The GCC should transform itself into an offshore services hub to reduce the region's dependence on dwindling oil reserves and generate more jobs, according to a human resources consultancy.
The offshoring trend has propelled several countries onto a high growth path. One of them is India, whose gross domestic product (GDP) has grown at twice the global rate over the past 20 years, said Vikas Verma, Hewitt Associates' practice leader for Asia Pacific.
"GCC too can increase its resilience through a larger services contribution by transforming into a strategic offshoring hub. Global firms are increasingly embracing the concept of multi-location delivery, giving the GCC an opportunity to play the role of a strategic offshoring hub," he said at a recent Datamatix forum in Dubai.
The Gulf has an edge over other regions since it is well positioned with a young workforce, Verma said, adding that it also has a strong economy, stable politics and well developed financial and telecom infrastructure.
"Offshoring may be a potential solution for the region to reduce its reliance on its limited oil reserves, thus making the region more resilient to potential shocks and also absorbing a large portion of the unemployed domestic population," Verma said.
By establishing the Dubai Outsource Zone (DOZ), the UAE has laid the groundwork to set the region up as a services hub. Home to companies that provide technology and business process outsourcing services, the DOZ aims to be the leading outsourcing destination in the Middle East and North Africa.
The research department of the Dubai Chamber of Commerce and Industry (DCCI) noted that oil's share of the UAE's GDP has decreased.
"Over the past 10 years, the UAE has more then doubled its GDP, totalling Dh358 billion in 2005. Conversely, oil's share of GDP has been diminishing during this period. Non-oil GDP has been the main driver of the UAE economy - its share of total GDP was 73 per cent in 2005," it said.
However, Verma said the region is still facing some drawbacks as it lacks talent and skills in the services sector and the composition of its GDP remains in stark contrast to that of a developed economy.
"With oil being the predominant sector of the GCC economy, the domestic population is yet to orient itself and develop the appropriate skills required for a knowledge economy. Expatriates form over one third of GCC residents (with 80 per cent of residents in Qatar and the UAE being non-nationals)," Verma said.
He said the number of jobs created by the manufacturing sector is significantly lower in comparison to the service sector, while inadequate skills in the domestic workforce and a large expatriate population render a large local population unemployed. ( Gulf )