The Middle East is ripe for global expansion, and our region's desire to move away from energy industry reliance opens up wider opportunities for brands to make their mark in tech, finance, healthcare, and more.
Understanding that companies need help setting up in countries with wide-ranging employment guidelines and cultural differences, workforce outsourcing has become a popular service.
But what are the opportunities and challenges of workforce outsourcing, and how do they affect your choice to expand here? As Middle East workforce specialists, we'd like to offer our unique take.
"Reforms in the Middle East cause a surge in workforce outsourcing."
The Middle East is experiencing rapid economic growth driven by ambitious government reforms.Saudi Arabia's Vision 2030 is an excellent example of why cities like Riyadh are attracting global business at an accelerated rate. They are delivering real change in economic diversification, social development, government reform and pushing hard for global leadership.
Cities like Dubai are also experiencing exponential growth because of the UAE's pro-business reforms, which have seen a surge of 284% in start-ups in the last few years (many of which were founded by female founders).
Qatar has also welcomed global business through its Qatar National Vision 2030. We saw their success improve after winning the World Cup 2022 bid in 2010, which encouraged foreign investment and cemented their economic growth in many areas, including tourism.
Many more countries in the Middle East have followed suit. As a direct result, workforce outsourcing has become a must-have component for global expansion plans—it's more efficient, cost-effective, and allows access to specialised local knowledge.
Your Middle East opportunities are enhanced through workforce outsourcing.
Working with the right partner can present many opportunities in the Middle East. Those to note include:
1. Access to specialised talent despite local skill gaps
One of the most significant benefits of outsourcing your workforce in the Middle East is access to a cross-border specialised talent pool. That is, of course, if your service provider works cross-border.
With the rapid growth in sectors like technology, healthcare, and finance, businesses often need help finding qualified professionals within the region. Sadly, not every area has trained professionals to meet market demands, so cross-border employment is critical. We have found that our clients greatly benefit from our wider talent pool when it comes to delivering qualified staff because we go to great lengths to work in multiple regions.
2. Cost efficiency in high-cost business hubs
Cities like Dubai, Abu Dhabi, and Riyadh are attractive to expand into, particularly for property and social affluence. But, they are not cost-friendly when it comes to operations. One easy way to reduce operational costs in these cities is to outsource non-core functions, like workforce management.
According to Deloitte,labour accounts for up to 60% of Fortune 500 businesses' operational costs; because of this, companies are now investing in managed servicesto make savings. By offering our clients a workforce solution, we have helped them reduce start-up costs and retention spending.
Then, depending on your business, there is "near-shoring" hosting your operations and logistics in neighbouring regions with similar time zones and cultures but significantly lower costs. Jordan, in particular, is pitching this idea. Choosing a service provider with the right connections could help you reduce workforce spending further.
3. Increased push for reform and outsourcing by Governments
Regional governments actively support business growth through a wide range of country-specific initiatives. The UAE's National Innovation Strategy is an example of reforms that aim to enhance the private sector's economic contribution, increase productivity, and create better business environments.
By securing workforce solutions through a business services partner like us, companies can quickly enter a regional market as we provide additional services like building procurement, facilities management, staffing, and payroll.
4. Scaling vertically and horizontally within markets
The rapid growth of sectors like e-commerce, fintech and tech, and logisticsin the Middle East has created an urgent need for scalable business models. Workforce outsourcing provides flexibility, allowing you to quickly scale based on market demand without needing heavy capital investment in contingent or permanent staff.
We've helped global brands like Huawei, and Samsung do that here in Iraq while delivering office and commercial space for various administration and commerce options.
You can overcome challenges in the Middle East with the right workforce outsourcing partner.
As with every location, there will always be challenges, but these can be overcome if you find the right partner to deliver business functions. Let's take a look at what you should look out for.
1. Complex regulatory and compliance
Every region has its own distinct regulatory and compliance requirements. For example, in Saudi Arabia and the UAE, it is mandated that local citizens fill a certain percentage of your in-land jobs. Understanding the rules can be challenging if you are unfamiliar with local legal frameworks.
However, working with a local outsourcing partner with expertise and understanding the channels of local and regional governments crosses a worry off of your list.
2. Cultural and language differences
The region is known for its rich cultural and language diversity, which is beautiful to witness but can be problematic, affecting business communication, decision-making processes, and sometimes team dynamics.
Sourcing the right people for the right jobs is critical to fostering cultural sensitivity and effective communication between your internal teams, suppliers, and clients.
3. Data protection
Many regions of the Middle East have imposed strict requirements on data management, storage, and transfer across borders, levying fines for non-compliance. In workforce management, employee data is considered highly sensitive, so understanding when and where it is appropriate to share data in your business will be vital.
Local expertise in the form of outsourced workforce management should provide you with compliance and handle liability throughout this business function.
4. Quality and performance consistency
Differences in work standards have always been a global issue, and they are especially troublesome in sectors that require high regulatory oversight, such as finance, healthcare, and telecommunications.
Establishing clear service-level agreements (SLAs), regular performance reviews, and maintaining open communication channels will help mitigate these risks and ensure your outsourced workforce management team and staff meet your expected standards.
So, do the opportunities and challenges of workforce outsourcing affect your choice to expand into the Middle East?
There is undoubtedly plenty of opportunity in the Middle East. With proper planning and the right outsourcing partnership, you can enter and disrupt any market. That's why we recommend working with a business service provider who can provide more than just an outsourced workforce. Consider a cross-border partner who can procure infrastructure, facilities management, staffing, and operational core functions like payroll, HR and more.
Contact one of our mselect hubs today if you are considering Middle Eastern expansion.