The outsourcing industry is growing at an ever-increasing rate as globalisation is accepted as the path forward for businesses worldwide. Protectionist sentiment in some quarters during 2009 only served as a brief hiccup against this almost unstoppable force. Organisations are looking to vendors across the globe to provide them with cost saving services and expertise, especially during times of financial instability. India has been the dominating force behind this outsourcing boom and acceleration of globalisation, servicing a vast chunk of the market for both BPO services as well as IT.
However, over recent years, the outsourcing landscape has started to change, as more regions recognize the possible economic benefits that outsourcing can offer a country. Governments that have previously focused on agriculture or manufacturing are rapidly diverting investment into developing sizeable outsourcing capabilities. The drivers behind this change include the decrease in technology costs and increasing ease of global communications.
One region that has been particularly active in developing itself as an emerging outsourcing destination is Africa. A continent vital in the provision of food around the globe is now beginning to tap its often highly educated workforces and is starting to draw the attention of large corporations as a result.
Within Africa there are a few locations that are emerging particularly rapidly in the outsourcing space. Egypt is top of the pile in this respect, having caught the wave of African outsourcing and received significant government support to boost interest in the country. Last year the country won the ‘Offshoring Destination of the Year’ award at the National Outsourcing Association’s Awards and this year the country has been ranked number one outsourcing destination in Africa by the Commonwealth Business Council. So what is it about Egypt that is drawing the eyes of the outsourcing world?
Like with many of these emerging destinations, government backing is very important to the appeal of an outsourcing destination. There are two government agencies dedicated to the support of the outsourcing market in Egypt. Various tax breaks, government grants and an overall competitive cost associated with setting up shop in Egypt has meant businesses, such as Google and HSBC, have started moving into the North African region.
Egypt’s IT is also better than most other African nations and of course benefits from a multilingual workforce. There are around 20 languages spoken amongst the 300,000 graduates that enter the outsourcing industry each year. This is a particularly attractive attribute especially when organisations are looking to set-up call centres that service a range of countries.
However, Egypt is not without its problems. The nation’s politics is something that businesses are still cautious of when considering Egypt. Corruption is still rife and that is as true in the rural areas as it is in the business capitals such as Cairo. There are also issues with IP and data protection laws, the issue being that it does not appear Egypt enforces any. The transport infrastructure still needs work if the country is to progress in its outsourcing offering and energy supply, as with any African nation, is of course an issue.
Looking beyond Egypt there is another African nation which is making notable progress in the BPO market. Kenya is strengthening its position within the outsourcing world. It has 50,000 new graduates each year and 50 percent unemployment meaning it is not short on enthusiastic and intelligent workers. The British Empire’s legacy has been a surprisingly neutral accent giving the country a lot of scope in voice as well as other BPO service offerings.
The government has also latched onto outsourcing as an important pillar in the country’s development. In commitment to this goal the Kenyan Government has highlighted outsourcing in its ambitious Vision 2030 development plan and invested significantly in the industry’s development. Although the industry is still decidedly nascent in Kenya, expect to hear more from the country and East Africa after its long-anticipated connection to fibre optic cabling this year.
The other obvious star of the continent is South Africa. Being slightly longer in the tooth than the other emerging African outsourcing nations, it has had time to develop its capabilities accordingly. However, its increased development relative to places like Kenya, mean the country is not the best place to go for cost reduction. Aside from this it has been ranked in the top 30 IT outsourcing locations globally by Gartner and continues to enhance its slightly higher-end call centre industry with strong European language capabilities. Its government is also, unsurprisingly, supporting the industry well.
To find further success stories of African outsourcing one must look offshore to the idyllic island of Mauritius. Better known as a honeymoon destination than anything else, the progressive government continues to promote the country as a focused offshoring destination. The country is gaining sizeable traction too, with its focus on smaller-scale, SME-type deals and bespoke services. This niche focus is likely to gain further traction in 2010 with a predicted boom in SME sourcing and similarly focused destinations coming to the fore.
It is clear that Africa as a continent is rapidly forcing itself onto the global outsourcing scene and this is only likely to increase as time passes. That said, the continent as a whole still has some major hurdles to overcome. The overarching issue is that of perception – much of sub-Saharan Africa is still seen as Safari-territory and little else, while daily news reports of failed states and piracy continue to taint its image as a viable business location.
The central problem is in looking at the continent as a whole. Most business people have such little experience of the place that they take all news of corruption, Big-man politicians, unstable governments and other disparaging news as a whole. The African continent is tarred all-over with the same brush.
But taking an entire continent of over 11699000 square miles as a whole is dangerously myopic and could see end-users miss out on some of its key benefits. Those looking at outsourcing to Africa must take each country on its own merits and history, seek advice from those that understand the market and its players, conduct appropriate risk assessments and due diligence and, as always, follow outsourcing best practice. This will ensure the best chance of success in a continent that will increasingly pack a punch in the global outsourcing industry of the future.
The NOA is the UK’s national Trade Association for organisations that are currently using or considering: outsourcing, shared services or in sourcing of their business processes or information technologies. It provides best practice, accredited qualifications, peer group networking and lobbying, for more details go to www.noa.co.uk
By Martyn Hart, Chairman of the NOA
