Dubai's Time Is Now: A City Ripe For Shared Services And BPO

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Posted: 11/24/2015

As part of any global market strategy, multinationals are identifying one key geography as either EMEA (Europe, Middle East and Africa) or AMENA (Asia, Middle East, and North Africa). However you slice and dice it, an increasingly interesting part of this sector is the Middle East – a growing and strategic market for global businesses, so making the right decisions on how to support it is crucial.

PepsiCo’s Global Financial Shared Services (GFSS) model is maturing rapidly and the AMENA component forms an important element in its strategy.

To better understand this strategy, it's important to get the context and chronology of PepsiCo's Middle East operations right. Not only is AMENA a crucial geographic sector, but MENA is the fulcrum, with Dubai home to the regional HQ and Finance leadership, including governance.

Prior to 2010, the geography included several captive shared services centers – each having a relevant local mandate. "Synergistic solutions were not on the agenda at that time", explains Tony Breen, Senior Director for PepsiCo’s Business Shared Services, Asia, Middle East & Africa.

That all changed five years ago when a broad review of the regional strategy led to a new vision which included a strategic BPO element. This was further corroborated as part of a global review of Finance strategy. In both cases, BPO came out as a key plank in the redefined, optimized Finance services model.

Today, for AMENA, close to 100% of transactional Finance activities are outsourced. The driver for outsourcing was not cost, however.

"In a company such as ours, given the disciplines and improvements we had in place, we were already operating a fairly cost-advantaged model," Tony explains. "So, to a great extent, labor arbitrage – the stereotypical outsourcing advantage – was not available in AMENA. BPO & Shared Services within the Middle East is really about what might be called pure shared services – meaning harmonization and optimization of processes".

With the Middle East element of EMEA or AMEA increasing in relevance, solving the service support challenge is going to be high on leaders’ agendas in the next few years.

This is particularly relevant when targeting well-defined outputs, says Tony. "The value proposition our model is based on was being able to draw a link between shared services and the real impact it had on profit and loss. We were focused on delivering value at a very granular level, the kind that would convince a CFO or Controller, so our focus was always on linking the value derived from our processes directly to the P&L reporting lines or the balance sheet. It's the impact we make that argued our case."

In 2010, while Dubai was already fairly modernized as far as business infrastructure was concerned, there was not enough visible strategic intent to warrant confidence that it could support an emerging shared services market. As a result, companies like PepsiCo chose to go with nearshore options.

Nearshoring Made Easy Through Partnership

While many local companies are still wary of outsourcing, and certainly wary of outsourcing to another country, PepsiCo simply built upon the early foundation pioneered in India where BPO was already in vogue from 2010. As a result, regional management was easily persuaded to put its faith in a BPO partnership with a proven global provider.

Today, PepsiCo's AMENA transactional finance processes are supported from India (Chennai), China (Dalian), and Egypt (Cairo). These three locations are third-party owned and run and the partnership with the provider has proved enormously productive, says Tony.

The three-pronged BPO approach makes the most of regional talent while delivering to PepsiCo’s customers’ expectations. "For India it makes sense to service from India, just as China services China best," explains Tony. "For our Middle Eastern markets, we chose to work with a nearshore center in Cairo, which supports our Arabic-language operations in Egypt as well as Jordan, Saudi Arabia, and the United Arab Emirates. All English language services are supported from Chennai".

Moving to Cairo was somewhat of a risk five years ago, as there were no F&A BPO centers in Egypt at the time. In fact, the Cairo BPO center is the first Arabic-speaking F&A BPO operation in the Middle East. "Today, the Arabic language services center in Cairo plays a key role in delivering customer satisfaction across our region" explains Tony.

Shifting Up the Value Curve

With transactional processes and services well in place and delivering to expectations, Tony is now turning his attention to additional value-levers like data analytics and process optimization. Many shared services are already gearing themselves up to include this capability within their scope.

"There is lots of opportunity around data and business intelligence that we are currently assessing. Certainly, we've had a lot of baseline analytics from our BPO partner over the last five years but the value proposition of ‘analytics’ has been given an enormous boost over the last year and this is what we're trying to figure out right now. It makes sense for us to build this capability up internally first, but we are also taking several external perspectives to come up with the best solution.

Additionally, we look routinely at how we can further fine tune and optimize process agility and impact. This process focus now shapes our Shared Services delivery model.

The Market is Ripe for BPOs

Dubai’s rise as a world-class business location has been fast. For example, Dubai's International Finance Center [DIFC] is an example of a world-class financial center leading the way. While the general perception has long been that the local play for outsourcing is not as successful as it could be, the tide is changing. With the Middle East element of EMEA or AMEA increasing in relevance, solving the service support challenge is going to be high on leaders’ agendas in the next few years.

Certainly, there is no shortage of talent.

Tony sees plenty of highly skilled and trained individuals, both local Emiratis as well as from other neighboring countries, attracted by the opportunities of a growing market.

With the Middle East element of EMEA or AMEA increasing in relevance, solving the service support challenge is going to be high on leaders’ agendas in the next few years.

"Maybe it is time for the BPO industry to consider standing up a center in Dubai, and effectively opening the door to more such activity," he says. "There are plenty of incentives to be had and lots of talent to leverage."

What’s certain is that Dubai stands at the center of any organization’s Middle East strategy, and, with more and greater investments taking place, it may well emerge as a winning and value-adding location strategy.

And if the decision around sourcing was being made today instead of five years ago, it's entirely feasible that the company might have located those operations in Dubai itself, says Tony. "As it was, Dubai simply wasn't ready yet".

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Posted: 11/24/2015


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