IT outsourcing takes off in Middle East market

The Middle East is set to see a boom in outsourcing, according to new research published today, despite reports that company executives in the US are cutting back on the practice.

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By  Daniel Stanton Published  July 25, 2006

The Middle East is set to see a boom in outsourcing, according to new research published today, despite reports that company executives in the US are cutting back on the practice. IDC reported that spending on information systems outsourcing in the UAE increased by more than 700% last year, albeit from a small base, while services relating to hosting infrastructure rose by nearly 69%. The firm also predicted that a major IT outsourcing deal between Injazat Data Systems and the Abu Dhabi Water and Electricity Authority, worth more than US$100 million over 10 years, could spur demand for outsourcing in the Emirates. "Outsourcing has finally arrived in the UAE," said Philip van Heerden, research manager at IDC. "Last year outsourcing spending amounted to around 15% of the total IT services market. By 2010, this number will reach approximately 23% of spending." Today, Saudi Telecom announced that it would be outsourcing the implementation of end-to-end billing and customer care services for its new wireless service to an Indian firm, Tata Consulting Services. The deal is said to be worth US$33m and will be delivered within 18 months. A report released earlier this week suggested that demand for IT outsourcing from US companies was decreasing. Management consulting firm DiamondCluster surveyed 153 executives at US firms with IT budgets ranging from US$5m to US$500m for its annual Global IT Outsourcing Study. It found that 9% of those who use outsourcing within the US were planning to cut back, while 8% who use offshore outsourcing saying the same. However, Abbas Khan, head of IT consulting and outsourcing for Abacus IT Consulting, Pakistan, said that his firm was continuing to experience growth in demand from overseas clients. “To be honest, I can’t say that I’ve felt any reduction in the outsourcing demand,” said Khan. “If I look around the Pakistan market of IT companies, I think that we are if anything experiencing a growth. There is more work coming to Pakistan than ever before and most of it is coming from the US, actually.”

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