Local banks outsource IT requirements

Although the Middle East’s financial community is set to invest more in IT during 2003 than ever before, intense cost pressures, increased competition and a need to focus are set to boost outsourcing in the coming years.

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By  Matthew Southwell Published  February 18, 2003

Although the Middle East’s financial community is set to invest more in IT during 2003 than ever before, intense cost pressures, increased competition, a need to focus, and regulatory requirements are set to boost outsourcing in the coming years.

According to the latest research from MENAFN Research, 40% of financial institutions from around the GCC and Levant region will increase their expenditure on IT outsourcing in 2003. An additional 30% percent will keep spending levels the same as in 2002.

National Commercial Bank (NCB), for example, opted to outsource the development and hosting of its new corporate portal to IBM and Saudi Business Machines (SBM). Hosted at the IBM/DIC eHosting centre in Dubai Internet City, the portal provides a host of information services for customers, including newsletters, stock values, financial news, currency calculators and online fund and stock prices.

“The ability to communicate with our customers securely and reliably via the internet is what is driving NCB's continuing success. Strong customer relations are at the heart of the banking business: this portal provides easy and reliable access to information and services to our customers,” says Omar Hashem, e-business development manager at NCB.

Although leading retail Arab banks currently outsource discrete, well-defined tasks that are commodity-like and constitute a relatively small percentage of the overall IT budget — such as web site development, web hosting and end user support — MENAFN believes this will change in the near future.

“Going forward, IT executives within leading retail Arab banks [will look to] outsource more complex, inter-dependent, and large scale IT functions such as telecom and network management,” says the market research firm.

The local market’s enthusiasm for outsourcing mirrors the current global trend as companies hit by the economic slowdown look to trim IT workforces and maximise their return on investment. Evidence of this comes from IDC, which reports that IT services are one of the few sectors to continue growing during the downturn.

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