Dubai: MENA’s Most Expensive Shared Services Location Takes the Lead in Regional Growth
Posted by email@example.com on October 13, 2017
The Middle East and North Africa (MENA) is home to 190 captive/hybrid shared services centres (SSCs). The region is unique for the multiple languages it represents, as well as the fairly regional nature of many of its business entities. That explains to a large extent why most of the shared services support on or nearshore business unit activities.
What's notable is that the most expensive location, in terms of office space and salary, is also the most popular: Dubai, in the United Arab Emirates, hosts nearly 30% of the total shared services centers in the region, and in the last six months alone has seen significant growth in the sector (28% compared to the number of centers at the start of 2017).
Figure 1: Range of average salary costs for typical shared services roles across MENA region.
Saudi Arabia is the second most popular location with nearly 20% of the regional centers based there. That means that nearly half of regional centers are based in the UAE or Saudi Arabia. Also notable are Turkey and Egypt, which together account for a quarter of regional SSCs.
On a closer look, there are definite trends that highlight the popularity of certain industries for certain countries. Banking and financial services, for example, is a leading sector for shared services, and represents most of the centers in the United Arab Emirates and Turkey. Similarly, the mining industry, construction, and travel & hospitality are heavily represented by UAE centers, whereby construction also plays a leading role in Saudi Arabia-based shared services. Saudi Arabia also stands out for the number of government shared services centers, a unique trend across the region but one very much reflecting best practices in North America as well as the UK and Australia – all mature locations for shared services. Qatar has also taken public sector interest to heart with its Qatar Foundation SSC.
The UAE-based shared services are a great example of the trend to support predominantly regional businesses: Six out of 10 UAE SSCs support operations across the Middle East/North Africa. This stands in stark contrast to Algeria or Libya, where all of the shared services in our database support North American business operations.
The high costs that businesses are willing to support for these nearshore operations is thus explained: Bahrain operates on a exclusive regional model, as does Israel, Lebanon, Syria, and most of the Saudi and Qatari based centers. Egypt and Morocco stand out for the one-out-of-every-two centers that support Europe. Of the 18 countries analyzed, only 10 provide support to North America, and nine to Europe.
For enterprises wanting to leverage a MENA-based shared services footprint, there is certainly plenty of opportunity: Turkey offers relevant finance, HR, procurement, supply chain, and marketing talent at significantly lower cost than most of the other countries in the region. Nearly 1/5 of the cost of Dubai for most relevant skills – and commercial office rental at 1/8 of the cost of Dubai. Of course the latter has annual personal income tax of 0% in its favor! That's hard to compete with. However, even Saudi offers equivalent skill sets at less than half the cost of Dubai, with commercial office space discounted by a similar percentage.
For more information see: Evaluating SSC locations in Middle East & North Africa (2017)
N.B. The 18 MENA countries included in this analysis are Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, Turkey and United Arab Emirates.
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