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An interview with Bagedo IB founder and chairman Hani Bagedo

Over the past few years, we’ve seen a number of countries competing to become the world’s number one offshore outsourcing location. For decades, India was seen as the best candidate, boasting low costs, a growing economy and a large population with an increasing number of skilled workers.

Locations such as the Philippines and South Africa have also been favoured – not as effective perhaps on the cost front, but more appealing than India in terms of quality infrastructure. More recently, Mexico has been touted by some as the next big outsourcing market for information technology. The country is only a short flight away from the US, shares similar time zones and sports a large number of ICT professionals.

But what about Saudi Arabia? It’s hardly a high profile information technology outsourcing (ITO) location, yet Hani Bagedo, founder of e-commerce and software solutions company Bagedo IB, is adamant that Saudi Arabia is a unique and extremely viable location for companies looking to outsource their IT capabilities.

Sourcingfocus interviewed Bagedo to find out if Saudi Arabia could become the next big ITO market.

To what do you attribute the success of Saudi Arabia’s information technology market?

The globalization of the technology market has a strong effect on a country’s digital market. In Saudi Arabia specifically, the country has become more open to the world market, and the computer technology sector is the fastest growing channel because of its constant connection to the world.

The number of Saudis receiving a bachelor's degree or higher education has increased dramatically, especially after King Abdullah's scholarship program, which sends more than 400,000 Saudis to continue their higher education at the best universities around the world every year.

Consequently, Saudis are becoming more open to all the different cultures and markets around the world, and they bring a lot of experience and strong practices for enhancing e-marketing in the Saudi economy.

Moreover, a lot of international ecommerce companies know of the Saudi purchasing power and the importance of the Saudi Arabian market in the Gulf Cooperation Council (GCC). As a result, they have started targeting this market and expending resources to gain a better understanding of the market. This has caused it to expand and its influence has shaped Saudi consumers' minds and brought them into a new digital age.

How has Bagedo IB benefited from Saudi Arabia’s up-and-coming IT market?

IB recognized that, as per the most recent research, about 15.6 million people in Saudi Arabia use the internet. Roughly 3.9 million of the total population make online transactions, primarily ages 25 to 54. Moreover, the e-commerce growth rate increased by 34 per cent from 2013 to 2014. Research says that approximately 36 per cent of the people in Saudi Arabia now shop online.

Most online activities in terms of digital marketing were focused on Instagram or Pinterest, where people didn’t experience many issues. Bagedo IB noticed the gap in the Local SMEs and the online market, and is trying to provide emerging businesses with the whole e-commerce experience while retaining their identity. Bagedo IB provides them with the appropriate tools that can enhance their business at a competitive price while maintaining the international standards.

Given the proficiency of the country’s IT market, is Saudi Arabia likely to become an important hub for IT outsourcing in the near future?

The Saudi Arabia market is very important because it’s the largest and the most powerful country in MENA (Middle East and North Africa) in all sectors. The economy here is also very fertile and filled with strong opportunities for opening up new businesses, because the GPI per capita is 26,200 US dollars. Saudi Arabia is ranked among the top 50 countries for doing business.

Because of the strict regulations in the country and few entertainment sources, everything related to IT and internet is considered a means of entertainment for people of all ages. Moreover, technology has entered the government education system so all schools now depend on computers and the internet.

Compared to the other GCC countries, Saudi Arabia has the highest population. The opportunity to open a business here is huge and advantageous, as it is one of the richest multinational countries in the world, because of all the people from different countries living here. This wide diversity of cultures here has created a large and unique community.

What do clients need to consider before outsourcing to third parties in Saudi Arabia?

Any international company looking to enter the Saudi market must first consider which local company to partner with because of the complex culture and regulations.

These companies need to outsource their activities to local companies that can mold their strategies accordingly to the local consumer’s mind. We believe that is our competitive advantage; we provide professional services with the necessary local orientation and do the same when choosing our partner. That’s why we choose partners who know their local market.

Where does Bagedo IB stand on outsourcing?

Bagedo IB is a local company, but we outsource to partners who are taking our name and expanding around the world. Bagedo IB is focusing on launches in Oman, Kuwait, UK, USA and more. Our aim is to turn local small boutique brands into international brands help and various others.

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The Sodexo UK and Ireland chief executive, Debbie White, has called for the UK government to appoint an ‘inspector of ethics and transparency’ to regulate public-private outsourcing.

The news came as part of Sodexo’s public service pledge, which the company calls ‘an ethical manifesto for its contracts and conduct, for citizens and community’ intended to achieve ‘a fairer and better society.’

Sodexo also announced that it will be committing to independent client satisfaction reviews, unannounced audits and transparency with its revenues.

This drive for ethical outsourcing management and delivery has been welcomed by the National Outsourcing Association (NOA). The NOA has been working with both the private and the public sector on raising ethical standards within the outsourcing industry.

Sodexo is one of the most prominent private suppliers to the coalition government, supporting the public sector in matters of justice, defence, healthcare and education. The company employs over 17,000 individuals who are currently working on government contracts.

The pledge comes shortly after the UK government announced its own drive for transparency on the part of private companies that procure public sector contracts. The coalition made similar claims in 2010, but fell well short of their transparency aims.

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Read this next: Government Pledge on Public-Private Contract Transparency Falls Short

Recently renationalised Network Rail may be forced to sell its telecoms work by the Department for Transport (DfT).

Private sector providers such as O2, BT and Vodafone could begin providing Wi-Fi services and transmitting signalling information to train drivers, as part of plans brought about by the DfT to either outsource the rights through a long-term travel and transport contract or sell them off entirely.

A Network Rail source told the Independent that “the work could still be kept in-house, but one of the views at DfT is that Network Rail is too big – and they don’t think this is a core business.”

A final decision is expected this summer.

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Read this next: Could India Outsource Railway Operations?

The Local Government Association (LGA) has awarded a total of £390,000 to 27 councils in order to help them develop their use of technology.

This is part of the LGA’s Digital Experts programme, where the councils will learn from digital tools and approaches that have already been implemented successfully elsewhere.

Programmes include reducing digital exclusion, harnessing social media, enabling remote working for staff, and working more effectively with partners and community groups.

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Read this next: IT Staff at Scottish Borders Council Oppose Outsourcing

The Times of India has reported that the Macquarie Group, an Australian financial services provider, will decide between Infosys and Accenture for an IT outsourcing contract worth $150 million.

The five-year long contract will cover app development, testing and infrastructure management. Both companies have had dealings with the Australian giant in the past, where Infosys secured a $25 million BPO deal in 2012 and Accenture assisted the Group with core banking implementations.

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Off the back of recent research, the Information Commissioner's Office (ICO) has requested more transparency in outsourcing dealings between the public and private sector.

The ICO claims that there has been more pressure on the public sector to be open with information regarding outsourcing contracts, but that the same has not been the case with the third party suppliers involved.

ICO research has also found that a high percentage of the public want private firms to be subject to the same freedom of information requests that central and local government can be.

Steve Wood, Head of Policy at the ICO, said: ‘It isn’t a secret that the growth in outsourcing has led to a fall in transparency, as freedom of information laws haven’t always been able to follow the public pound. But this isn’t an insurmountable problem.

‘We’re calling on public authorities and contractors to consider transparency from an early stage, before a contract is even signed.'

Wood went on to suggest that the government may need to ‘step in’ to ensure that the public can access the information that ‘they should be entitled to.’

This news comes shortly after Computer Weekly revealed that the coalition government has fallen short of its pledge to be more transparent with public-private contracts, which it committed to in 2010.

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Read this next: Government Pledge on Public-Private Contract Transparency Falls Short

Confidential documents obtained by the Guardian have revealed that the EU is considering proposals to outsource Mediterranean migrant patrols offshore to North African countries.

The Italian government has put forward plans to reach agreements with nations such as Egypt and Tunisia, which would see EU funding and training of foreign navies, who would assume control of search-and-rescue missions for the tens of thousands of migrants who make the perilous Mediterranean crossing.

Speaking to the Guardian, William Spindler, a spokesman for the UN High Commissioner for Refugees said: “Given the situation in the Mediterranean, we need to explore all the available options. But it’s not a fully developed plan. Some countries are very reticent.”

The European Commission is set to produce a new policy blueprint on the migration issues facing the EU in May.

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Read this next: European Commission Awards Largest Ever Outsourcing Contract

Information technology staff at the Scottish Borders Council (SBC) have reacted furiously to the news that the SBC plans to outsource 80 of their roles.

The SBC is entering into a joint arrangement with Edinburgh’s City Council which will result in 80 public sector IT staff being outsourced to a supplier in October.

Over 60 of those staff, along with Unite union officials, orchestrated a mass meeting to oppose the decision.

Tony Trench, Unite’s regional industrial officer, said: ‘it’s not just IT staff at the council who should be worried about their jobs, IT staff at places like NHS Borders should also be concerned.

‘We disagree totally with plans to outsource any jobs and want to see the figures they have used to justify this.’

Another meeting will be held in the week beginning 23rd March 2015, accompanied by the launch of a petition to oppose the planned outsourcing.

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Read this next: Number of US Tech Firms Outsourcing IT Services Doubles since 2013

‘We'll publish every government contract worth over £25,000 in full – every clause, every performance measure, every penalty trigger.’

This was a pledge made by David Cameron on 22 February 2010, accompanied by a manifesto commitment and a clause in the coalition agreement between the Conservatives and the Liberal Democrats.

This complete public-private transparency was in part intended to aid ‘small businesses, charities and social enterprises’ in their competition to procure government services.

However, Computer Weekly has reported that, since that day, £5 billion worth of contracts involving public deals have not been published, and many of the published contracts have been stripped of all meaningful details.

Computer Weekly also reported that, shortly after Cameron made his pledge in 2010, the Cabinet Office sent a private letter to its suppliers giving them permission to redact all information that they considered confidential. Government and suppliers have since been accused of being overzealous with what information they remove from the contracts before they are published.

Charles Kenny, who has conducted research into government contracting transparency for the Global Center of Development, said: ‘It is easier to over-redact and avoid an angry confrontation than to under-redact and face very limited pressure from civil society.’

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The Deputy Mayor of Middlesbrough, Dave Budd, has fiercely criticised the “scaremongering” surrounding Middlesbrough Council’s decision to move key services out of authority control, with detractors accusing the Council of back-door privatisation.

The authority has agreed to embark upon a joint venture with the Norfolk County Council-owned Norse Commercial Services, in a move that could see services such as bin collections and school meals placed under the control of an external operator.

The council, which will retain 50% of any operating profit under the agreement, has said that its environmental services must save £3.6 million over the next three years. More than 1400 staff members could be transferred following the agreement.

The plan has met with criticism, with a group of independent councilors launching a petition calling for the Council to reconsider.

Attending an executive meeting of the council on Tuesday, Budd spoke out against the move, saying “I would hope that people would be considerate towards the workforce. There have been some lies told about this. Anyone in this room who has done this should examine their conscience.”

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Read this next: UK Public Wants to be Involved in Public Sector Outsourcing