The global business process outsourcing (BPO) market is currently valued at over $260 billion and is expected to exceed $500 billion by 2030, according to Grand View Research. Outsourcing markets like the Philippines and India are well-established, but saturation, high turnover, and intense competition for labor are among the concerns in these and other mature locations.
Next-generation “hot spots” for call center outsourcing will continue to emerge as brands seek untapped markets with talented workers and new suppliers. Africa is leading the geographic diversification "revolution" with competitive BPO solutions.
Let's delve into the emergence of African outsourcing.
Why is Africa rising?
Africa has been previously overlooked as an outsourcing destination for several reasons, including infrastructure, geo-political, and slow market development. Over the past 10-20 years, various African countries have made great strides to become bona fide destinations for tech-enabled services, including BPO.
One of Africa's greatest assets is a skilled, yet underutilized talent pool. According to the African Development Bank:
- There are roughly 420 million youth in Africa between the ages of 15 and 35.
- Africa is the world's youngest region, with a median age of 25.
- There is a high rate of unemployment and underemployment in many African countries.
- Over 12 million African youth enter the job market annually.
- Available workers face prolonged unemployment and underemployment.
- Without meaningful career prospects, skills can atrophy, leading to regressive societal issues.
Perceptions of Africa vs. reality
There has been a perception that African countries are playing catch up to the rest of the world in tech-enabled services. While mature outsourcing markets like the Philippines are poised to grow 10% per year, newer locations like Africa pose a formidable challenge and are gaining market share.
Let's address perception vs. reality in the region.
Misperceptions associated with outsourcing to Africa:
- Poor infrastructure, underdeveloped countries
- Low wages and worker exploitation
- Data security and customer experience risks
- Market immaturity in the BPO sector
- Limited knowledge of U.S. brands and a lack of cultural affinity
- Geo-political issues and corruption
- Low-skilled labor force, communication challenges
- Inexperienced with complex workstreams
Reality associated with outsourcing to Africa:
- Improving infrastructure, rivalling first-world cities leading the BPO industry.
- Call centers have supported European, Australian, and African companies for 20+ years.
- Progressive BPOs have transitioned to supporting U.S. clients with great effect.
- Broader adoption of Africa as a "go-to" offshore market by Fortune 500 brands.
- Highly skilled, tech-savvy, educated, and motivated workforce.
- Strong communication skills, exceptional English — spoken and written.
- Competitive wages and meaningful career opportunities.
- Minimal weather-related events compared to other offshore markets.
Why is Africa an attractive market for BPO?
Since the onset of offshoring, we have always eyed "the next best outsourcing region." For English language support, brands can continue to saturate and over-index headcount in current markets or look to newer, competitive destinations.
Enter Africa — the next frontier for BPO. For corporate brands seeking a burgeoning option for outsourcing, Africa offers many advantages, including:
- Competitive costs – On par with other offshore markets and more competitive than most nearshore locations.
- English language – The first or second language in many African countries.
- Talent pool – An abundance of young, educated, tech-savvy, trainable workers vying for a career in BPO.
- Unsaturated markets – Access to an untapped labor pool, less competition for talent, and more selective hiring.
- Impact sourcing – Brands can invest in socially conscious practices enabling job creation and career opportunities for persistently unemployed and disadvantaged individuals.
- STEM-focused education – The African Union is committed to STEM — Science, Technology, Engineering, and Mathematics — education systems grooming future business leaders among African youth.
- Major brand presence – Brands such as Amazon, Daimler, Google, and Microsoft have established service delivery centers in Africa and are investing in tech-enabled job growth.
- Government support – Governments and Non-Governmental Organizations (NGOs) are investing heavily in the sector by offering financial incentives for job creation.
- Risk mitigation – Africa offers the opportunity to de-risk and diversify from over-concentration in de facto BPO markets.
What are some of Africa's leading countries for BPO services?
Leading North African Markets
- Egypt – the most populous country in North Africa, 4th most in Africa, 102 million people, 7.5% unemployment rate, 51.2% of Egyptians under age 25, one of the most youthful populations in the world, IT-enabled services industry estimated $3.26 billion, 95,000 working in the call center industry, over 500,000 graduates per year, multi-lingual BPO hub for English, French, Spanish, German, Arabic, Italian, and other languages.
- Morocco – population 37 million, 11.2% unemployment rate, 29.5 years median age, only African country to have a free trade agreement with the U.S., 5th largest GDP in Africa, estimated 100,000 call center workers in captive and BPO operations supporting EMEA (Europe, Middle East Africa) and North America customer services. Multi-lingual BPO hub for English, French, Spanish, German, Arabic, Italian, and other languages.
- Tunisia – 12.3 million population, 16.82 unemployment rate, 10,000 IT engineers graduating annually, expanding BPO sector estimated at $2 billion currently, digital services contribute to 7% of GDP, nearly 300 foreign companies with business interests in the country.
Leading Sub-Saharan Africa Markets
- South Africa – the Sub-Saharan region’s most mature market for BPO services, 61 million population, the only African country in the G20, among the three largest economies in Africa, estimated 300,000 + call center employees, 35% average unemployment rate. Most call centers are in Durban, Cape Town, and Johannesburg.
- Kenya – 54 million population, one of the largest economies in East Africa, rising star in BPO, English official language, among the most neutral English accents. British education system (former colony), free and accessible primary education, 130,000 university graduates annually. Kenya poised for expansive international BPO growth. Most call centers are in Nairobi.
- Ghana – 33 million population, services sector largest contributor to GDP, third-largest U.S. exporter in Sub-Saharan Africa, over 70% literacy rate, over 20 captive and BPO call center operations primarily servicing local African CX market, expanding to support North America and Europe. The main hub for call centers is in Accra, the capital.
- Ethiopia – 115 million population, annual GDP growth rate of 10% in the last 10 years, median age 19.5 years, government transforming country from agriculture to services-based economy, among largest recipients of foreign investments in Africa, growing tech and BPO sectors.
- Rwanda – 13.7 million population, one of the world's fastest-growing economies, traditionally an agriculture-based economy, shifting to tech, energy, financial services, and hospitality. Nascent BPO industry, not as scalable yet as other Sub-Saharan countries but well poised for growth.
- Nigeria – 215 million population, 9% unemployment, $1.1 trillion GDP, largest economy in Africa, 16,000 BPO agents and growing, largest ICT (Information and Communications Technology) sector in Africa, over 91 million internet users (among highest in Africa), 53 million population between 18-35, abundance of multi-lingual speakers.
Differences between BPO vendors in Africa
Call center outsourcers (BPOs) in Africa range from very small operations to mid-sized providers to global conglomerates. As with any geography, vendor selection is critical. The market is poised for significant growth, hence why many BPOs are seeking entry.
However, a BPO's presence in Africa alone is not a differentiator. A key factor is the BPO’s overall commitment to Africa as well as the long-term plan and vision. Is the vendor, or site, an “African born” enterprise or a satellite location? What is the BPO’s foundation in Africa? What is the BPO’s understanding of the African market? Is the management team local, expatriates or both? These and other considerations are essential in choosing your partner(s).
U.S. market experience is critical! Some African BPOs have supported U.S. brands for nearly 10 years, while others are lagging. If you're considering BPOs in Africa for U.S. customer support, deep U.S. brand experience is essential — we can't emphasize this enough. Your BPO should not "learn" how to support U.S. clients on your dime.
Avoid the joint-venture structure! Some BPOs seek market entry by establishing joint ventures with African call center operators. Such models have great risk, hence why so many brands decline the joint-venture arrangement. The preference is for the BPO to be the "owner and operator" of the site, not a sub-contractor.
Job creation is not enough! Africa offers a wonderful opportunity for brands to create jobs but customer experience, meeting and exceeding performance, staffing, and contractual KPIs are paramount. Please refer to our article, "Impact Sourcing Requires Impact Performance," where we delve into this topic.
Careful due diligence is required! Brands seeking vendor relationships in Africa must scrutinize the company and site operations to ensure the best alignment for a long-term partnership. As in other markets, there are BPOs in Africa with commoditized services that lack intrinsic value. For the best customer experience, look to higher echelon BPOs that should be on par, if not better than the best BPO operations in the world.
Things to look for in African BPOs include:
- Cultural alignment
- Deep experience with U.S. brands
- Frontline leadership experience
- Client services organization and structure
- Operational team structure and communication loops
- Executive leadership, level of engagement, ownership structure, financial health
- Reputation — in the local market(s), industrywide and via references
- Agent experience (culture, wage rates, amenities, transportation, etc.)
- Recruiting and retention practices
- Impact sourcing practices; confirm they're real, and impactful
- Diversity, inclusion, and social responsibility practices
- Relationships with NGOs
- English comprehension, verbal and written
- On-premise vs. work-at-home operational parameters
- Innovations, automation, value-added tools, and processes
- Cost structure — competitive, at-market, shared-risk
- Data security and business continuity
Concerns with African BPOs
While most African BPO markets are a long way from saturation, this is always a concern in new markets. However, given the level of unemployment and the sheer number of individuals applying for BPO jobs, we predict that saturation will not be an issue in most African BPO markets for several years — possibly longer.
A bigger concern is the ability of African BPOs to groom leadership talent, given the newness of the market and current growth trajectory. African BPOs must invest heavily in management training programs, ensuring that frontline operations leaders, client services personnel, and trainers meet and exceed client expectations.
What services do African outsourcing firms provide?
BPO is among Africa's fastest-growing sectors for job growth, encompassing customer service and other call center functions. Africa has been a BPO “outpost” for European support and continues to be. Recently (over the past 10 years) progressive BPOs have shifted to supporting North American brands. The predominant language is English. However, French, Spanish, Italian, German, Arabic, and Portuguese are other languages that can be recruited.
|Services offered by BPOs in Africa include:||Who is outsourcing to Africa today?|
|Data annotation||BFSI (banking, financial services, insurance)|
|Data entry & back office||Consumer electronics|
Corporate brands seeking high-quality offshore BPO services are looking beyond well-known, traditional outsourcing destinations. Brands with a diverse geographic mix of contact centers in regions like Africa can match customer demand with highly talented resources and individuals interested in a career, not just a transient job.
As the BPO industry expands globally, diversity will become a greater source of competitive advantage. Newer labor markets are characterized by some of the best talent available in the global BPO community, along with improving education and career development standards. Africa is poised for significant growth, as evidenced by the influx of new outsourcing contracts to African BPOs over the past 12-36 months from some of the most sought-after brands.
Africa is just beginning its expansion into BPO, and the region has high potential to become a preferred and even dominant outsourcing destination.