Job outsourcing is a contractual arrangement (ILO, 2015) involving an individual and an employer, or an individual, an intermediary, and an employer to which they provide their services.
Job outsourcing is one of the richest trends in the workforce across the world. It has undergone seismic changes and has been a sizable beneficiary of the great resignation as individuals increasingly seek work-life balance, control over work, financial benefits, time off in between projects, and more (Movemeon, 2023).
Initially, outsourcing targeted basic or non-core functions (e.g., procurement). However, it is no longer in the province of non-core functions considering the evolution of the workforce and the workplace or what is so-called the future of work alongside talent scarcity, technological disruption, and other factors. The outsourcing of sophisticated or core jobs is expected to increase as non-core jobs are being digitized.
In a nutshell, outsourcing covers three clusters of jobs: knowledge process outsourcing (e.g., management consulting), support process outsourcing (e.g., HR management), and digital process outsourcing (e.g., App development).
What is the opportunity that lies in outsourcing, and where does it primarily sit across the MENA region serving larger and more mature markets?
Lebanon
+ Highly qualified, multilingual, and cost-competitive workforce
– Political and economic risks
Jordan
+ Highly qualified workforce, attractive market environment, advanced telecom infrastructure, and favorable regulatory landscape
– Absence of data protection laws
Egypt
+ Cost-competitive workforce, attractive market environment, strong digital, and physical infrastructure
– Limited government involvement in facilitating the setup of outsourcing businesses
The UAE comes as the first choice among countries asking and paying for outsourced jobs. Ranked 16th globally for ease of doing business[1] (World Bank, 2020), the UAE is now the second-largest economy in the Arab world, with a GDP of around USD 360 billion in 2020 (Al Bawaba, 2023). The total spending by UAE-based organizations on outsourcing services from local and offshore providers was estimated at over USD 4.8 billion in 2018 and is expected to reach USD 6.8 billion in 2023, with a compound annual growth rate of approximately 7% (BCG, 2023).
More broadly, labor market dynamics are changing: new jobs, disappearing ones, and others transformed. This is mainly driven by the accelerated digital transformation, the talent pool insufficiency, the rise of the gig economy since the Covid-19 pandemic, and the surge in highly skilled or well-rounded individuals.
Organizations are more and more convinced that outsourcing can help them reduce costs, focus on core functions, and access a contingent talent pool to bridge both capacity and capability gaps.
[1] The ease of doing business makes it easier for service providers/freelancers to work with the UAE with limited complications regarding administrative paperwork, legislation, taxes, etc.
Saudi Arabia and Qatar started to follow suit in their growing reliance on job outsourcing within the boundaries of their legal frameworks, their ease of doing business, and other criteria.
With the rise of job outsourcing comes increased awareness about the drawbacks of outsourcing that are summarized hereunder:
Traditionally, organizations did not opt for outsourcing because of the risk of losing employer control. This fear remains in many instances. Along the same lines lies the risk of sub-par quality as the freelancer’s involvement is inorganic and away from organizations’ skills development techniques and initiatives.
Additionally, some entities are still reluctant to outsource due to concerns about the confidentiality and security of data, especially in sectors such as the public sector and financial services.
Furthermore, as offshore outsourcing grows, organizations worry about the differences in professional standards that are adopted in-country; and the extent to which freelancers are aware of and know those requirements/standards.
Use Case
The future of outsourcing in management consulting is a subset of this study, and it is of interest as it sits at the heart of Gravitas’s raison d’être being the do-tank of the management consulting industry in Europe, Africa, and the Middle East.
Here are four key observations related to how management consulting is affected by job outsourcing.
- Recent years witnessed an upsurge in management consultants quitting the big names to seek freelancing. This has resulted in a high-quality market with deep expertise. Around the world, 40% of management consulting freelancers are ex-McKinsey (Movemeon, 2023).
- Typically, management consultants leave at a managerial level gaining, as such, both industry and consulting experience that they are increasingly offering on a project basis (Source Market Research, 2016).
- While freelance compensation tends to remain flat, it is still higher than that of permanent management consultants. It has recently spiked because of high utilization combined with a talent shortage.
- Platforms are nowadays one of the most common places to find projects alongside personal networks.
If you are interested in freelancing as a management consultant, email us: joinus@teamgravitas.com
Sources
https://www.bcg.com/publications/2023/future-of-outsourcing-mena-talent-map
https://www.ilo.org/wcmsp5/groups/public/—dgreports/—stat/documents/meetingdocument/wcms_636045.pdf
https://hbr.org/2022/06/the-great-resignation-stems-from-a-great-exploration
