With the rising cost of local production and labour in developed countries like the United States, many companies, especially in the IT arena are looking to the developed world for answers--and finding them. Countries like India have successfully positioned themselves as niche providers of outsourced labour in IT and are reaping the benefits. And, as analysts continue to predict a growth in this type of outsourcing, the opportunity is ripe for other developing countries to tap into this lucrative market. The question is: Can Africa capture a share of the offshore IT market?
US research firm Gartner Inc is predicting that the outsourcing segment will continue to outperform the western European IT services market overall, growing by 3.1% in 2004, then rising steadily during the next three years to an annual increase of 8% in 2007. Moreover, as a result of global outsourcing trends, Gartner predicts that up to 25% of traditional IT jobs in many developed countries today will be situated in emerging markets by 2010.
The move to offshore outsourcing is spurred on by increasing pressure on companies in the developed world to generate profits and reduce costs. Anton Groom of MBS Outsourcing says there is also a drive to follow the sun, to allow them to offer services 24/7 (24 hours, seven days a week). "It therefore makes sense to have offices located in the three primary time zones," says Groom.
He adds that with a client base expanding globally, it also makes sense to provide clients with a global delivery model. As the developing world gains momentum in creating pools of qualified, skilled talent, outsourcing to these regions becomes more attractive.
FOLLOWING INDIA'S LEAD
India has managed to create a niche for itself in this area, but it has not happened overnight. Amar Vakil, CEO of Lintas, a US-based management-consulting firm, and founder of the Foreign Investment Promotion Council, explains that there are specific factors that have enabled India to position itself in such a manner. These factors are predominantly a skilled workforce and appropriate infrastructure.
"Twenty to 25 years ago, India was an underdeveloped country. There was a brain drain of skilled labour to developed countries, where, for example there was a need for engineers," says Vakil. "Ten to 15 years ago, people like me, with similar backgrounds, decided to move back to India and there was a huge impetus from government to build world class...