Injazat Data Systems tackles IT outsourcing success drivers at GITEX Technology Week Global Conference 2007
CEO Ibrahim Mohamed Lari discusses the key role of local outsourcing in boosting the UAE's economic growth
During its participation at GITEX Technology Week Global Conference 2007 at the Dubai World Trade Centre, Injazat Data Systems, the region’s leading Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) company, announced that Outsourcing services success is driven by local professionals’ development. As the leading figure in the UAE IT Outsourcing industry, Ibrahim Mohamed Lari, CEO, Injazat Data Systems shared his insights on the IT Outsourcing success drivers in a panel discussion titled 'Captive or Outsourced – Business Processes on the Cusp'.
GITEX Technology Week Global Conference 2007 is a series of high-end conferences, panel discussions and networking meetings involving some of the most prominent IT personalities and organizations in the world. During the panel session, Lari emphasised on the advantages that organisations gain through IT Outsourcing and the benefits of core competencies by outsourcing all or part of their IT operations.
"The region’s fast-track economy has positioned outsourcing as a strategic competitive tool for many organisations. Staying ahead of competition has always been the name of the game, and one of the most efficient ways to achieve this is to focus quality internal resources on the delivery of quality products or services, and to delegate non-core functions to a capable partner" said Lari, "Outsourcing non-core functions enables organizations to free up resources for more productive core duties, and also ensures better control of operational costs.” added Lari.
Other significant benefits of IT outsourcing that were highlighted during the discussion included enhanced speed to market, better control over security issues, and ensuring a more dynamic and flexible organizational structure that allows organizations to keep their options open for any growth opportunity.
"When choosing an outsourcing partner, proximity and local resources become the key success drivers. I believe that IT Outsourcing is about delivering services while pioneering initiatives that seek to enhance the IT expertise of UAE professionals especially UAE nationals." said Lari.
Injazat Data Systems is considered as the main contributor to the sudden upsurge of the IT services industry in the UAE. In its inaugural year in 2005, Injazat Data Systems struck a deal valued at over AED 400 million with the Abu Dhabi Water and Electricity Authority, a landmark partnership that helped the UAE's IT outsourcing sector to achieve a phenomenal 747 per cent growth.
According to market intelligence firm IDC, the IT outsourcing industry has continued to improve remarkably and is poised for a robust 16 per cent growth in 2007, topping USD 94.54 million or almost AED 350 million, compared to USD 81.27 million or about AED 299 million in 2006. The outsourcing sector's strong performance will be a significant contributor to the steady growth of the overall IT services expenditure in the UAE, which is expected to increase by 9.6 per cent in 2007 to USD 556 million or about AED 2 billion, while it will have a compound annual growth rate of 7.6 percent during the period 2006-2011.
Despite being in operation for only two years, Injazat Data Systems has transformed the industry and became one of the three biggest players in the UAE's IT services market in just 2 years. IDC has reported that Injazat Data Systems achieved a strong year-on-year growth of 68 per cent in 2006 after dominating three market segments:
Information System Outsourcing Foundation Market, Hosted Application Management Foundation Market and Information System Consulting Foundation Market. Injazat Data Systems also came third in the Network and Desktop Outsourcing Foundation Market , and fourth in the Housing Infrastructure Foundation Market.
Established in early 2005, Injazat Data Systems is an Abu Dhabi-based joint venture between Mubadala Development Company, a wholly owned investment vehicle of the government of the emirate of Abu Dhabi; and Electronic Data Systems (EDS), a global IT and business process services giant.
Strong credit growth persists and private deposits bounce back after 3 months of anemic growth… Fall in reserves confirms the turnaround in speculative flows
In its latest economic brief on monetary developments, National Bank of Kuwait (NBK) reported that the expansion in the money supply accelerated in July, with M2 rising KD 428 million (2.4%) following a more moderate expansion of KD 161 million in June. This allowed the year-on-year increase to continue accelerating to 34.5%. Money supply was largely affected by the continued streak of strong credit growth as well as a record rise in banks’ foreign assets. However, the increase in money was partly tempered by an outflow of funds as evidenced by a drop in the Central Bank of Kuwait’s (CBK) foreign assets which was sensed in June and accelerated this month as more and more investors moved to close out speculative positions over the exchange rate. Meanwhile, private deposits witnessed a surge in growth following a three month slump, registering a 2.7% increase in July and 23.3% over the previous 12 months.
During this month, the CBK also proceeded to revalue the dinar against the US dollar on two occasions. On July 12 the USD/KD rate was raised by 0.4%. A larger 1.7% increase was implemented on July 25. By early August, the CBK began repricing the rate on a daily basis as it had done prior to 2003 when the dollar peg was adopted.
NBK noted that credit to residents grew KD 403 million (2.3%) in July, compared with KD 650 million in June. Despite coming below the record growth experienced in the previous four months, the annual increase in credit expansion is well ahead of the 24.9% registered a year ago, and approaching the highs witnessed in the mid 90s. In short, credit is currently witnessing explosive growth, with the increase since the start of the year (KD 3.2 billion) already surpassing total growth in the past year.
In July, the real estate sector and non-bank financial institutions accounted for the bulk of credit growth, with increases amounting to KD 176 million and KD 169 million, respectively. Personal facilities dropped KD 32 million following a sharp increase in June, mostly reflecting a drop in facilities for the purchase of securities though other personal loans also showed weakness. Meanwhile, remaining credit categories witnessed minor changes.
NBK also mentioned that deposit growth this month was in line with credit growth. For the previous three months, credit growth had outpaced private deposits by a whopping KD 1.47 billion, driving many banks to seek foreign sources of funding to fill the gap. However, lured by aggressive pricing, deposits rose KD 458 million this month, well ahead of the average growth set in the previous three of KD 139 million. Almost half the July increase was in local currency, which experienced a shift from shorter term to higher term deposits. Specifically, time deposits in KD rose KD 404 million while sight dropped KD 190 million. Meanwhile, the growth in foreign currency deposits, at KD 235 million, comes following seven months of consecutive declines, adding up to a KD 1 billion fall.
Foreign assets of local banks set the largest increase on record, rising KD 836 million in July. Meanwhile, foreign liabilities rise KD 133 million, a mark which stands well below the average growth so far this year. This helped local banks redress their position vis-à-vis non-residents, regaining their historical net creditor status to the tune of KD 350 million after four months of carrying a net debtor position. At the same time, CBK foreign assets maintained their decline for a second month, falling by KD 375 million in July on continued outflows from the system. All in all, NFAs in the system registered a KD 326 million rise.
The rise in credit facilities and foreign assets lifted total assets of local banks KD 656 million to reach KD 32.4 billion at the end of July. The growth in total assets came despite a large drop in liquid assets (net of local interbank placements) of KD 395 million. This decline came as the CBK maintained measures to squeeze out currency speculators which resulted in a drop in bank holdings of CBK bonds and other public debt instruments. Consequently, the ratio of liquid assets to total assets declined to 15.0% from 16.4% in June.
According to NBK report, KD interbank rates (KIBOR) bounced back slightly from the heavy drops sustained in June. Tightening liquidity at local banks drove rates up for shorter maturities, where the yields on 1, 3, and 6-month local interbank placements rose 15, 11 and 3 bps to 4.25%, 4.49% and 4.73%, respectively. Meanwhile, the 12-month rate fell 1 bps to 5.02%. With this month’s rise, the gap between KIBOR and US dollar Libor rates was cut from 98 bps for the 3-month maturity and 69 bps for the 6-month maturity to 87 bps and 60 bps, respectively.
With banks being more aggressive than ever in pricing their deposits, customer deposit rates rose with hikes ranging between 11 bps and 15 bps on average. Rates paid on KD deposits averaged 4.92%, 5.04%, 5.22%, and 5.32% for 1, 3, 6, and 12-month maturities, respectively. Rising interest rates helped push the weighted average cost of KD deposits up by 9 bps to 4.11%.
