• December 1, 2005
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Offshoring Awimowehs to Africa

The latest offshoring hot spot offers a stable, democratic government; a highly educated and content populace; English as its official language; and generous subsidies for investor companies. It's not in Europe or Asia, nor in the Middle East or South America. It's Botswana, deep in the heart of sub-Saharan Africa, and it represents the often-overlooked opportunities found on the continent. "Profiting from Contact Center Outsourcing in Botswana," a Datamonitor report, identifies a number of factors that recommend the nation as one to consider for contact center locations. According to report author Peter Ryan, CRM analyst for outsourcing and offshoring, Botswana's suitability for offshoring is nothing new. "They've had a sustained democracy and liberalization since 1966, and the citizens are fairly well educated and content," Ryan says. Botswana's political parties support the parliamentary government, the report states, and are committed to maintaining regular elections. In addition to general political stability, the nation has a strong economy that, though it has declined slightly since its peak of 7 percent GDP growth in 2003, "has not been erratic or unsustainable." Inflation is declining there, and Ryan's report describes Botswana's domestic business landscape as being "as obstacle-free for offshore investors as possible." Factors include a legal system that protects investor property rights, labor unions that rarely strike, and a high literacy rate (80 percent) based on English-language instruction and the country's history as a British colony. Botswana has invested heavily in its people and the support services necessary for industry, according to Ryan. "The infrastructure is certainly in place, and has grown in leaps and bounds in terms of investment. They have a good transportation network and a reliable power grid, both of which are important concerns for outsourcing." Furthermore, Botswana dedicates 25 percent of its budget to education, with much of that money being used to send students abroad. "They come back with excellent skills, and an understanding of how Canadians, Americans, or Australians, for example, think when making business decisions." Despite Botswana's attractiveness, the nation does sport weaknesses that limit potential investors' window of opportunity. Scalability is one. The population is less than 2 million citizens, with an official unemployment rate of 24 percent, and some estimates placing it as high as 40 percent. On the one hand, this means that workers are in ample supply for the short term; on the other, it means that the labor supply will dry up if too many large-scale projects are launched, leading to inflation and loss of competitive advantage. High per-minute phone charges are another major threat, with costs ranging from $0.36 to $0.45, depending on the country. "If the current charges remain in place, Botswana's industry has no chance over the long term, relative to international competition," Ryan says. HIV infection of up to a third of the population, while a definite danger to the labor force, may not be a serious deterrent to investors; the report notes that South Africa's AIDS epidemic hasn't decreased that country's perceived value, for example. But perhaps the biggest limiting factor is inaccurate perceptions of Botswana's status. According to the report and conventional wisdom, the western stereotype of African nations is one of ignorance, poverty, corruption, and violent conflict. Ryan notes that none of these are relevant to Botswana, nor to several other potential offshoring destinations. "Botswana, and also places like Ghana, Kenya, and Senegal, are stable and capable of sustaining outsourcing projects in addition to their own native industries." Related articles: A 'Second Wave of Firms' Moves Toward Outsourcing
Losing the Offshoring War South African Call Centers Roar
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