Regional companies are outsourcing most of their operations as the current financial crisis forces them to save operational costs, according to a regional expert.

The expert, Dr. Ali Sharab, says: “Outsourcing enhances productivity and transfer skills. However, it is still a short-term solution. Laying off employees should stop in the Middle East”.

Dr Sharab said that outsourcing will continue to take a bigger slice of the operations, with an estimated multi billion dollars work of work getting outsourced across the Middle East.

He explained that outsourcing did not necessarily mean getting international expertise; in fact,  the bulk of outsourcing companies are local businesses. Sharab emphasized the need for confidentiality between the vendor and the company, because the vendor might work with various clients from same field, leading to a conflict of interests.

He called for local outsourcing, instead of international outsourcing, because international companies do not know the market very well, and are usually liable to fail to provide specifically tailored solutions, except when it is merely a technical one, such as call centers.

Outsourcing is defined as subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering costs or making better use of time and energy costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, (information) technology and resources.

Outsourcing includes IT, CRM, support centers, web applications and maintenance, IT support, engineering support, call centers, content development and management, research & development and marketing.

Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services.

Business segments typically outsourced include information technology, human resources, facilities, real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, CAD drafting, customer service, market research, manufacturing, designing, web development, content writing, ghostwriting and engineering.

Ali Sharab added: “Arab businesses are getting 35 per cent of the outsourcing, including companies in Egypt, Lebanon and Jordan. Outsourcing will witness a boom because businesses will need it to save costs. Ideally, it is better to go in for Arab companies in order to keep the money in the region.”

© 2009 Al Bawaba (www.albawaba.com)