market means for software delivery in the UAE

Nearshoring – outsourcing service provision to another company in a nearby country is rapidly growing. Shankar Garg, MD, Xebia Middle East outlines why this is a game-changer in software delivery in the UAE

Gulf Business

Increasingly, companies are realising the benefits of cost-effective remote team collaborations, overlapping time zones, cultural alignment, shorter travel time and increased customer responsiveness.

In fact, the outsourced shared services (OSS) market – which includes nearshoring – is forecasted to reach $971.2bn by 2023. According to a Deloitte 2021 global shared services and outsourcing survey report, the global OSS market size was valued at $837.2bn in 2021.

Given that growth trajectory, the OSS industry looks set to exceed $1tn within the next six years – a clear indication that nearshoring of managed operations is the next game-changer in software delivery.

While US companies are heavily dependent on offshoring to India, they have been nearshoring a lot of recent work to Mexico. Meanwhile, many organisations in Europe are now nearshoring management of their IT and shared services to locations overlapping their time zone.

Primary technologies contributing to the growth globally include data and artificial intelligence, cloud, DevOps, business agility, security, training and learning, software development, product management and quality improvement. These demand full stack software engineering, IT strategy and digital consulting, enabling digital transformation of enterprises.

The main objective of nearshoring is gaining access to industry experts to manage the shared service centre (SSC) part of the business, enabling organisations to focus on their core functions.

Today, nearshoring of OSS is about increasing collaboration to integrate services that organisations cannot organically build alone. This might include business process automation and digital transformations of SSCs.

But what about the benefits of nearshoring managed OSS for Europe from the UAE?
Mindful of the finite nature of fossil fuels, the Middle East is focusing its economic transformation towards non-oil industries such as OSS, ICT, telecom and knowledge-based industries.

As an established regional and international business hub, the UAE’s OSS market size – in terms of spend – is already currently estimated at more than $5.9bn in 2021 and forecasted to grow to $6.4bn in 2022.

The UAE’s growing OSS market is currently dominated by the financial services industry (FSI), representing 36 per cent of spending in 2018, closely followed by the public sector and government entities at 16 per cent. By function, UAE OSS spend is concentrated across IT (62 per cent), and customer support (21 per cent), representing 83 per cent of the total UAE OSS spend.

Conveniently located in a similar time zone as several European countries, Dubai’s bid to become the biggest nearshoring destination has gained traction, thanks to the UAE’s easy visa processing and tax-free policies. Dubai has been attracting some of the best talents from across the globe to come together to deliver outstanding quality and value for customers worldwide.

Furthermore, the creation of the Dubai Outsource City, an entire business community dedicated to OSS, is a testament to the country’s growth ambitions within this sector.

Managed shared services, if correctly adopted, help reduce costs, increase efficiency and drive business value. However, the first step is to identify processes, workforce, and business goals that can be nearshored to SSCs. Then, the right governance model must be chosen, which includes the hybrid governance model, the multi-functional leader model, a build operate and transfer (BOT) model and the global shared service centre model.

A sure-fire way to succeed in selecting a capability and governance mix that works best for you is to partner with industry IT experts. They will offer an in-depth evaluation and information on flexible governance models, ensuring your nearshoring needs are fulfilled quickly, professionally, and cost-effectively.

By offering numerous strategic and competitive advantages, the Middle East is well on track to becoming the one-stop destination for all of Europe’s nearshoring needs.

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