Dubai – the land that has outsourced itself (part 2) – and how to be an intelligent client

So we made the radical statement yesterday that Dubai is perhaps the world’s most dramatic example of outsourcing – a whole country (well, an Emirate technically) that has outsourced itself to the expatriates (and their employers) who make up almost 95% of its population.

The role of the ruling Emiratee families, right up to the monarchy,  is then to act as the “intelligent client” in an outsourcing sense. Consciously or accidentally, they have fulfilled this role very successfully. Dubai is peaceful, stable, and although it doesn’t have the oil reserves of some other neighbouring countries, it has generally been economically successful. So what can we learn from their example, in our more mundane outsourcing contexts?

The Dubai intelligent client rules

Keep control of what really matters.  The state and the ruling families maintain ownership of key industries.  Then there are a whole tranche of businesses where joint ventures  of some sort are the norm – such as Tejari, the BravoSolution JV. So the intelligent client maintains a stake, but the “suppliers” or partners have a real incentive to make it work. Then at the bottom end of the criticality scale, suppliers (mainly individuals) get on with their activities with limited interference (and of course very low taxes).

Be willing to share gains and benefits   As we’ve just said, firms and individuals have a chance to gain through their relationship. You could argue that it is easy to be generous with inherent wealth (although Dubai is not as well positioned as Saudi or Abu Dhabi in terms of natural oil wealth). But clearly both firms and individuals are allowed to benefit and gain from their efforts in Dubai, some very much so. And there are signs that even at the bottom end of the scale, workers are being treated better and seeing a fairer allocation of return for their efforts. (Some of the new “villages” being built for factory workers are apparently “amazing” according to people who had seen them).

Strong performance management  Sharing gains doesn’t mean being soft with your service providers. I heard a couple of stories about people who were pretty unceremoniously thrown out of the country. One gets the clear impression that “poor performance”, as we might define it in supplier terms, is not tolerated. I suspect that applies at both corporate and individual level as well. So firms or people who don’t work in the way the intelligent client desires don’t get too many second chances. Another pretty good learning for any outsourcing relationship.

Build relationships  Talking of relationships... they are a strong part of the Arabian culture of course, and that seems to apply both amongst Emiratees and with their key partners as well. The firms and individuals who succeed in the region do so in part because of their ability to build those relationships with the key people. And even in the biggest outsourcing relationship, we know that personal relationships still play an important part.

Develop provider commitment to your business  This builds on both the relationship aspect and the gain-sharing. Perhaps the comment that resonated  most strongly with me during the trip came from Asif Khan, Account Director at Tejari. (A Brit himself, he is building a very successful career for himself in Duabai).

“Many of the ex-pats are investing in Dubai now – both emotionally and financially” he said. “They believe in the place, they are committed to it long term, and they don’t just see themselves as visitors.”

And that might sum up what Dubai and its rulers have achieved. They’ve outsourced the operations of the place, to the masses of expatriates and their organisations. But they’ve done it such a manner that many of the “service providers” (as it were) are now committed to building a successful country for their own  intrinsic sake, rather than purely because of what their “contract” says they must do.  (Actually, I wonder how many British citizens feel that way about building the success of our own country? How many really feel they have a stake in the UK?)

In business terms then, that’s a bit like a key outsourced service provider pro-actively helping their client find new business opportunities, or identifying cost savings, because they see their own success and future tied up so closely with that of the client firm. Now we know that we’d love that to happen more often, but it is rare to see an outsource relationship truly working like that.

So, if my hypothesis is right, it’s quite remarkable to see it happening in Dubai, across an entire country.

(That’s the end for now of our posts from Dubai – thanks again to BravoSolution, Tejari, CIPS MENA and everyone who came to our session in Dubai. Guy Allen will be back there in June and November, and I’ll be back in October, for more Real World Sourcing).

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