India losing it's competitve advantage of Outsourcing?

I wrote earlier this year about the global outsourcing market and Africa's potential to grab some market share. Business Week magazine says the fallen dollar and the higher wages in India are hurting some Indian vendors. No one can do anything to stop the fallen dollar. The fact is, the US dollar needs to fall further to bridge the trade deficit if faces.

This is an opportune time for African IT vendors to partner with Indian IT firms who have experience to bring jobs and contracts to Africa.


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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

African countries strive for outsourcing business

There is a great article on outsourcing in Africa by Offshoring Times. As soon as we get redundent communications infrastructure: fiber optics, microwave or other emerging technology Africa can then be an international player.

Most recently, the government of Nigeria has decided to put together a national strategy for an official Outsourcing industry. The government is also looking at building educational institutions focused on ITES, or BPO market. There will be a time when the Indians outsourcers, the Wipros, Tata's and Infosys will be outsourcing back-office work to Africa. The Indians are already setting up show in Mauritius because of the close colonial ties to that country.



From Outsourcing Times: African countries strive for outsourcing business

The South Africa is vying to bring in more of business processing outsourcing (BPO) on the continent, and other countries are also following to attract more of this business.

There are common factor in the African continent is the language skills, time zone/geographical location and an underemployed workforce with resulting low labor costs. But among all these the only real competitor to them in the BPO sector is Egypt.

Egypt at present has 4,000 agent positions and is estimated to grow to 12,000 in 2012, according to a technology analyst with consultancy Datamonitor PLC.

Outsourcing is not as easy with SLA's and metrics

Information technology enabled services (ITES) or BPO has enabled India, Philippines and other developing markets to grow and provide badly needed jobs in those markets. I used to consult in the outsourcing industry as a consultant for Cap Gemini. Entrepreneurs attempting to get into BPO need to be aware that it is extremely difficult to get and sometimes maintain a contract. Service line agreements (SLA's) are loaded with penalties and metrics that many Indian companies avoid bidding for the RFP.

Outsourcing is quite a mature industry now, four years ago when I was consulting margins were high. Four years later corporations are getting smarter by putting more metrics and clauses into contracts to protect themselves.

I urge anyone reading this post to go and learn more about outsourcing if they are trying to become a provider of ITES in Africa.

Neo IT
Outsoucing Law
Outsourcing Center
Outsourcing Central

If you have any direct questions about BPO you can email me at nas146 AT yahoo DOT com.

Nubian Cheetah

Climbing the Outsourcing Ladder

Read Emeka's Timbuktu Chronicles post about outsourcing opportunities outside of India and my comments.

Nice post Emeka. Africa can seize this opportunity by adopting international standards for communications infrastructure. We also need expatriates to come back to Africa and invest in science and technology education, then we can start to build African versions of Wipro, Infosys, and Tata’s........

Nubian Cheetah (Nii)

Africa Outsourcing

Over the years I've spoken at conferences and seminars about Outsourcing in Africa and

other developing markets. It's not a question if Africa will grow as an Outsourcing destination, it's a when. Right now outsourcing in Africa is minuscule at best compared to the likes of India, Philippines or Russia.

Here are some key things Africa needs to grow into a outsourcing destination.

1. We need redundant and reliable Internet broadband infrastructure.
ex. Eassy fiber cable and SAT-3 cable are starters, also we need more Internet
infrastructure.

2. We need the Diaspora to come back and start building the Infosys, Wipro's and Tata's of
Africa.

3. We need Governments to earmark or allocate IT parks or Tax free zones only for science, Hi-tech or outsourcing related businesses.

4. We need more IT education, we simply lack this right now. Africa needs more programmers in Java, html, and other related IT fields.

5. Last but not least, we need to change or mind-set or frame of vision. Nations are not built
overnight, nor can we always depend on the government for handouts. Entrepreneurs are the
ones that build markets and nations. America was built by industrialists and business men!