Post by : Shweta
Saudi Arabia Eyes Major Shift in Outsourcing
Saudi Arabia is examining ways to bring private-sector jobs and services that are currently outsourced to providers abroad back to service providers inside the Kingdom. The initiative was outlined by Sultan Al-Musallam, secretary-general of the Federation of Saudi Chambers, during an interview with Asharq Business with Bloomberg on the sidelines of the AIM Congress in Dubai.
Outsourcing Covers Several Business Services
The areas under consideration extend well beyond traditional outsourcing. They include information technology, call centers, shared services, accounting, human resources, data analysis, operations and maintenance, and consultancy. Bringing more of these activities into Saudi Arabia could create employment opportunities across different skill levels while encouraging the transfer of knowledge and technology.
Why Saudi Arabia Wants More Services Locally
The proposed localization of outsourced activities could help Saudi companies develop stronger domestic capabilities and reduce dependence on overseas service providers. It could also support the growth of local companies capable of providing specialized business services inside the Kingdom. Saudi Arabia's official international trade statistics classify professional and management advisory services among its major categories of cross-border services.
Cost and Expertise Remain Key Challenges
The study is examining why Saudi companies currently choose foreign providers. Factors include service quality, lower costs, access to specialized expertise and faster implementation. It is also considering whether businesses would be prepared to shift outsourced functions to local providers within a period of 12 to 24 months.However, bringing these services back to Saudi Arabia could face challenges. Domestic expertise gaps, higher operating costs, possible service disruptions, data migration difficulties and the absence of local providers with comparable scale could make the transition complicated.
Read more : Saudi Envoy Meets EU Ambassador in Beirut
Saudi Private Sector Has a Bigger Economic Role
The outsourcing review comes as Saudi Arabia seeks to increase the role of the private sector in the national economy. Sultan Al-Musallam said the Kingdom is targeting a 65 percent private-sector contribution to GDP by 2030, while the contribution has reached approximately 52 percent, according to the report.The push also fits into Saudi Arabia's wider workforce-localization strategy. The Ministry of Human Resources and Social Development has continued introducing sector-specific localization requirements designed to increase the participation of Saudi nationals in private-sector employment.
Local Content Rules Could Boost Domestic Providers
Saudi Arabia is simultaneously strengthening local-content requirements in government procurement. The reported policy direction includes greater weighting for local content when evaluating administrative consultancy and information-technology service tenders.According to the report, a minimum 30 percent local-content requirement is planned for administrative consultancy tenders worth SR10 million or more from April 2027, with the threshold later extending to tenders worth SR5 million or more from January 2028.These measures could encourage businesses to develop stronger domestic service capabilities and create additional opportunities for Saudi-based technology, consulting and professional-services companies.
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