There are an increasing number of business opportunities available in Saudi Arabia, via the introduction of Vision 2030, and the National Transformation Program (NTP). The government’s initiatives to diversify the economy away from oil has created an increasing number of opportunities for foreign investment, making it a key target for businesses looking to expand.
Businesses expanding in Saudi have to make a decision on the need to expand their teams and the requirement of more staff to handle the new workload. However, due to economic and geographical uncertainty, many employers are looking to decrease their number of permanent employees.
With the current Saudi economic climate being affected by oil prices, businesses are finding ways to reduce costs, without reducing efficiency and productivity. The economic instability has caused cash flow issues for numerous businesses, and has led them to try and find viable and sustainable solutions. Recruitment of permanent staff has been one of the areas where businesses have cut back looking instead to outsourcing companies to provide the staff they need on a short term basis.
Recently, outsourcing, also called business process outsourcing (BPO) has become an increasingly popular move for many businesses. It allows them to increase efficiency and decrease costs. With the rapid development of communication and technological advancements, it has lowered the perceived risk, increased transparency and improved the process quality, whilst decreasing costs. According to a study by Terra, 73% of BPO clients believe that outsourcing has improved their processes, efficiency and effectiveness.
Business process outsourcing has become the chosen solution for many companies in Saudi. For these businesses there are departments of the business that are not in-house essentials. Therefore, outsourcing these processes to a specialist who can focus on these functions at a lower cost rather than hiring permanent employees is a viable solution.
Hiring permanent employees in Saudi Arabia is a costly and timely process. With the introduction of Nitaqat in 2016 it now means the hiring process can take months to complete; from an expat leaving their home country to having them officially start working in Saudi Arabia. There are also many costs associated with getting the visa, accommodation, transport and other necessities organized for the employee.
According to a study by Deloitte, companies favour BPO for many reasons. The most common being, 59% used BPO as a cost cutting tool, 57% used BPO as a means to focus on their core business and 47% used BPO as a solution to capacity issues. Other reasons included, to enhance service quality, BPO was critical to the business needs and access to intellectual capacity.
With the constant development of technology and innovation, BPO services are continually improving. Technological advancements that improve the BPO service include cloud computing and robotic and cognitive automation. Innovation is being used by outsource providers to increase the level of quality (58%), lower cost of delivery (44%) and improve user experience (38%). With minor reasons being to increase client (31%) and provider (29%) revenue growth, decrease transaction time (21%), and deliver new capabilities (20%).
Businesses are also finding that using a BPO provider can reduce company liability in relation to hiring permanent employees. As the BPO provider is responsible for their outsourced employees, it is their responsibility to ensure that they are compliant. This removes the responsibility from the business and allows them to focus on their core business.
For businesses in Saudi Arabia, using BPO is proving to be a favorable solution to combat cost and recruitment issues; all whilst improving efficiency and effectiveness of their core business. The trends for the BPO industry are increasing, proving that more businesses are considering BPO over hiring permanent employees. Research shows that finance (36%), HR (32%) and IT (31%) show the highest opportunities for growth.