Monday, October 10, 2005

DOZ - Dubai Outsourcing Zone
Communication Costs

Among the search results that brought a visitor to our humble blog today: failure of DOZ in Dubai - Recherche Google.

What does the searcher know that we don't know?

Among the results that Recherche Google offered up (besides something by Emirates Economist) was this Reuters story from nearly a year ago. Some quotes (emphasis added):

Dubai, the UAE's trading centre, is setting up the Dubai Outsourcing Zone (DOZ) in 2005 to lure businesses away from high-cost Western countries. Luxury lifestyles, modern infrastructure, a multinational talent pool and low taxes all add to the UAE's lustre compared to outsourcing kingpin India.

But many businesses doubt whether Dubai will be able to compete with India or cheaper Middle East countries when it comes to costs, especially telecommunications.
. . .
Dubai is attracting thousands of skilled workers from less affluent countries in Asia and the Middle East, lured by the promise of higher wages and a comfortable way of life.

Kito de Boer, managing director of McKinsey & Co. Middle East, said his company considered Dubai as a destination for its own outsourcing facility that employs 200 people in India. But Dubai's competitive advantage of a better lifestyle paled before telecommunication costs that are 60 per cent higher than India's, he said. "We did a cost comparison-India versus Dubai," de Boer said. "Dubai lost out on telecommunications costs."

IT giant Oracle Corp. said high telecommunications costs were blocking any plans to expand its 35-member Middle East and Africa call centre in Dubai. Husam Dajani, Oracle's senior vice president for Middle East and Africa, said it was cheaper to telephone neighbouring Gulf state Qatar from Ireland than from Dubai. "The environment in Dubai is very competitive," he said. "Income is tax free which means we can save substantially on wages... but telecommunications costs are our main inhibitor."

In mid-2004, the UAE said it would end the monopoly of Etisalat, the majority state-owned telecommunications provider, paving the way for cheaper rates. But the government did not set a timetable, or specify which services would be deregulated, which is likely to dim the prospects of the proposed Dubai Outsourcing Zone. The state-owned zone will be tax free and offer foreign investors full ownership.
Nearly one year later we know what telecom competition means in the UAE. For now there will be no price competition allowed. As yet the second player has yet even to open its doors.

Searching on "failure of DOZ" appears to reveal some insight. Is this one more instance of Dubai and Abu Dhabi finding themselves with opposing goals?



Blogger secretdubai said...

Oh - that is sweet, it has quite made my night.

The UAE loses out because of the sheer, anti-competitive GREED of Etisalat.

1:37 AM  
Blogger Keefieboy said...

I would have thought that DOZ could have its own telecoms infrastructure a la TECOM? In which case they could set prices that would be attractive to call centres...

7:50 AM  

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