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The Dubai government launched its major initiative for Dubai to become a knowledge-centric society just a few years ago, when the nation’s progressive leadership strategized about how Dubai would overcome its projected shortage of oil — its largest revenue contributor — by year 2025. After much government support, financial investment and long-term strategic planning, Dubai intends to generate 70% of its GDP from the services sector by 2010, with 25% of its projected $30 billion GDP to come from the services sector. Only five percent is expected to be attributable to oil.
Dubai is one of seven emirates, similar to a U.S. state that comprises the United Arab Emirates (U.A.E.) — an independent federation in the Middle East located along the Persian Gulf, between Saudi Arabia and Oman. Its “Emir” is an inherited political position, but Dubai operates within a constitutional domain independent of the U.A.E. other than an overarching federal system. The Ruler of Dubai is His Highness Sheikh Mohammed bin Rashid al-Maktoum, elected in January 2006, whose leadership has driven strong international interest in Dubai as a tourist destination and an alternate location for companies to operate in a nontraditional business destination.
Quick Take: Dubai
Official population figures peg Dubai at 1.4 million (including 180 nationalities), growing at an estimated seven percent annually. Arabic is the official language, and Dirham is the official currency.
Current Growth Initiatives
As part of its development efforts, the Dubai government has undertaken numerous significant growth initiatives in the past two years alone aimed at strengthening its expertise in trading and logistics and developing knowledge-based centers of expertise. The sectors include Information Technology (IT), finance/banking, insurance and health care and other areas such as R&D, education, pharmaceuticals, biotech, nano-tech and wireless technology. Funded by both public and private investments, Dubai is in the process of developing countless additional programs to further position the nation as a tourist and business destination.
Funded largely under the umbrella of privately held Dubai Holding, the government created Dubai Technology and Media Free Zone (DTMFZ or TECOM), which consists mainly of Dubai Internet City, Dubai Media City and Knowledge Village. This “free zone” was established to attract foreign investment and prompt commercial activity. Companies operating in the free zone (and there are others in the nation with free zone status) can be 100% tax free for 50 years and be 100% foreign-owned, along with many other services and benefits offered in this authority. Dubai also has a new international financial center, a new international financial exchange, several cities serving as expertise centers within various disciplines and countless leisure and tourist-focused developments, like “Dubailand”, Exhibition City and a major waterfront development project. There also are countless housing, hotel and residential community options being created, along with man-made islands and a re-defined coastline.
Dubai Outsource Zone
Dubai launched the world's first environment dedicated to the outsourcing industry on June 20, ’04. Dubai Outsource Zone (DOZ), provides a comprehensive infrastructure and environment for outsourcing companies to set up global or regional hubs servicing the worldwide market or for companies seeking alternate operational locations. DOZ offers 100% exemption from all taxes, a reliable telecommunications and technology infrastructure, a one-stop shop of support services, a pool of qualified workers from around the world and numerous other benefits.
The DOZ has a five-year roadmap — termed “Dubai Vision 2010,” which illustrates its plans to achieve a knowledge economy. DOZ’s short-term goals during “Horizon 1” of this initiative focused on building out capacity in industries and competencies where it already had expertise. DOZ currently is in “Horizon 2” of its roadmap.
Figure, “Dubai Vision 2010” - Phases of Dubai’s Growth Strategy to Achieve a Knowledge Economy
Source: Dubai Outsource Zone, 2006 (for FAO Research, Inc.)
The Financial Sector is a major component of this progressive economic agenda, along with an International Financial Center. In addition, it also recently introduced a new Dubai International Foreign Exchange (DIFX), in September 2005. The Central Bank formulates U.A.E.’s banking and monetary policies.
Targeting a five-percent share of the global outsourcing industry, DOZ seeks to have between 200–300 companies by 2010. DOZ initially is targeting companies in the U.S.A., India, the U.K. and Germany. DOZ is focusing primarily on attracting midrange to high-end Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) services firms from sectors like finance and accounting, human resources, transaction processing, IT, graphics, engineering, R&D and energy. DOZ offers several categories of support to companies seeking locations in Dubai, be it service centers or executive locations for outsourcers or the provision of alternate delivery facilities for companies seeking offshore shared service centers or captive locations. It also offers different options for companies seeking limited investments or significant operations in the nation.
Current Businesses in Dubai
Businesses already established in Dubai include IT companies, consultancies, legal firms, real-estate firms, business-services firms, publishing companies and many other types of businesses from around the world. Some of the companies include: Standard Chartered Bank, ABN Amro, Oracle, KPMG Consulting, Logica, Booz Allen Hamilton, Fujitsu, Siemens and Microsoft. Several BPO companies have already started operations from Dubai, including suppliers of services like data warehousing and mining, back-office technical fleet management and transaction processing. The following outsourcing suppliers have operations of some capacity already set up in TECOM: EDS, Perot Systems, IBM, HP and Wipro.
Based on its strategic location near Europe, Africa and Asia, DOZ can draw upon the skills and language expertise of numerous countries to comprise its employee pool. Its primarily non-national, young, highly literate workforce has low attrition and surprisingly low tension attributable to racial, national and language divisions despite its diversity. Also, the overall financial incentives for businesses to employ such individuals are compelling.
The environment in which DOZ is located is impressive — innovative architecture, beautiful beaches, countless leisure and sports opportunities and an increasing number of high rises sporting recognizable, global corporate brand names. All of Dubai’s major airports and roadways are virtually brand new or under renovation. Tourist and residential-related projects are many, with the creation of villages, shops, hotels, museums, theater, art, film, music, dance, poetry and sports venues.
What service providers and global companies seeking alternate delivery locations will find is that operating in DOZ will facilitate their efforts towards geographic diversification and globalization, lower costs, higher quality operations using state-of-the-art technology and greater access to skilled resources speaking multiple languages. Facing an increasingly complex and global economic environment, corporations and other entities will continue to explore DOZ as a means of facilitating profitability, business growth and end user/customer satisfaction.
