Mauritius paves the way for ICT/BPO in Africa
The 1st International ICT-BPO Investment Forum in Mauritius explores the explosive growth of the ICT/BPO sector and why the tiny Indian Ocean Island is a big destination for investors. By SEGUN ORUAME, Port Louis
Mauritius is famously known as a tourist destination but it has also gained grounds as hub for ICT/BPO. Yet few years ago, this small volcanic island nation of about 1.3 million people was basically an agrarian-depended economy with sugarcane as its chief export. All that is part of its contemporary history. As at December 2012, to quote Bobby Varanasi, Chairman & CEO of Matryzel Consulting Inc, a strategy consulting, sourcing advisory and management firm headquartered in New York, “the ICT/BPO industry has generated some 17,700 jobs and has sustained a 15% growth in terms of the number of operators over the period 2011- 2012.
“ITO [information technology outsourcing] has been the fastest growing segment during the past two years despite the economic problems in US and Europe. Over 270 companies, large organizations, mid-sized and small enterprises, are offering their services across a number of verticals and service lines. ITO offerings have evolved from application development and maintenance, to emerge as full service players providing testing services, infrastructure services and systems integration.”
Matryzel Consulting, Inc, was charged by the government of Mauritius through its Ministry of Information and Communication Technology to plan and conduct the 1st International ICT-BPO
Investment Forum in Port Louis, administrative capital of Mauritius. The forum held 24-25 June, 2013 at the serene Intercontinental Resort, Balaclava. It was declared openby President KailashYage with Minister of Information and Communication TechnologyHon. TassarajenPillayChedumbrumand Minister of Foreign AffairsHon Arvin Boolell in attendance.
The two days event proved to be not only an expository retreat on the widening potential for ICT/BPO in Mauritius for would-be investors many of which included international delegates drawn from virtually all the continents but it also provided the opportunity for inward looking among several African delegates including those from Nigeria, Chad, Kenya, and Uganda among others hoping to have a slice of the rising global ICT/BPO market estimated at USD 750 billion as at mid-2012.
Mauritius offers an attractive model of how a developing country could refocus its economy to tap from the global ICT market so as to become a key player. To quote Varanasi again: “The ICT sector is a key pillar of the Mauritian economy with an annual growth of 12% (CSO: ICT Statistics Report 2011) in terms of value addition and a contribution of 6.5% to GDP in 2012. This indicates that the industry is remarkably dynamic, complex and competitive…. Mauritius has a diversified market for the export of ICT-BPO activities with France, Benelux. Overseas French departments and UK being among the top five markets.”
How did Mauritius get it right? Hon. Chedumbrum, in his address during the opening of the investment forum offered a clue: “Over the past years, government has focused all its attention to weave the right environment for the expansion of the ICT/BPO sector, be it in terms of massive investment in telecommunications infrastructure to be in line with international benchmarks and globally competitive prices, the establishment of a strong and sound legal and regulatory environment and the development of the required human resource talent pool.”
Unlike several African countries that had expressed intention to remodel their largely mineral-based economies on ICT, Mauritius has demonstrated the required willpower to turn its economy around. “It has not been just words and policies here but clear-cut actions,” said Roland Omoresemi, CEO of US based Tezza Solutions with considerable presence in eastern Africa including Kenya and Uganda. Omoresemi, one of the international delegates at the Port Louis gathering is thinking of setting up shop in Mauritius. He regards the level of infrastructure development and tax regime to be investors-friendly.
Hon. Chedumbrum emphasized this strength in his speech. His words: “Considerable efforts have been put in the past few years to create global visibility to promote Mauritius as preferred ICT destination through promotion agencies of government and the organization of two successive editions of the International ICT/BPO Conference in 2011 and 2012 respectively. The next logical step is to create, through this edition of the International ICT/BPO Investment Forum, the right platform to bring under one roof, potential investors to enable them take cognizance of the unique opportunity that our country has to offer for ICT/BPO sector…. Mauritius has a legitimate ambition to position itself as Regional ICT Hub and a gateway to Africa by leveraging on its historical, cultural and economic ties with Asia and Africa.”
For Mauritius, the investment of willpower in ICT/BPO has been outstanding. Here are the key reports in one analysis by Varanasi: “According to the 2012 Everest Report on the attractiveness of Mauritius as a location for the delivery of offshore services, Mauritius distinguished itself again as the lowest-cost offshore delivery location for French works and among the few countries offering a cost advantage over multiple locations for English language works with a cost arbitrage around 62 % over relative source markets such as France and UK. Other key findings are:
“Mauritius is 30 to 40% cheaper than Eastern European countries and 10 to 20% cheaper than North African peers. For Finance and Accounting and IT, costs in Mauritius are lower than in most emerging destinations. Good quality infrastructure, strong regulatory environment, and low structural risks make Mauritius a perfect location for infrastructure hosting and data center services, especially for companies with regional operations.”
There are plenty of lessons to learn from Mauritius, said Peter Akindeju, Head of Corporate Services at Lagos based Integrated Corporate Services that largely offers Human Resource Outsourcing (HRO). Akindeju thinks Mauritius has in spite of its small size and population moved ahead of other African countries including Nigeria by investing massively on robust support infrastructure and right policy framework that includes low tax regime. ”We have a huge population and comparatively can boast of higher number of skilled cheap manpower but we lack the infrastructure and the willpower,” said Akindeju.
“Mauritius brims with success and we are here to learn how,” said OusmaneMahamatNourElimi, Secretary General of the Ministry of Commerce and Industry, Chad. His point is well captured in a 2012 report by By Martin Conboy with the title: Mauritius: The Thinking Mans’ ICT-BPO Island. Part of the report states: “Mauritius has attracted more than 32,000 offshore entities, many aimed at commerce in India, South Africa, and China. Investment in the banking sector alone has reached over US$1 billion. The economy is gradually shifting from light manufacturing and agriculture towards a services based economy. The services sector now represents over 70% of GDP.The country now promotes its ‘five pillars’, Tourism, agriculture, off shore financial services, manufacturing and ICT- BPO. Mauritius is well poised to take advantage of African BPO Growth.”
How does Nigeria, Africa’s most populous country of 180 million people fit into the global ICT/BPO picture? Group MD/Software Architect at Lagos based Programos Software Group, Mr. Amos Emmanuel thinks Nigerian and many African countries have been inactive for too long in the face of major outsourcing transformations witnessed globally. Lack of political commitment, weak energy infrastructure, absence of broadband, issues of intellectual property, and capacity development challenges have connived to ensure that Nigeria still cannot contribute significantly in global outsourcing. He told eT Edge News in Lagos, “The impact we are able to make in our local jurisdictions have not been any meaningful to offer local opportunities, education and growth to the local workforce in this respect. This disconnect, in my opinion, has largely been attributed to the disharmonized industry architecture in Nigeria.”
Kenya is seeking to break ground on its flagship technology mega project, the Konza Techno City and neighboring Ghana has sought to expand the strength of its Cyber City, a technology cluster on a 36 acre technology park in Accra. Ghana´s BPO is expected to create 37 000 jobs with revenues of USD 750 million within five years.Nigeria has competitive market attractions that should encouraged fast growth of its ICT/BPO sector coupled with the fact that traditional ICT/BPO destinations (India and Philippines) are getting more expensive. Nigeria is the largest market place in Sub-Sahara Africa and it boasts of about the largest young and educated work force that are all English Speaking. If companies decide to outsource to cut costs and reduce OpEx, markets like Nigeria hold strong attractions. A right framework that addresses the challenges in the power sector and a favourable tax regime should be able to lower OpEX and increase profitability for companies doing business here.
As one report by US based Interra Networks Inc states: “India and other emerging market outsourcing destinations –Philippines and Pakistan were not as cheap as we thought. India is averaging about $12-$15 an hour.Philippines and Pakistan are hovering around $10.” Interra Networks Inc with presence in Abuja, Nigeria’s administrative capital has a practical experience of how profitable the Nigerian market could be for outsourcing. “[We] struggle convincing our shareholders on Nigeria as an option. But the numbers did the trick.30-40% cut in Opex is no mean thing. [We] realized Nigeria as an alternating outsourcing destination potential when asked by two companies in Atlanta to provide support services. [We] realized local market potential for outsourcing services in the areas of contact center services, document management, humanresources, software development and technical help desk services,” said the company in one of its public presentations on outsourcing in Nigeria.