The outsourcing industry is worth over $200bn today and is likely to grow even faster over the next five years. Outsourcing is when a company sends some of its functions to be performed elsewhere for far less cost than if it did so itself. India is the current world leader in outsourcing but Kagem Tibaijuka* argues that East Africa is ideally placed to join the stream.
East Africa is on the worldwide business radar thanks to the region’s dominant tourism industry and wealth of natural resources. Outsourcing is proving itself to be an industry that offers East African countries the chance to export the services of their people to the world in a way that tourism and natural resources don’t.
But you can’t talk about outsourcing in Africa without looking at the world leader for outsourcing: India. Africa can learn lessons from India from a positive side and how to improve for the future.
India is the pioneer in the offshore outsourcing field with companies such as Infosys and HCL Technologies. The model perfected in India initially revolved around back-office work such as accounting and customer service that blue chip companies in the West needed to cut costs on.
As the outsourcing industry grew to be a billion-dollar industry, India’s model evolved to create an outsourcing industry catering to all types of business clients. Let’s look at some of the ways East Africa can learn from India to grow the African outsourcing industry:
Take advantage of a young and educated workforce:
Countries like Uganda, Tanzania and Kenya are blessed with a young and educated population who could deliver on many outsourcing services such as customer service and contact centre work.
KenCall is a good example of an outsourcing company based in Kenya that is using the educated workforce of the country to deliver contact centre services for clients such as Orange. Other companies in the region should look at graduates in fields like graphic and web design and marketing to deliver services like IT and customer service outsourcing for the worldwide market.
Capitalise on non-core services:
While it looks glossy to work on big, splashy ad campaigns for Fortune 500 companies, non-core services are the bread and butter of the outsourcing industry. Clients are more likely to outsource functions, as opposed to ideas on a long-term scale. Marketing and strategy form part of ideas because they are less tangible than accounts receivable and HR.
African outsourcing companies can capitalise by offering services that grease the wheels of a business. This can be anything from office work such as data entry, administration and invoice chasing to analytical work such as data mining and infographic production.
Package your outsourcing services:
Outsourcing companies like Infosys have found the perfect balance between offering IT services and products. We all know that when you package something as a product, it has a better chance of selling. Outsourcing businesses in East Africa need to look at packaging as a marketing strategy to offer potential clients services that they need or products they can use in the day-to-day operations of their businesses.
What should African countries do differently?
One of the labels that outsourcing has received is that it is only about cost-cutting. Service level agreements done in the past competed on price, which meant many companies in the field just undercut competitors in order to stand out. As the industry has matured, it is clear that branding, marketing and new products are critical to making African outsourcing companies stand out compared to giants such as Accenture, Infosys and Xerox.
Remember, traditional IT companies like IBM and image companies like Canon are moving into outsourcing. This speeds up the need for African companies to define their product line up beyond simply cost-cutting. Other ways outsourcing businesses in East Africa can stand out include:
Be global and regional:
Dar es Salaam, Kampala and Nairobi are well placed to connect with sub-Saharan African businesses, Asian countries like Singapore and South Korea and the West. The time zones between the West, Asia and Africa are well suited for companies to conduct businesses with a range of clients in different locations.
Use social media to brand themselves:
Outsourcing companies are in the business of taking the administration and paperwork from another business and making this their responsibility. This is not necessarily the coolest opportunity – which is where social media comes in. Social media will give East African start-ups the opportunity to promote themselves without a big budget.
Come up with fresh ideas:
Knowledge process outsourcing is a slick way of talking about the latest innovation in outsourcing – services such as analysis, research and publishing. Companies in East Africa should think about innovative ways to offer outsourcing that overcome a client’s scepticism of sending work abroad. The negative press outsourcing has received is actually a blessing – it will give businesses the chance to breathe new life into the industry.
As more companies reconsider the traditional view on outsourcing, this is the opportunity for African outsourcing companies to be experts in the field that they choose. An example of successful specialisation in outsourcing is Pangea3, a legal outsourcing company that was acquired by Thomson Reuters in 2010. Specialisation gives clients a deeper customer service experience as well as more quality control in the services rendered.
Heavyweight tasks such as organising data, building software and invoice and payroll processing is not work that can be done in-house completely by every business in the world. This is outsourcing’s sweet spot – the fact that efficiency can be achieved by an external supplier. East Africa is the perfect region to build on this sweet spot which could provide tasty dividends for the number of people employed by outsourcing and the economy.
*Kagem Tibaijuka is the operations manager of Wilson Raphael (www.wilsonraphael.com), an outsourcing company in Tanzania.