It will never overtake China and India, but as people look to take more advantage of globalisation rather than offshoring, then Africa will continue to grow as an outsourcing destination.
In short, Africa has become one of the fastest growing offshoring destinations in the world.
According to the 2009 A.T. Kearney Global Services Location index, (which looks at the financial attractiveness of a country, the people skills and availability, the business environment to form its total score):
Egypt is the sixth most popular location moving up from 13th, Ghana has moved from 27th to 15th, Tunisia 26th to 17th, Senegal 39th to 26th, Morocco from 36th to 30th And interestingly South Africa has moved the other way from the 31st- to 39th.
Looking at Africa it is important to realise that you can divide the country into three areas, firstly Northern and Saharan Africa, the up and coming West and East African countries and then Southern Africa, particularly South Africa.
Egypt has become a much more popular destination as Professor Leslie Willcocks has pointed out in recent research. American giants such as IBM and EDS, now HP, have both had operations here for some time and interestingly, Wipro and Infosys have been expanding into Cairo, thereby taking advantage of the availability of low cost well qualified people. Egypt, like Morocco, also has huge support from the government to expand this ability which is key to sustainable success.
Moving along the African coast, then Morocco has rapidly found its presence as a supplier of outsourcing services to the French market. Until recently, Morocco's outsourcing market had focused on call centres, but its expansion into banking/ insurance, telecommunications and information technology is being supported by infrastructure investment and the development of four outsourcing hubs at Fes, Marrakech, Tangier and Casablanca. A good example of increased presence is Capgemini's recent investment in Morocco, providing sourcing services to the French market and interestingly companies are also providing outsourcing services to the Spanish market. Tunisia meanwhile is looking to emulate Morocco's success.
West and East Africa
Kenya is heavily promoting itself as an offshore destination. As part of Kenya's strategic plan called 'Vision 2030', BPO (Business Process Offshoring) has been selected as one of the six main economic pillars. With this is mind, Kenya hope to quickly become one of the top three destinations in Africa, and government goals by 2012 are to create 7500 jobs in the BPO industry of which 5000 will be located in BPO parks.
Countries in West Africa, particularly countries like Ghana and Senegal, are growing from a very small base and outsourcing in these countries is quite often done by providing outsourced services to other West African or Central African countries. However these countries are ones to watch for the future.
Moving further south, to South Africa, five to six years ago this was a very popular destination particularly for call centres and for financial service applications, especially in and around Cape Town and to a lesser extent Johannesburg and Durban. Interestingly, the reason for the decline is an increasing concern about the increasing value of the rand, as the economic case becomes less compelling and concerns about infrastructure deterioration.
Like Egypt, South Africa has looked to partner with India. The reason for this is that India is geographically closer to Europe than South Africa by roughly four hours but the time zone difference in Africa is no more than two hours + or – GMT.
We are seeing much more complex relationships with countries such as South Africa for the UK market and Morocco for the French and Spanish markets, providing first line support with India providing second and third line support.
About the author:
Alex Blues has over 15 years expeience in IT and BPO sourcing in Europe, US and Asia including advising clients, end user experience and senior mangement roles within the supplier community. Alex has extensive practical experience of the offshore market and is a regular speaker and commentator on the benefits and potential pitfalls of sourcing in the UK and overseas.