While U.S. firms are laying-off employees, IT outsourcing is doing well on foreign streets. The debate over offshoring has been brewing since a 2002 study by the research group Forrester predicted that 3.3 million white-collar American jobs (including 500,000 IT positions) would move overseas to countries such as India by 2015.
More than 75 percent of major financial institutions send IT work offshore, according to the consulting firm Deloitte, which estimates that offshore technology spending by banks will reach 30 percent of the industry’s $44 billion total annual IT budget by 2010. By 2012, the industry is expected to reach approximately $230 billion globally. Most jobs on the move would be back office positions that can be digitized anywhere worldwide. Plus, routine telephone inquiries are increasingly being bundled together into call centers, making for more offshore telecommunications jobs.
Business process outsourcing (BPO) remains an important part of the IT industry’s sourcing strategies, but its offshore destinations are changing. Today, Wall Street firms are sourcing from around the globe with increasing interest in African countries such as South Africa, Ghana, Egypt, and Kenya.
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The article mentions that broadband internet in Africa is expensive, making communication more expensive which, in turn, makes it difficult for African SMEs to be competitive with companies in Asia. However, this article was written in the fall of 2008. Is communication, specifically internet, infrastructure expanding rapidly enough to increase Africa’s market share of outsourcing?
The article also mentions another really interesting point. It quotes a man who works for a South African service provider. “We have credit cards, and we understand how frustrating it is when the black strip isn’t working,” he notes in explaining that South African customer service providers are particularly effective because they can relate to their customers’ experiences. But what happens when the outsourcing provider is dealing with services that aren’t so readily available in their own communities or even countries? I doubt it makes them less able, particularly given the training and strong skill-set they have, but is it somehow unfair? Or, on the other hand, might it inspire people to develop the otherwise non-existent services locally?
If Wall Street firms are changing its destination in off shoring their business process, they definitely have made thorough research with this African countries. If this countries are globally-competitive and are giving the same or even better service than the three leading Asian countries. I think Wall Street firms are widening the horizon of the business process outsourcing industry.
This was a great news. South Africa too is a powerhouse in BPO business. Last year TeleTech has established an office here. There is a majority of people in this country that speak English and moreover provincial and municipal government too provide full support to its BPO industry. So, it seems that Africa is ready to challenge the Asian nations that has so far solely ruled the BPO sector.
Regards,
Charlie