UAE Govt outsourcing could boost services sector

Benefits for government in agility and focus, but outsourcing must be carefully monitored, say analysts

Tags: IDC Middle East and AfricaStrategy& (www.strategyand.pwc.com/)United Arab Emirates
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UAE Govt outsourcing could boost services sector HH Sheikh Mohammed has announced that the UAE government will develop a roadmap to outsource 'most' government services. (Getty Images)
By  Mark Sutton Published  February 10, 2016

The decision of the UAE government to outsource most services to the private sector will provide a boost to regional and multinational service providers, but could also risk a loss of control over services provision, according to industry analysts.

On Monday, His Highness Sheikh Mohammed bin Rashid al-Maktoum Vice-President and Prime Minister of the UAE and Ruler of Dubai, announced that the government will develop a roadmap "to outsource most government services to the private sector" as well as to cut the number of ministries.

The move will allow the government to be more agile and focus on more strategic issues, and is likely to involve back office functions in the initial stages.

Megha Kumar, Senior Research Manager - Software, IDC MEA, commented: "The new structure is set to enable agility and efficiency around government processes and decision making. With a move towards outsourcing government services to the private sector there will be increased synergies across public-private partnerships which will also be beneficial in the government meeting their vision around smart cities and innovation. If the decision covers IT functionalities as well it will be boost the IT outsourcing services market in the UAE.

"By engaging in IT outsourcing and even managed services,  this will allow government organizations to secure improved service levels, remain cost efficient, focus on customer centricity and also gain additional capacity to focus on innovation and agility, which is no doubt a major focus in the UAE," she added.

Ashish Labroo, Principal with Strategy&, formerly Booz & Company, added that the outsourcing of administrative functions was already a proven strategy in some markets. Government entities in the region have also relied on staffing service agreements to meet demand for specific skills.

"Such an approach lets the government entities focus on more strategic and policy related topics rather than spending efforts in day-to-day routine tasks. Outsourcing of government services is fairly common in many countries and has been successfully done," Labroo said.

The outsourced business is likely to go to local and multinational companies with proven track records in outsourcing, or expertise in specific domains Labroo added.

Any outsourced business would have to be strictly monitored and managed, particularly in areas such as data protection and privacy.

"When it comes to IT outsourcing, I think the issue will be around ensuring that the government choose the right partners to be able since there should be scrutiny around data protection, intellectual property, the services provider might have their own turn over issues which can be a cause for concern and of course the productivity levels of the contractors themselves. A lot of checks need to be put in place in terms KPI to meet government services standards," said Kumar.

Labroo also noted that government must take care to maintain control over activities that directly impact customer service, and that there may also be employment implications for the large number of UAE nationals that work for the government at present

"Many jobs are likely to move to the private sector and the government will have to work closely with the private sector to maintain employment opportunities for UAE Nationals," Labroo said.

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