Publication: ComputerWorld USA
Next Frontier of Outsourcing
Richard Mills, Chairman
Mooneegan, managing director of Ceridian Mauritius, discusses the
emerging growth opportunities in Africa for business process outsourcing (BPO)
with Richard Mills.
Why is Africa becoming of
interest to offshore outsourcing decision-makers? Asian countries
have been very successful over the past few years at growing their
outsourcing industries. However, India, for example, is now experiencing a
labor shortage, which is leading to high attrition, high cost and
lower-quality service as Indian companies move to rural areas to find
resources. Naturally, this is starting to slow down their growth. People are
now considering other locations. The only untapped region left with a large
supply of underemployed labor is Africa.
The AT Kearney Global
Services Location Index 2007 showed a steady rise of African
countries in the ranking, pushing out countries from Eastern Europe and
America as labor costs increase in those regions. Seven African countries
the world's top locations for outsourcing. Datamonitor predicts Egypt will
most aggressive growth in next decade.
What are some of the benefits
of Africa as an outsourcing destination? Africa has a population of
933million (2007 estimate), and 50% are under 20 years. It has a large pool
of underemployed at highly competitive rates. With Asia rapidly increasing
in costs, Africa will be a strong alternative over the next few years, and
work may be cascaded to Africa.
Another significant advantage
is language capabilities. Due to its strong history o f European colonial
rule, many European languages are spoken on the continent, including
English, French, German, Portuguese, Dutch (Afrikaans), Spanish and Italian.
As other non-English-speaking countries start to take outsourcing seriously,
Africa seems to be a good choice.
It also has a favorable time
zone, almost the same as Europe. For U.S. companies, working hours are
usually in the evening, so Africans avoid the night shifts that Asians have
Its geographical location may be an advantage. North Africa is a few hours
away from Europe compared to India and China.
What are some of the problems
about sending outsourcing work to African countries? They are the
same concerns that people talked about in Asia a few years ago, things like
infrastructure, political stability, training and so on.
Africa needs to address the
following issues if it wants to be a serious player: 1) [It needs] a
redundant and reliable Internet broadband infrastructure; 2) more IT
education; 3) government nee s to invest in IT or business parks for
outsourcing businesses; 4) the regulatory environment needs improving; 5) a
change in mind-set, e.g., [companies] cannot depend on government handouts;
and 6) more entrepreneurs to build markets, probably having the diaspora to
come back and start building the Infosyses and Wipros of Africa.
Some African countries such
as South Africa, which already has a strong brand, and Mauritius, which is
well known to Europeans but not as well known to Americans yet, are quite
advanced and already have fast-growing BPO sectors. From Mauritius, I host
officials visiting from many of these countries to learn about how we have
done it in Mauritius. Given their enthusiasm, I expect improvements to
Countries like Kenya,
Botswana, Ghana and others are already organized and quite stable. They seem
poised to be strong outsourcing destinations over the next few years.
You mentioned that Mauritius
is a fast-growing outsourcing destination. What more can you say about it?
Mauritius is a small island nation off the coast of Africa with a strong
democratic tradition and one of the most advanced economies in the region.
It has a long history of colonization by the British and French. Not
surprisingly, almost everyone speaks both English and French fluently.
Mauritius has been doing
outsourcing since the early 1990s. Accenture, Infosys, Ceridian, AXA, TNT
and Orange are examples of companies with a strong presence here. We have
been growing by about 35% to 40% over the past few years. The majority of
the companies serve the European countries, mainly the U.K. and France.
Currently, the largest BPO provider is Accenture.
What role do you think
Mauritius and South Africa can play for the lower-cost countries of Africa?
It is very difficult to deploy directly into Africa, as most people can
understand. Mauritius and South Africa can act as hubs much like Taiwan and
Hong Kong did for China until just a few years ago.
This is also what happened in
the textile industry in Mauritius as it migrated to lower-cost African
countries over the past few years. Mauritius retained all the higher-value
functions like customer interactivity, design, management and marketing. All
production work went to lower-cost African countries.
We see the same progression
happening over the next few years in services outsourcing. This is why
Indian companies are quite interested in Mauritius. Infosys, Hinduja Group
and others are already here partly for this reason. Indians do not enjoy the
same favorable reputation in Africa as Mauritius does because of past
history. Mauritius can be a channel between India and Africa. Furthermore,
there is very strong historical and cultural ties between Mauritius and
is chairman of Chalré Associates, an executive search and management
consulting firm working in the emerging economies of Asia.
the article above
PDF format by clicking below.
& Management Consulting:
Associates provides its Executive Search & Management
Consulting services throughout the Asia Pacific region. We are
proactive and well known in our sectors of focus. Regional
Managers use us to help bridge the gap between local environments and
the world-class requirements of multinational corporations.