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Bank to outsource operations to DOZ

Arab Bank is outsourcing its entire back office processing operations for the Gulf region to a shared services facility in the Dubai Outsource Zone (DOZ).

Arab Bank is outsourcing its entire back office processing operations for the Gulf region to a shared services facility in the Dubai Outsource Zone (DOZ).

Named the Arab Company for Shared Services (ACSS), the facility, which will be the first of its kind to be set up by a Middle East bank, be will completed by next summer at a cost of US$21.8 million.

It will service the Jordan-based bank’s customers across the region and will employ up to 500 staff.

The facility will be used initially for the processing of fund transfers and trade finance products as well as retail
and commercial loans and in the future will house the bank’s IT centre.

Currently back office processing is carried out in separate centralised processing facilities at a country level with operations in the bank’s offices in the UAE, Bahrain, Qatar
and Yemen.

“Our back office processing centre in DOZ is part of a strategic move to create a dedicated unit for the processing of products and services to our customers in the Gulf Region,” said Mohammed Azab, senior vice president and area manager for Arab Bank in the UAE, who will be managing director of ACSS.

Azab said no staff would lose their jobs as a result of the move, nor would existing back offices premises be shut down.

Describing the reasons behind Arab Bank’s decision he listed the standardisation of back office processes and the opportunity to cut costs as two factors.

“Because it leads to improved controls instead of dealing with four or five countries you will be moving and controlling in one single location,” he said.

“The other reason is that you get further standardisation which is a very important issue for us — the way you process in a single location with improved standardisation of how we process for the customer. Plus hopefully you will get a better return on your scale of economy,” he added.

He gave the example of the processing of letters of credit and how processing these in bulk from one facility would cut costs and will require less manpower.

Despite having denied that the bank would be closing any existing back office processing facilities, he said that it would benefit from relocating from its existing “prime real estate” facilities.

“Our branches or our locations in different countries are sitting in prime real estate so you end up paying higher rent in these locations,” he said.

“And when you move to a single location it is going to make it viable to cut down on your rent and your costs generally,” he went on to add.

DOZ is set to be operational by July this year and is
designed as a base for outsourcing operations providing such services as banking, finance, accounting, IT, payroll processing, engineering, R&D and design.

It aims to capture 5% of the global outsourcing industry and its target is to have between 200 and 300 companies based there in the next five years.

Ismail Al Naqi, director of DOZ, said that MashreqBank also planned to open an outsourcing facility in the zone within the next 15 months.

He claimed that Dubai offered greater benefits than India when it came to setting up outsourcing operations.

These, according to Al Naqi, included better infrastructure, a multilingual pool of labour and a more stable political and economic environment.

He added that DOZ offered distinct government incentives. “DOZ offers a 50-year tax break environment, 100% ownership, subsidised commercial and residential real estate — a one-stop shop concept where companies will not face any bureaucracy related to any government issues,” he said.

“You’re talking about controlled attrition within DOS which is again a major challenge in India,” he continued.

Al Naqi claimed that setting up outsourcing operations in Dubai could cost 20% higher than doing so in India, but claimed it would result in a 30% higher rate of productivity.

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