Dubai Is Outsourcing: Can Kerala Be its Back Office?

C. Sarat Chandran

The United Arab Emirates, and Dubai in particular, has been on a scorching pace of growth over the past 30 years. Much of that growth has come through the sweat and toil of the 2.5 million Malayalees living there. At the Arab Strategy Forum held recently in Dubai, Fareed Zakaria, the distinguished journalist and columnist, observed that “this city with all its grandeur is essentially built by immigrant population.” I imagine that he had the enterprising and highly productive workforce of Kerala in mind.

The forum was a high-profile affair with speakers such as the former President Bill Clinton, the New York Times columnist Thomas Friedman and Amartya Sen, the distinguished economist and Nobel laureate. But what struck me was the spirit of Kerala seen everywhere. In fact, the comment I heard on the sidelines of the conference is that “the best place to live in Kerala is Dubai!”

At the plush Madinat Jumeirah, the backroom boys of the convention were all Malayalees. So were the designers and decorators and also many of the reporters who covered the event on behalf of the leading Arab newspapers. The fact is that Kerala has a luminous brand equity in Dubai and perhaps much of the Middle East.


Skydiving in Dubai

However, the region from Abu Dhabi to Amman is currently facing a severe economic uncertainty following the steep fall in crude oil prices. Although this largely affects the gulf region, the impact on Kerala should be considerable. Last year, overseas Malayalees sent home a whopping $20 billion, and much of that came from the Malayalee workers employed in the gulf region. Is that massive flow of petro-dollars about to dry up? A significant number of these workers may also be forced to return home. How will Kerala cope with such a gathering crisis?

Peter Drucker, the celebrated management guru, once observed that “every crisis brings up its own solutions.” The gulf region is now on a transformational process and is re-inventing itself as sophisticated, technology savvy, digital economies. In fact, the UAE and Dubai in particular are now ripe for a digital revolution. Dubai is an economic powerhouse today aggressively driven by forces of globalisation, high technology and upmarket products and services -- luxury villas, seaside resorts, shopping malls, fashion shows and flashy brands. The world’s leading investment banks, multinationals and telecommunication giants are now converging in Dubai. Dubai is now billed as the next Singapore and the first “tiger” economy in the Middle East. There is, however, a side effect to all these relentless pace of growth. Dubai’s economy is getting overheated and in that overheating, costs are rising disproportionately. Remember, Dubai has no oil, its income is generated entirely through trade and services, and both are inflationary.

That should drive Dubai to think of outsourcing many of the services to a less expensive offshore destination, where it should create jobs – accounting, payrolls, hotel reservations, telemarketing, help desk etc. This is Kerala’s chance and we need to seize this opportunity.


Technopark Thiruvananthapuram

A major element in such outsourcing decision is familiarity with the chosen partner. It is here that Kerala might score over Bangalore and Chennai. However, almost all of the over $10 million of outsourcing contracts the UAE extended to India in 2014 has gone Bangalore, Chennai and Mumbai. Why hasn’t this business come to the Technoparks and Info Parks in Kerala? That is because familiarity and closeness are not enough to get such massive outsourcing projects. Dependability will be seen as an even more important criterion. Dubai will need to be assured that there will be no disruption of work and that the investments Dubai makes here will be justified in terms of both productivity and continuity. In a way we need to assure them that Malayalees here are as good as the Malayalees in Dubai. That is a challenge we should accept if we have to find a solution to our growing unemployment problem.

The opportunities don’t end there. If Kerala can be the back office to Dubai, Dubai can also be the front office to Kerala. Dubai is today on the crossroads of international marketing and more and more countries are opening trade centers there to showcase their product range. Australia has just opened one. Thailand and Malaysia are planning theirs. Dubai is indeed the best place to exhibit Kerala’s products to the world at large: our spices, cashew, handloom and the exotic range of handicrafts. However, the biggest gain for Kerala will be in terms of tourism. As Thomas Friedman observed at the Arab Strategy Forum, “Dubai attracts an incredible six million tourists every year just to see the sands here.” That is the result of high-end marketing.

Kerala with so much to offer attracts less than a million foreign tourists a year. Taking a leaf out of Dubai’s marketing campaign, Kerala should be able to persuade two or three million of those foreigners to visit the state and that should pump in an extra 150 billion rupees to Kerala’s economy and create many more jobs.

There are many more hidden possibilities to be built on the equation between Kerala and Dubai. Whatever be the criticism on globalisation, the linkages between these two regions have been a story of success in the second half of the twentieth century. But the potential is far greater than the performance, and this is the time to leverage it.

(Photo credit: photo Q.Thang via / CC BY-NC-SA beinnmhor via / CC BY-NC !efatima via / CC BY-NC)