Monday, February 25, 2008

Rethinking the India Back Office - opportunity for Africa?

The Wall Street Journal has an interesting story about the Indian Outsourcing industry. The article basically describes how costs in the outsourcing sector are outpacing savings. Furthermore, captives which are entities owned by multinationals are getting hurt by the fall of the American Dollar. Plus, labor rates and employee churn are hurting profit margins of Wipro, Infosys, Tata, and some of the other Indian firms.

I have consulted, researched, and presented information on the global BPO/ITES (information technology enabled service), my conclusion with outsourcing is this. Currently, India is the mecca for BPO because of it's highly qualified labor force, this will never change. India graduates more english speaking engineers than the US and UK combined. However, labor rates in India are getting higher and will keep getting higher.

Where does Africa fall in all this? Well, for starters we need cheap, reliable fiber optic cable. We are highly educated, we just need more investment in science and technology education. Africa has witnessed a paradigm shift in terms of telecommunications on the continent. We have the fastest growing mobile market in the world and this is forcing state owned monopolies to divest and invest in new technologies. For the first time in 10 years, African governments are starting to collaborate and partner for fiber optic infrastructure. East Africa has 4 different competing fiber optic cables that will enable outsourcing and cheaper communications.

By 2015, I think Africa should be a player in the global BPO market and could perhaps challenge India. Africans speak English, French, Spanish, and Portuguese. Africans also don't need to take special language classes to overcome accents.

WSJ article about India outsourcing

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