Africa: New Opportunities Through Outsourcing and Shared Services Industries

In recent years, several African states have leaped at the opportunity to join the outsourcing and shared services industry. Africa’s growing economies, economical labor, and technological development have advanced these prospects, as have the continent’s convenient time zones (zero-to-two hour time differences from Europe, as well as convenient time zones for 24-hour services to the North American continent), and regional fluencies in English and French. With the outsourcing industry valued at over $730 billion USD and expected to grow a further 9.4% annually, African regions should expand opportunities and incentivize businesses to capture more of this market.

Africa offers several advantages for corporations looking to globalize. Factors such as personnel shortages and cost considerations drove almost 70% of American companies– and close to 50% of British corporations– to outsource their consumer product industries. While other countries experience negative population growth (and, therefore, a shortage of new employees entering the workplace), numerous regions in Africa show rising populations and younger median ages. Increased internet connectivity in these regions make Africa a continent rich with young, technologically fluent adults that are entering the workspace at a perfect time for integration in the global economy. American, British, Australian, and Canadian companies have shown preference previously for outsourcing to India and the Philippines, in part due to seamless communication. But Africa’s young, diverse, and multilingual populations can compete with their English-speaking counterparts in India and the Philippines, while also offering opportunities for companies who are looking to outsource French and Arabic work, as well.

Furthermore, Africa’s natural diversity, in population and environment, offers business incentives for contingency planning. Companies increasingly look to grow in regionally diverse areas in hopes of creating incident response plans for natural disasters and other region-specific events. Recent increases in political hostility in some regions will likely drive more businesses to look for new areas of expansion to increase company resiliency. Regional cooperation in Africa, if pursued by businesses and government entities alike, can bolster this natural diversity, strengthening investment opportunities for multiple regions and populations.

While the opportunities are numerous, there are difficulties as well for African regions looking to grow their prospects as outsourcing hubs. Power outages, corruption, and political turmoil create infrastructure challenges and weaken incentives for companies looking to outsource. Inducements to prevent or limit these challenges can bolster industry and investment. The challenge of consistent, reliable internet infrastructure is likely the most important and difficult obstacle for some African regions to overcome. While numerous regions bolster high e-Connectivity rates, most of these connectivity rates are based on mobile networks (such as 4G and 5G connectivity). Other higher data connectivity models such as broadband are likely to be more compatible for global business needs. While more expensive initially, many regions can invest in fiber optic technology in populous areas, creating speedy internet connections and preventing a need for network upgrades for many years. Investments in these networks are costly, but the potential for these networks to connect a young, willing, and highly adaptable workforce to a globalized world is essential for attracting foreign investment.

In addition to internet connectivity, regions should increase investments in international airports and reliable transportation networks. Further investments in reliable energy and affordable housing would further attract international investors, as would investments in potential workforce populations (such as education and employee safety).

Corporations looking for new regions to expand their outsourcing and shared services industries have much to gain in expanding to Africa, but Africa, too, has much to gain from attracting these businesses. Outsourcing hubs, for instance, gain economical advantages; foreign cash investments have positive impacts on regional economies.


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Other advantages may also exist for regions attracting foreign capital. India’s outsourcing sectors, for example, created opportunities for the country to start closing the gap in gender employment. Regions in Africa that are looking to increase participation by women in the workforce have ample opportunity to utilize India as an example for potential incentives (for instance, the Indian government, corporations, and industry bodies have sought to incentivize more gender-neutral hiring and promotion by implementing anti-harassment policies, maternity benefits, flexible working hours, and physical security). Long-standing gender norms can be slow to change, but, along with increased investment in education, outsourcing and shared service industries have the potential to provide lucrative work opportunities for populations regardless of gender.

Africa is a prime location for the outsourcing and shared service industries. Companies constantly look for corporate initiatives to “do better” in today’s highly competitive, politicized environment. By advancing education, improving infrastructure, and incentivizing gender-neutral hiring practices, regions throughout Africa provide corporations with opportunities to give back to economies that need new opportunities. Corporations can also benefit from employing Africa’s young, technologically savvy workforce across regions with multilingual fluency and natural diversity and resiliency. With more investment and regional cooperation, Africa has ample opportunity to compete in this growing industry for years to come.

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jodi

Jodi has worked in the technology sector as a lawyer, project manager, and privacy analyst. After graduating with her first degree in 2012, Jodi entered the workforce and found globalization impacted every aspect of her work. She has been fortunate to work with incredible colleagues from around the world, expanding her horizons and her interests far beyond her home in Colorado, USA.

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