There has been a lot of discussion in press around Africa being a choice for organisations as an offshore destination, comparing it to the more dominant markets such as India, China and Malaysia. An article in Outsource Magazine predicted that Africa (as a whole) would represent between 10% to 15% of the total outsourcing market in volume terms by 2013, which is up from less than 5% in 2010.

With some operating experience from Africa, we’d like to share our views on what organisations should look for when thinking of off-shoring a particular business unit.

As mentioned previously, the current dominant markets for off-shoring are India, China and Malaysia – some of the main reasons for this include their population size and availability of large skilled workforces.

So, why is Africa (and other countries) becoming more appealing to off-shoring decision makers?

Nowadays, and especially in the current economic climate, organisations are looking for ways to reduce risk when and wherever they can, in turn this means looking for secondary locations to compliment primary destinations like China etc.

South Africa (where Percepta are based with a major automotive client) is the continent’s largest and most mature outsourcing market with reasons for this including the two hour time difference and the quality of English (and many other European) language skills available.

In the beginning, the types of services being off-shored to South Africa were second or third line back office support services but as the market has matured, a lot more front line, end user services are now based there. These services are delivered to a range of industry sectors including retail, automotive and travel.

One thing that has been detracting companies from South Africa are labour costs – although it is still a much cheaper option than Western European salaries, they do average between 20% – 30% higher than India. Although the other advantages mentioned above warrant the rise in this type of cost.

To summarise – whilst Africa isn’t in the league of more mature markets like India and China, it certainly is a fast growing outsourcing location. The main items to consider for client organisations when devising their off-shoring strategy is not putting all their eggs in one basket and maybe multi-shoring, looking at the service required with specific regards to language capability and technical expertise as well as the obvious one – budget.