Outsourcing in Saudi Arabia: What Banks and Institutions Should Know

Outsourcing in Saudi Arabia is a growing business practice. When implemented properly, banks and finance institutions can reap the full rewards of third-party support.

There is a lot going on right now in Saudi Arabia.

Thanks to Vision 2030, the country is modernizing rapidly, and many industries - including banking and finance - are primed to benefit.

The financial services sector is the “lynchpin” of Vision 2030, according to Dubai-based publication Gulf Business.

A robust banking and finance sector is seen as Crown Prince Mohammed bin Salman’s “economic blueprint to drive growth across non-oil sectors,” and such ambitious development requires all hands on deck.

A combination of homegrown Saudi talent and foreign expertise is what’s needed to fulfill this vision, and that’s where outsourcing comes in.

In fact, the Kingdom is becoming a “hot spot” for outsourcing, with total spending on outsourced services to reach US $5.7 billion by the end of 2027, up from US $2.3 billion in 2018.

What Outsourcing in Saudi Arabia Brings to Banks & Institutions

  • Access specialized expertise: Taking the company to the next level often requires outside experience. Whether it’s digitization or customer service, Saudi banks and institutions m find it more practical to partner with true specialists in a field.
  • Improved efficiency: Outsourced experts are focused on the areas Saudi firms need help with. Naturally, the vendor will develop tools and methods to drive greater process efficiency.
  • Concentrate on core competencies: Not every bank or institution is the best at everything, nor do they need to be. It’s better to invest resources internally in areas that bring the firm the most benefit. Let others do everything else.
  • Cut costs: Outsourcing solutions providers generally perform the workloads at a lower cost. Operating and overhead expenses add up quickly, so one way banks  lower and control costs is by working with a vendor.
  • Scale: by partnering with a banking and financial services outsourcing provider, the firm focuses on what it does best and grows the business faster than it would if it were caught up in all the admin or non-revenue generating work.

Banking Processes to Outsource

While there are in fact many others areas Saudi banks and finance institutions can benefit from with outsourcing, here are a few examples:

1. IT Services

This can include IT infrastructure management, software development, data maintenance and support, network management, cybersecurity, and help desk services.

Cybersecurity is a particular area of interest. 56% of Saudi organizations were targeted in ransomware attacks in 2021.

2. Customer Service

Banks can outsource customer services  functions, including call centers, phone and email communication, and live chat. Outsourced customer service allows banks to provide round-the-clock support and handle high call volumes efficiently.

3. Payment Processing

Credit card processing, transaction settlements, fraud detection and prevention can be all done by third party specialists. Banks can leverage specialized expertise and scalable payment platforms.

4. Back-Office Processing

Back-office functions like data entry, document processing, account reconciliation, and record keeping can be outsourced to specialized service providers like Empaxis. We support Saudi banks and institutions for their outsourced back-office needs.

5. Compliance and Regulatory Reporting

Regulatory reporting, monitoring and surveillance, anti-money laundering (AML) checks, and know-your-customer (KYC) due diligence can be all done with a qualified third party. As part of compliance, Saudi businesses must submit their ZATCA e-invoices to the government. Empaxis helps automate ZATCA invoice processes.

6. HR and Payroll

Banks can outsource human resources (HR) functions, such as payroll processing, employee benefits administration, recruitment, and training.

7. Collections and Debt Recovery

Managing overdue loans, negotiating repayment plans, and taking legal action when necessary are some of the activities a professional third party can take care of.

Saudi Banks Can Enjoy the Flexibility Working with Third-Parties

For a long time, banks in Saudi Arabia have performed their routine and mundane workflows in house.

And if they do outsource, in many cases the banks import the talent from abroad to be physically present in their offices.

While it's ok to bring in foreign talent, outsourcing in itself provides flexibility to Saudi firms if they choose a different approach.

An outsourced model makes it possible to hire staff remotely and avoid the costs of hiring staff and bringing them into a physical office.

Security is often a question for banks, and any reputable outsourcing services provider should know that. For those reasons, the vendor must be audited, compliant with regulations, and fully transparent about everything they do. If vendors want to win new business and outclass their peers, it is in their best interest to put clients' needs first.

Because it works so well, the world's largest and most reputable banking and financial institutions all follow an outsourced, offshored model. Accordingly, the work is done efficiently, taking place in secure facilities over secure connections.

Similarly, the outsourced partner must be flexible with clients' requirements. If the banks or institutions want their talent to be physically present in office or remote (or a mix of both), they should partner with those organizations.

Empaxis, as an example, partners with prominent Saudi banks and institutions to provide outsourced talent, whether they are to be in Saudi Arabia or working remotely from our India-based facilities

Many Opportunities Ahead

Outsourcing in Saudi Arabia is indeed a growing trend as the nation and its industries modernize at a rapid pace. The banking and financial services sector is crucial to this development.

In order for firms to reach their full potential and simultaneously follow suit wit the broader goals of Vision 2030, Saudi firms must have the right mix of people and technology, leveraging talent both locally and globally to get things done.

Outsourcing is one of those mechanisms for banks and institutions to leverage the expertise they need quickly, affordably, and effectively.

And Empaxis is available to assist Saudi banks and institutions in their path to greater operational efficiency.

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