Expert suggests the setting up of a BPO park in Dubai to spur the growth of this $102b industry

The middle east's business process outsourcing (BPO) market, currently estimated at $102 billion is set to grow once lease line and corporate telecom rates are brought down to the international level, said an industry expert.

The sector can also grow if Dubai, especially the Dubai Internet City, undertakes the initiative to create a new BPO zone, said industry experts.

The Middle East's BPO spend has been relatively small, currently estimated at around two per cent of the global total.

Last year, total global BPO spend reached $4.78 trillion, compared with $3.78 trillion in 2003, 15 per cent of which was IT-related.

The sector has registered a 19.6 per cent annual growth over the last few years and projections for total BPO spend this year is $ 5.1 trillion.

"In 2001, business activity around the world was worth $36.6 trillion, of which approximately 50 per cent was in the operational part of a business, 20 per cent was spent on support services and 30 per cent went on interest, taxes, depreciation and earnings," said Akash Arora, an expert in BPO and chief software architect, Netlink a company specialized in outsourcing services.

Major Player

"Of the operational and support portions of this spending, 14.8 per cent was outsourced, resulting in global outsourcing spending in 2001 of $3.78 trillion, Two third of global outsourcing spending is in the U.S.

"About two-thirds of outsourcing spending is in large companies. By 2003, diversified financial institutions, banks and insurance companies will be the top outsourcers."

As the region's IT market grows and matures by the day, many multi-nationals are looking for outsourcing of their services and solutions, mostly in India which has become the world's virtual back-office".

However, due to certain complexities, its growth in the region has become stagnant. The two major factors hampering BPO growth in the region is the comparatively high telecom rates and cost of living." In order to make BPO financially viable, telecom rates have to be brought down to international level. There is a high potential for the sectors growth in the Middle East.

One of the key reasons for outsourcing services and call centres is to save on these processes. To make this financially viable and profitable, we need to bring call centre rates between $8 and $12 per hour from the current level of $16 to $24 in UAE. The rates here is double compares with the required rates.

"Besides, the comparatively high cost of living also stands as a bottleneck for the sector to grow here. Once these issues are addressed, Dubai's economy could boom from the BPO revolution."

Arora said over 250,000 people are currently working in various call centres in India. "Even if Dubai could attract about ten per cent of this, we could have 25,000 educated professionals in Dubai alone, "he said.

"A good number of companies are setting up call centres in the region, despite higher costs. A company based in UK can save 59 per cent on costs by outsourcing services from India, compared with 30-35 per cent in Dubai, "he said.

Companies can outsource a wide range of services including accounting and finance, telemarketing, Web services, customer service response, cross selling, promotion, loyalty programme, research, report and analysis, among many others.