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African countries set sights on BPO market

By John Yarney, IDG News Service
July 15, 2005 10:01 AM ET

IDG News Service - Following a route forged by India and the Philippines, countries throughout Africa are trying to become competitive destinations for business process outsourcing by promoting low-cost labor and fostering conditions for a build-up of IT infrastructure.

Within the last quarter, there has been considerable movement in the BPO sector on the continent. For instance, East Africa just made an entry to the BPO sector with the launch of KenCall EPZ, Kenya's first international call center. Mauritius is consolidating its plan to convert the country into a cyber island, with the ongoing construction of a second cyber tower in Ebène that will host BPO operators, and preparation for a second cyber park at Rose Belle.

The bulk of Africa's BPO activity is presently concentrated in two areas - the southern and northern regions of the continent, though countries throughout the continent, such as Ghana and Senegal, are also trying to build up BPO activity.

South Africa leads Africa's BPO sector; performing call center services and all types of back office operations, according to Peter Ryan, a call center analyst for Datamonitor, which provides a barometer for BPO activity on the African continent.

In North Africa, Egypt is by far the best equipped to perform all aspects of BPO, according to industry insiders. Morocco has some activity in the call center arena, while Tunisia has the least amount of BPO activity in North Africa.

Xceed Contact Center is a call center that employs 850 people and has been operating in Egypt since 2001. According to Ossama Nazmi, Xceed's business development manager, there were several reasons why the company decided to locate in Egypt.

A major issue was Egypt's wage rate. Nazmi said via e-mail that Egypt's wage rate is more competitive than nearly all offshore locations including Canada, Mexico, Poland and Hungary. "Only one other offshore market is as competitive as Egypt's rate, of 54% of the cost of a U.S. customer care agent," said Nazmi. The other market is Hungary, he added.

Nazmi also catalogued other competitive advantages, such as multilingual capabilities; and several big post-secondary-school institutions located in Egypt are funded by foreign governments, including the U.S., Canada, France and Germany, all of which produce many multilingual graduates, Nazmi said.

Egypt has the workforce to feed the call centers. More than 200,000 graduate from universities in Egypt every year, 40 percent of which are in the field of information technology.

In addition, Egypt has a prime geographical location (centrally situated between the U.S., Europe and Asia), and the time difference with other countries allow it to cater to multiple regions.

Other factors that made Egypt a preferred destination for Xceed were the country's business culture. Its workforce is accustomed to using the same goods and services found in Western countries, due to its proximity to Western Europe and long-established trade links. The Egyptian government actively supports the industry through various incentives, and gross domestic product growth and inflation are at sustainable and constant levels.

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