In the last decade, business process outsourcing was the poster child of Africa's new digital age. There was a lot of talk and hype about how Africa would conquer the global business process outsourcing industry, overtaking India and the South East Asian countries. Some of the reasons for this exuberant optimism were the language factor, cheap highly skilled (university educated) labor and the expected reduction in telecommunication costs following the completion of several undersea fiber optic cables and terrestrial fiber.
Anglophone Africa, specifically South Africa and Kenya, were said to have an advantage in language over India due to their perceived better ability to speak English with a neutral. This was seen as a key factor in acquiring call center business, a major sub-sector of the business process outsourcing industry.
A decade later, there is no question that BPO has been a big failure in East Africa, one of the regions it was thought would have led the charge. Despite huge investments to attract BPO business in Kenya, most global call center businesses have found their way to the Philippines. The Philippines now has the largest share of global call center business having overtaken India in 2011 even though India still leads in overall business process outsourcing.
South Africa has performed much better though the growth is still mediocre when compared to the Philippines and other South Asian countries.
To understand this disappointing growth, one has to weigh it against the criteria that companies use when deciding where to take their outsourcing business. The most important factors are; language, labor pool, infrastructure, education system, cultural compatibility, government support, cost, political and economic environment, legal maturity, data privacy and security and, intellectual property protection.
While Kenya scores well on language, labor pool, education and cost, it performs miserably on most other criteria. For example, the political environment especially after the 2007 general elections scared off many potential outsourcing customers. The integrity of data is also a key concern. Outsourcing companies need to feel that their data is secure. Security of North American or European company data is more difficult to maintain when accessed or controlled in Africa. It is only recently that several African countries begun implementing public key infrastructure
to improve online security. Enforcement of intellectual property violations is also another area where much can be done to improve perception from overseas. The cost of Internet access has also been quite high and only begun to fall considerably in 2008.
South Africa also scores well on infrastructure, language, politics, labor pool and education. But, on the issue of data security, the country is bedeviled by the same problems experienced by the rest of Africa. Also, even though the telecommunications infrastructure is well developed, the costs remain relatively high when compared to other parts of the world such as India and Philippines. This has a substantial impact on the cost of outsourcing fees.
One of the ways that African countries can grow this industry is by re-examining their approach to customer acquisition. There should be a paradigm shift in this area in the sense that African BPO firms should focus more on the local in-country business and drop their obsession with European and North American contracts. There is also great potential in cloud based services such as; accounting, customer relationship management, digital marketing, inventory management, lead generation and payments processing. African governments are also prime targets for local business process outsourcing. This is the best way to revive the BPO dream in Africa.