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Out is the new in: The rise of outsourcing in Dubai

Thanks to the sharing economy, an array of outsourcing companies have made running an SME easier than ever in the UAE 

If you deprive yourself of outsourcing and your competitors do not, you're putting yourself out of business. Lee ~Kuan Yew

When Saudi entrepreneur Ebrahim Al Jassim was looking to scale up his food delivery business, he struggled to find legal advice at an affordable price. The opportunity presented itself in the form of a merger between his company, Hunger Station, and a corporate rival, Hellofood, but the high costs involved proved to be a challenge. “I had worked previously with a number of internationally renowned law firms,” he says. “A large barrier to trust between clients and lawyers is the billable hour.”

So when he heard about a new approach to the legal business, he was happy to give it a shot. He turned to Support Legal, a new breed of legal professionals that provides critical legal infrastructure to the SME sector. The Abu Dhabi-headquartered firm has helped close to 150 clients and are adding more than 10 clients a month.

If you deprive yourself of outsourcing and your competitors do not, you're putting yourself out of business. Lee ~Kuan Yew

“Support Legal’s innovative model, with its emphasis on absolute pricing transparency, ensured that a strong dynamic of trust was established quickly between us. I also liked the fact that the founders are entrepreneurs themselves, understand what goes into building a business from scratch and were willing to take on risk — quite a rare thing to find in lawyers! — in relation to the fee structure we agreed,” Al Jassim says on the firm’s website. 

The merger was concluded in 2016, and he remains at the helm of the amalgamated unit.

“Many entrepreneurs think lawyers are prohibitively expensive and can complicate commercially straightforward deals,” says Zoë Blakemore, Support Legal cofounder and principal. “We are intent on changing the way you think about lawyers. Our clients tell us they value our willingness to take risks alongside them, focusing on long-term value over short-term fee generation. And, simply, that we get it.”

“Many entrepreneurs think lawyers are prohibitively expensive and can complicate commercially straightforward deals,” ~Zoë Blakemore

When prospects for business growth present themselves, small and medium enterprises can find it hard to respond with the required speed or resources. But with an assortment of companies such as Support Legal having sprung up to cater to this need, business growth could soon become as easy as having your next meal delivered.

“SMEs, especially start-ups with potential for explosive growth but slim funds, need to both build economies as well as scalability into their resources. Outsourcing shifts the burden,” says Madhuri Sen, a brand strategist and start-up business coach. 

The industry veteran heads A.C.E. Brand Strategist, a consulting firm whose advice uses the principles of design thinking and behavioural neuroscience. “Since captive — or inhouse — resources are comparatively more challenging to fully utilise, they can result in higher total cost over the long term, and these are difficult to flexibly reassign to other parts of the business,” she tells Debonair

For example, a company may leverage the skills of an external marketing consultant for a few weeks to get a strategy up and running, after which that budget may become available to another function, such as finance, to raise funds, or to HR, to spend on training.

According to the International Data Corporation’s report UAE Outsourcing Market Outlook 2016-2020, the sector is an important pillar of the country’s economic diversification and among the fastest-growing, with a CAGR of 11.2 per cent. It estimates that operational management revenues of business process outsourcing and cloud services should reach $976.1 million this year, rising to $1.195 billion in 2020.

SMEs are the backbone of the UAE, comprising more than 90 per cent of registered businesses in the country, and SME empowerment is a strategic governmental priority across the region, says Blakemore. In Dubai alone, the figure rises to 95 per cent, with micro businesses accounting for 72 per cent of the total, according to official figures.

“Outsourcing sales minimises the risk of hiring an ineffective salesperson,” ~Mohamed Taboubi

For these companies, it may often be advisable to outsource practically everything except their core function, says Sen. The amount saved varies widely from case to case. “Savings could be as little as 5 per cent or as much as 50 per cent for even the exact same process, depending on a variety of factors,” she explains.

What’s certain is that an increasing number of processes are now being outsourced. HR, finance and marketing have been contracted to other firms for some time now, but with the rise of websites such as Freelancer.com, the internet has made it easier to turn to professionals for everything, including admin. More recently, however, one Dubai establishment is making a case for farming out sales, often seen as an indispensable task.

“Outsourcing sales minimises the risk of hiring an ineffective salesperson,” says Mohamed Taboubi, founder and director of sales at The Sales Dept, a company launched last year. 

Since March, it has worked with some 10 SMEs and seven individual business owners in sectors such as video and branding, IT, furniture and exhibitions. “We help companies build a pipeline that drives clients to their door. Many new companies are set up because they are passionate about their product or service. They are not necessarily passionate about selling. That’s where we add value,” Taboubi says. 

Each of his clients is assigned a point of contact who focuses on understanding everything about the brand from positioning to target audience, before training the whole team. Since every member of The Sales Dept’s team is aware of all its clients, they are able to cross-sell across sectors, something individual firms have a hard time doing.

There are even services for professionals who are keen to make the leap into business but don’t know where to start. The Co-Working Popup is one of several incubators that help individuals start, manage and grow their businesses, while providing office space to operate from. “We help entrepreneurs start their business, which includes business plan development and market research as well as licensing the company within the mainland of Dubai, operating under the Dubai Economic Department,” says founder Shahzad Bhatti. 

His clients include companies in the educational and tech startup space. “Our memberships start from Dh50 per day with monthly packages for desks and private offices for startups,” Bhatti says, explaining that the co-working spaces function as informal networking venues. 

Since launch three years ago, his Downtown Dubai space has become home to 20 startups and has a community of more than 3,000 members.

But surely outsourcing isn’t all it’s cracked up to be? Expediency dictates that companies should think hard before giving away the house, and be circumspect in deciding which processes to outsource. If there are no significant benefits, either in terms of cost, convenience or quality, it may make more sense to do everything inhouse, clarifies Sen. “However, it gets more complex when there may be cost benefits but quality or convenience are compromised. The business needs to assess the total opportunity cost versus the benefit, even if some of the numbers assigned are only best guesses,” she says. 

Across the world, there are successful examples of even core operational processes being broken out — such as airlines subcontracting ground management. “Essentially, while there are basic thumb rules, they aren’t so rigid that they can’t be broken after careful consideration of pros and cons,” Sen adds.

In many ways, this emerging new business model is a reflection of the sharing economy we all live in. Uber built a multi-billion-dollar valuation on the principle that nobody needs a full-time driver. These companies aspire to generate a tiny fraction of that sum in revenue — and create value for their business partners along the way. 

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