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The outsourcing industry is rapidly growing in Saudi Arabia and has fundamentally changed how businesses operate. Companies prefer to outsource non-core tasks and focus on their core competencies. This approach is useful and helps companies grow, however, to get the most out of outsourcing, companies need to consider how it can be used strategically rather than tactically. Tactical outsourcing is problem solving based, for example, a lack of capacity in the finance department may force a company to outsource their tax and zakat reporting to fill the capacity gap. On the other hand, strategic outsourcing focuses on aligning outsourcing with the company’s long term objectives. It assists companies in achieving a competitive advantage and repositioning themselves in the market. It also allows companies to spend more time on core activities that are crucial to success and that can’t be outsourced.
Saudi Arabia is the second most popular destination for outsourcing and shared service (OSS) providers in the MENA region. The Saudi OSS industry is the fastest growing in the region. Approximately a quarter of all SSCs are based in Saudi and the majority of outsourcing providers in the MENA region are too.
Companies are looking for ways to increase productivity and more are turning to outsourcing companies in Saudi as a solution.
Outsourcing lets small to medium-sized businesses have access to experts with less risk to them in their early stages of growth. Another shift that we are seeing is that traditionally larger companies would not need to use outsourcing services, however, this is changing as they explore new markets and sectors. Outsourcing gives them access to experts without the need to take on permanent staff.
According to the survey, the total working-age population's unemployment rate (Saudis and non-Saudis 15 years of age and older) decreased from 7.4% in the last quarter of 2020 to 6.5% in the first quarter of 2021. Furthermore, the Saudi unemployment rate (males and females 15 years and above) decreased to 11.7% in the first quarter of 2021, from 12.6% in the fourth quarter of 2020. Saudi Arabia's total unemployment rate is 0.1% lower than in the same period last year, which is below its pre-COVID level. The report further shows that during the first quarter of 2021, the unemployment rate for the total male population of Saudi Arabia dropped to 3.7%, compared to 4.0% in the previous quarter. Overall, the female unemployment rate declined from 20.2% in the fourth quarter of 2020 to 16.1% in the first quarter of 2021. According to Labor Force Survey estimates, the unemployment rate for Saudi males was 7.2% in the first quarter of 2021, compared to 7.1% in the fourth quarter of 2020, while the unemployment rate for Saudi females was 21.2% in the first quarter of 2021, compared to 24.4% in the previous quarter. The overall Saudi unemployment rate dropped to 11.7% in the first quarter of 2021, from 12.6% in 2020 Q4. It is now below pre-pandemic levels.
Business process outsourcing is typically categorized into back office outsourcing and front office outsourcing. Back office outsourcing includes internal business functions such as human resources, finance and accounting. It provides organizations with the services to help manage tasks like data entry,data management, surveys, payment processing, quality assurance and accounting support. Front office outsourcing however, deals with customer related interactions such as telemarketing, customer service centres, help desks and inbound or outbound sales. In addition, other outsourcing segments within the global industry can include business services, energy, technology, healthcare and pharmaceuticals, retail, travel and transport, and telecom and media.