Seeing ‘Offshoring’ for the first time? Then not to worry. It is a form of Outsourcing and will be the focus of this article. Read on to discover what it entails and why organisations offshore to Africa.
Outsourcing is the engagement of a third party to perform a business function, and it typically covers the transfer of processes, people and assets to the third party. One unique delivery model for Outsourcing is Offshoring, which involves migrating services to another country where labour is more easily accessible than the country where the services are received.
According to the Kearney Global Services Location Index, African countries are usually a preferred destination for Business Process Offshoring. For instance, Egypt, Mauritius, Kenya, Morocco, Ghana and South Africa feature in the top 60 countries to locate a business service. So, what gives?
Why are global organisations offshoring segments of their business processes to Africa? And how can your organisation benefit from this trend?
It all boils down to about five key factors, summarised below.
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Why Global Organisations Offshore to Africa
Offshoring To Africa – Reason #1: Youthful Population
Africa is the world’s youngest continent with a median age of about 18 years. This large population of young, working-age people creates a pool of potential employees who are agile and can adapt to the demands of 21st-century technology.
But not only does Africa have a young population, conversely, the world’s largest economies have an ageing population problem as well. Take, for instance, Germany and Japan with a median age above 47years! So it is easy to see that for such economies to maintain their scale of commerce, it would need some help, which is where Africa comes in.
This age disparity is a recurring theme across continents. See below
Source: Visual Capitalist
Germany and Italy are projected to hit a median age of 50 and above by 2050, and Asia is projected to have a lesser youthful population than Africa in 2100; it is evident which continent will have the world’s attention.
Offshoring To Africa – Reason #2: Cost-effective Human Capital
Africa’s competitive rates make the continent an ideal destination for supplying cost-effective human capital to companies that need it. This is due to the relative lower cost of living across Africa.
For example, on the Worldwide Cost of Living index consisting of 110 countries, only one African country features in the top half of the more expensive nations to live in. On the other hand, many of the world’s largest economies like Germany [10X cheaper than the US and UK] are at least about 50X more expensive than Morocco, Kenya, and South Africa.
Another dimension at play here is that the Average Income across Africa is significantly lower than leading markets across the world.
In this way, Africa costs less and pays less. This means that global organisations can afford to spend less in Africa to get the same output quality as utilising in-country/in-region talent.
Offshoring To Africa – Reason #3: Africa is Multilingual
The yesteryears of colonisation and medieval trade has meant that Africa has become a language hub of many of the major economies across the world.
For instance, 26 African countries adopt English as an official language [including Nigeria, South Africa, Kenya, Ghana and Rwanda]; 21 adopt French, and about 150 million people speak Arabic in Africa – the most for any language on the continent. In addition, languages like Portuguese[officially spoken in 6 African countries], Spanish, and even Chinese are all spoken.
As a result, many Africans can communicate easily at a native level with customers worldwide, thus, making it easier for global companies to offshore to the continent.
Offshoring To Africa – Reason #4: Time Zone Advantage
Africa’s time zone is well-positioned for engaging clients and other global business needs in real-time and round the clock.
For example, Africa and Europe lie along similar latitudes and, therefore, share similar time zones. This affords global offshoring companies the opportunity of having remote employees who can engage in real-time. One advantage of this is that should there be a problem that requires a solution immediately, European businesses could easily count on African talent to resolve these in due time.
Areas with a more significant difference in time zones also facilitate a ‘round-the-clock’ production or service delivery, improving organisational efficiency across domains like customer satisfaction.
Offshoring To Africa – Reason #5: The Opportunity for Impact Sourcing
Progressive organisations who wish to project a humane and future-forward outlook can often offshore to Africa to achieve such aims.
Keying into SDG goals 8 and 10 – which aims to provide decent work for all while eradicating inequality between nations and individuals; organisations can intentionally hire and provide career development opportunities to young Africans. These are young Africans who otherwise have limited prospects for sustainable employment, allowing high-potential individuals to bring their strengths to the global marketplace.
In Africa, international organisations can find dedicated, reliable, and cost-effective labour while addressing the widespread economic inequality.
Offshore Your Business Processes to Africa with Ease
Offshoring to Africa holds many advantages for your global business operations, top of which include a youthful population and a cost-effective human capital, amongst other benefits.
However, no matter how good offshoring to Africa may be, It can quickly become complex. This is especially the case when local market expertise to guide you through compliance and other market peculiarities, are lacking.
Leverage African Ally’s expertise and experience to help you navigate the African talent landscape without the associated newcomer risks; so you can focus on more strategic functions and activities.
African Ally’s offshoring services can help you manage the entire offshoring process and onboard African talent in as little as 48 hours. With capabilities in 19+ African countries, African Ally can help ensure your first step in widening your African footprint is a steady one.
Are you ready to take the leap? Let’s make it happen. Click here to get in touch.