Dubai – the land that has outsourced itself

So, back to my recent Dubai trip, and some thoughts about the unusual nature of that Emirate. Dubai is seen as a centre of tourism, finance and trade, the most liberal of the Emirates.  Abu Dhabi next door is more conservative, a little less cosmopolitan, but some ex-pats prefer to live there, just as some live in Dubai and commute to Abu Dhabi. The Abu Dhabi government is seen as particularly progressive from a procurement point of view, and perhaps the leader in the region in terms of public sector procurement capability. (We may be able to explore that further on future visits).

Fewer than 10% of Dubai residents are Emirates citizens – generally the families whose ancestors have lived in the deserts and coastal strip of the region for many, many years.  The rest are “expatriates”, with the British the largest foreign group, and that varies from those who are working on projects only for weeks or months, to those who will see out their days in Dubai. But they cannot get citizenship, hold certain key roles in the country, and of course as Dubai is a constitutional monarchy, there is no question of participating in  democratic activities.

Some observers have taken a negative view of the way the Emirates have used foreign labour, and certainly there are valid questions to be asked around the treatment of workers at the lower end of the scale, in construction and similar roles. Indeed, critics have described  the situation of some Indian workers as “indentured slavery”, although we should say that these claims have been rejected strongly by those in power.

And clearly, even workers in low paid jobs may well feel they are better off in Dubai than in rural India, Pakistan or wherever there original home may be. Indeed, at the moment, many of the more professional folk in Dubai are VERY pleased not to be in their home countries of Syria, Libya or Egypt, given the post- Arab Spring turmoil, civil wars and so on. And as Guy Allen suggested when we discussed this, the Maslow “hierarchy of needs” suggests that feeling safe, a roof over our head, and adequate nourishment are probably more important to most of us than the right to vote.

So it suddenly struck me that actually, Dubai is a great outsourcing case study. The owners of the country – the ruling families – have effectively outsourced much of the operational management, development, and even some of what we might call the more strategic management of the country to millions of ex-pats and of course the firms who employ them.  Western consultants, lawyers, and planners advise at the strategic level; foreign retail, property and hospitality experts and firms run the services, and foreign workers build the incredible infrastructure.

Think about it. It is all outsourced. The local Emiratee people don’t build the new skyscrapers that spring up almost daily. They don’t tend to work in the hotels or shops, or provide taxi or other services. Many of them don’t even actively participate in the management level jobs.  (There is an issue there in terms of the work ethic of the younger, wealthy Emiratees, but that’s for another discussion).

Now this outsourcing might seem like a dangerous strategy. Yet, consciously or accidentally, the rulers of Dubai have put in place some very powerful mechanisms that have proved extraordinarily effective as this approach has developed. In effect, they are acting as what we would call the “intelligent client” function in an outsourcing environment. And their strategy actually demonstrates some key elements that any organisation can mimic in terms of maintaining their own similar role in an outsourcing arrangement.

More on that tomorrow....

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