It comes as no surprise that, in a digitised world, excellence is defined by an organisation’s ability to achieve targets on a minute scale.

The outsourcing of essential services can place your business ahead of competition.

According to Deloitte, the outsourcing and shared services market is set to exceed $1 trillion (Dh3.67 trillion) in next six years, with the UAE accounting for a $7 billion share.

While the practice of outsourcing has been around for a while, due to the widespread impact of digital transformation, the industry is now prepared for a global revolution. Organisations can no longer shy away from embracing cutting-edge technologies or investing in innovative systems if they want to continuously enhance their competitiveness and thrive.

Although organisations have been moving production or other services abroad to take advantage of lower production costs, the outsourcing of single-service basic needs that typically don’t form part of an organisation’s core business is a relatively new development.

It is expected that, towards 2020 and beyond, outsourcing will expand to cover new, more strategic areas such as complex business problems and management of innovation/intellectual capital, thus shaping a new future for the asset management industry.

Interestingly, businesses in advanced markets are already pushing outsourcing’s boundaries to cover areas such as idea generation and innovation. As organisations begin to actively adopt Artificial Intelligence (AI) solutions to streamline processes and reduce costs, the focus is on optimising processes to ensure sustainability of business growth.

Emerging technologies enable automation of increasingly complex processes and hence, companies must modify or revise their business models to allow greater automation. This will help them prepare for any future transformation of their industry’s landscape as robotic process automation (RPA) and AI impact the traditional outsourcing service delivery model.

The need for new ideas, innovations

Service providers will have to explore areas such as idea generation to keep up with the developments in the outsourcing industry. This will enable them to uniquely position themselves in the market and gain new competitive advantages.

In terms of challenges, the majority of service providers are not capable of providing this service for two specific reasons. These are the absence of an economic incentive to promote innovation when service providers are bound by a contract, and the reluctance of businesses to pay for advice on innovation. Even then, there is no doubt that the outsourcing sector will expand into new service areas, prompted by ever-increasing technological sophistication.

The advent of the “experience economy”, where the primary economic value is determined by experiences — is creating new avenues for service innovation and market opportunities. Therefore, evolving trends will present industry players who are capable of gathering context-specific data and/or processes with a wealth of new opportunities.

As organisations in the Middle East seek to cut down costs or to turn properties into income-generating assets, a comprehensive strategy will be key to maximising capital returns. Establishments such as universities, hospitals, airports and manufacturing plants consider outsourcing as a critical element in cutting down operational costs.

The increasing focus on smart cities, particularly in the UAE and Saudi Arabia, in view of their connectivity, futuristic social infrastructure and low-carbon design demand the formation of effective, integrated policies. The importance of the sector in the realisation of this new vision for smart, urban living cannot be overstated.

From being a prospect for commercial gain for both the public and private sectors, outsourcing has now become an integral sector that supports Gulf states’ visions for the creation of efficient, streamlined governments, and vibrant economies.

— Phil Malem is CEO at Serco Middle East.