OUTSOURCING AND SHARED SERVICES

One of the most promising sectors for Jordan is Process Outsourcing and Shared Services (commonly abbreviated as BPO) which is experiencing rapid growth in global and regional markets. In response to increasing competition, global economic pressures and improvements in ICT, companies in developed countries have re-thought their approach to service delivery. Many have established wholly owned “captives” and shared service centers in lower cost locations (onshore and offshore); others have outsourced a range of processes and functions to specialized third party vendors that are able to deliver services more efficiently and at a lower cost; and still others have adopted hybrid approaches, combining the various models to reduce overall costs, manage risks, increase efficiency and market responsiveness. Over the past decade, this has grown into a major global industry characterized by a number of key trends:

• Companies engaging in outsourcing have changed from those based primarily in industrialized countries in the US and Europe to Australia, Asia Pacific and increasingly, the GCC. Outsourcing vendors are increasingly servicing clients in regional and local markets as well as in export markets.
  
• Traditional offshore locations like India, China and Philippines have been joined by a host of new competitors in Southeast Asia (Thailand, Malaysia, Viet Nam); Central/Eastern Europe (Hungary, Czech Republic, Slovenia, Poland, Russia) and Middle East/Africa (Egypt, Tunisia, Morocco, UAE,  South Africa).
  
• Rising wage and operating costs in traditional offshore locations like India have forced companies and vendors to invest internationally to tap new pools of labor and expertise.
  
• Outsourced services are becoming increasingly more complex, both in terms of the types of functions and services delivered.Activities have steadily upgraded from relatively simple transactional processes (like payroll processing), to judgment-based processes (customer service) to complex processes (research, analytics, modeling, etc).
  
• In addition to traditional industries such as Banking, Finance and Insurance,  new verticals rapidly embracing outsourcing include Architectural & Engineering services, Life Sciences, Healthcare, Telecom services, Media & Entertainment, Retail, Energy, etc.

The outsourcing and shared services sector capitalizes on one of Jordan’s key assets, its educated and relatively available workforce. Indeed, during the past years, SABEQ’s modest support of the sector has yielded important results, including advancing to ninthon the AT Kearney list of global outsourcing destinations. As a result, SABEQ believes that significant economic results can be achieved from focusing efforts on this sector and positioning Jordan to compete with regional competitors, including Egypt and UAE.

SABEQ’s strategic analysis of the sector found that Jordan can compete in this market space, especially for more complex processes and functions that do not require large pools of labor. It also indicated several key weaknesses that need to be addressed:

• Build workforce capacity. Like labor in most offshoring countries, the Jordanian workforce skills need to be improved, including developing managerial, linguistic and vertical skills (e.g., skills in a specific technical area that would be outsourced).
  
• Enhance business infrastructure. The lack of purpose-built BPO facilities and infrastructure deters foreign investors and has resulted in some lost opportunities.
  
• Build telecom reliability while controlling costs. Telecommunications barriers, including inadequate redundancy and high internet connectivity costs, limit the ability to attract new investors and business for the industry.
  
• Develop industry specialization. Jordan must develop specialization in key verticals that build upon its latent strengths including banking, life sciences, healthcare (including telemedicine) and engineering services (particularly in energy).
  
• Improve government incentives and regulatory framework. Current incentives are inadequate to attract foreign BPO investors and upgrade the capabilities of Jordanian vendors. There are major regulatory barriers for the full exploitation of BPO opportunities in some verticals such as Banking, Telecoms and Healthcare.
  
• Improve market position, visibility, and access. The success of all these efforts ultimately relies on awareness of Jordan as an excellent outsourcing destination. At present, Jordan is largely invisible on the global outsourcing map.

SABEQ proposes a comprehensive, integrated and demand-driven strategy to enhance the competitiveness of Jordan as a BPO location—aimed at both enhancing the capabilities of existing Jordanian BPO service providers/incubating new enterprises as well as attracting investment/collaborations by global companies and third party vendors.