Africa , The next outsourcing haven

Here is a quite interesting interview a found. It's quite clear that Africa will be the next stop for outsourcing. But it's also factors of few steps that Africans and their governments needs to take. More importantly , the African diaspora will have a huge role to play.

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 Latin America as labor costs increase in those regions. Seven African countries are among the world's top locations for outsourcing. Datamonitor predicts Egypt will experience most aggressive growth in next decade.

What are some of the benefits of Africa as an outsourcing destination? Africa has a population of 933 million (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 of 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 to work.

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 needs 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 continue steadily.

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.