Africa Enters Global Market For IT Outsourcing

nusratt writes "MarketWatch reports that many organizations 'are moving away from India as the place to outsource, because of the labor churn, and Africa supplies the highest rate of return on investments. New York's parking ticket system is managed from Ghana, Nigeria has an entire ministry for ICT, and Mauritius is building its own CyberCity. Gartner predicts that up to 25 percent of IT jobs today will be moved to emerging markets by 2010'."

Comments

ummmmm.... security?

[JeanBaptiste]

Would you trust any sensitive customer data in Nigeria? Im not being racist, just that they dont exactly have a glowing track record.

Re:ummmmm.... security?

[Dibblah]

No. In fact, it *is* fair to generalize. If a country is cheap to outsource to, it means that labor costs are cheap. Which means the workers get paid little. This is fine (commercially speaking) when you're just making running shoes. But when you're handing out IT support and the workers must have access to sensitive financial and proprietory information to do their job, this has to be something that crosses a managers mind.

Oh. Wait a minute. No, it doesn't.

Re:ummmmm.... security?

[Gannoc]

Just so ya know, you would have sounded less racist if you had mentioned the Nigerian scam

Jesus Christ, he didn't say "How can you trust blackies with sensitive information", he said "How can you trust Nigeria with sensitive information".

You can criticize a country, environment OR EVEN CULTURE without being "racist". I don't like beheadings in Saudi Arabia, human rights in China, or cutting off a girl's clitoris in India, but that doesn't mean I don't like Arabs, Chinese, or Indians. So everyone stop being so fucking sensitive.

Re:ummmmm.... security?

[geekoid]

"but that doesn't mean I don't like Arabs, Chinese, or Indians...."

well, except the ones with the sharp knives.

Re:ummmmm.... security?

[drooling-dog]

I don't think that embezzlement is a primarily a crime of the desperately poor. Greed knows no bounds whatsoever, and there are plenty of well-healed corporate executives who are happily ripping off their shareholders big-time in spite of their wealth.

Nigeria!

[Megor1]

Oh yes this is the country you want to trust for your outsourcing needs. "Thank you for calling Dell,.... Well sir I think I know how we can fix your computer problem, you see my uncle Prince Zambar the great had $434,000,000 (FOUR HUNDRED AND THIRTY FOUR BILLION DOLLARS) yadda yadda yadda."

Nigeria has an entire ministry for ICT

[wfberg]

And as it so happens the Nigerian ministry of ICT has developed a product for the US Department of Homeland Security. Problem is, that the DHS can only contract out to a US based company or individual. Seeing as this contract is worth 480 MILLION DOLLARS, they will be glad to give you 10% of that, if you were to act as an intermediary.. There are just a feeeew formalities to be handled, like, oh, a Nigerian ICT business license, and this thing called a Remmitance Fee. Honest truth. They e-mailed me about it just yesterday.

Its not racism...Nigeria has a problem

[voss]

Nigeria is like the internet scam capital of the world they lack the legal infrastructure to be a trustworthy place to do business.

Thats not to say they couldnt turn it around...but its going to take a lot of work.

Re:Its not racism...Nigeria has a problem

[0racle]

But they have proved that they have the telecommunications infrastructure and the ability to forge international business deals worth many billions of dollars.

Re:Its not racism...Nigeria has a problem

[bcrowell]

I have to agree. I run a small internet business selling my own physics textbooks, and recently I got a $1300 order from someone in Lagos, Nigeria. Ran the transaction on her credit card, and then waited for the money to hit my account before I shipped the order. My merchant service provider called me up, and explained that they were holding the money because there was a high probability of fraud. Contacted the customer. Her response: "Oh, if that credit card number didn't work, that's no problem. I'll give you three more, and one of those will work for sure."

The weird thing about it is the lesson it teaches about the banality of crime. I mean, c'mon, using a stolen credit card number to buy physics textbooks?? There must actually be students in Lagos who want to buy the books, and I suppose this is simply her way of increasing her profit margin.

Reminds me of China, where all these U.S. businesses tried to move into the market, and then found out that the whole country was basically run by Communist Party gangster-officials. India may be screwed up in many ways (population, children's lack of access to education, ...), but they are at least a more-or-less functioning democracy with a more-or-less functioning court system.

Light and Fluffy, but interesting

[lofi-rev]

It's not super in depth, but over at cio.com they have interactive maps comparing different parts of the world for outsourcing.

Sure, send money to Nigeria

[Woy]

Yeah, i'm glad money is flowing into Nigeria, as i am about to complete a transaction with a Nigerian prince that will settle my money problems for good. I laugh at thee.

Political stability anyone?

[Dark Lord Seth]

Really now. India and Taiwan I can imagine as good sources for cheap labour. Stable and growing economies backed by a stable enough political systems. Now about most of Africa then? Only the countries at the northern most end and the southern most end ( Morocco, Libya, Algeria, Tunisia, Egypt and South-Africa. ) are anywhere near stable. The countries in the middle are plagued by atrocious economies that can't support anything, absolute lack of anything after YEARS of prolonged warfare and famine, no political stability whatsoever and plenty of tribal conflicts to boot.

I would think twice of investing resources in a country where the next day you might have to deal with 50k refugees from your neighbor camping on your grounds, the local fundamentalist warlord taking over control of the country and/or a tribal warfare because you've employed someone from tribe Z which pissed of tribes A to Y.

Re:Political stability anyone?

[spurious cowherd]

I don't think you have a grasp on things
Africa, like most other coninents, has stable (very) and unstable countries

Senegal seems to be more stable than just about any South American country & can give some European countries ( think the Balkans) a run for their money

'Tis no wonder then that French Call Centers are focused there

Go fuck yourself

[autopr0n]

FYI The the nation that produces the most spam is the Good Ole USA. Just because this scam is popular in Nigera dosn't mean that most nigerian's are scam artists. A couple of months ago over 500 scammers were arrested. Of course slashdot decided not to publish the story.

Re:Go fuck yourself

[mc6809e]

You probably were modded down because people still confuse race and culture. They misinterpret cultural criticism as racial criticism.

Remember, a lot of the people around here watch Star Trek, where race == culture.

Re:Keeping Wages Down

[_Sharp'r_]

What this leads to over time is people in these third-world countries, as well as the people who are hiring them from around the world, gradually having a better life than they did before.

As one country develops to the point where it's workers are efficient enough to be able to charge more for labor-intensive work like a call center, they move on to higher-paid work and the call center work gets moved to yet another country.

You don't pay a backhoe operator to dig ditches by hand when you have a backhoe handy and it's not because you want to keep from paying the backhoe operator too much.

There is a reason for this, it's called comparative efficiency and it's why trade between individuals exists in the first place.

What you are missing is that in order to "outsource" work to any country, a company must pay the people who work there more than they were being paid already, otherwise they wouldn't work for them, would they?

I really can't blame corporations.

[Freston Youseff]

Seriously, if the labour is as skilled, what's the justification for keeping the labour in the 1st world? Moral crusading on the idea that this would only be justified if the outsourced workers were paid an identical wage falls flat on its face; "victims" of outsourcing would be identically as pissed as they are now as they're having wages undercut. We're going to have to admit sooner or later that your average African or Indian brain can process the simplicity of IT work as well as your average Euro-American IT worker. If you ask me, offshore workers still have a very large hurdle to jump in order to become as useful in processing IT labour: predominant mastery of major lingua francas.

The U.S. outsources to Canada

[otisg]

I read an interesting article the other day. This article was describing Canada as a great place for the U.S. to outsource its jobs, because:

1. same time zone
2. same language
3. similar work ethics and culture
4. lower wages
5. highly educated
6. geographically closer ...
Makes sense, eh?

Same old corporate welfare

[danharan]

It is also vital that African countries nurture tertiary education, customizing tertiary education courses to capture the market and produce the needed skills to be attractive to investors.

Yay, let's encourage corporate welfare for foreign corporations!

In this tested and failed system, multinational corporations no longer need to pay training costs for their workforce. Governments also compete by subsidizing infrastructure - and sometimes by direct cash subsidies too.

God forbid we actually train Africans in IT so that they could deal solve their own economic challenges.

You gotta love Gartner

[foidulus]

Oh yes, offshore outsourcing is going to be huge! Oh and by the way, we do have our own offshore outsourcing consullting services!
Not saying they are wrong, but you just gotta wonder if they may have alterior motives....

read it here

[zogger]

I read about that "500 scammer arrest" here on slasherdot. Not sure-don't recall- if it was a standalone article or a reference in a subthread though, but defintely it was here.

My bottom line as a past identity theft victim is, I don't trust anyone or anyplace with my info now, although you are forced to provide it in some cases. I now use cash as much as possible, don't have an ebay or paypal, etc, account,never use them, don't pay any bills online, and tend to use postal money orders a lot for buying things "remotely", and even then, only if it's impossible to find or order what I want locally in a brick and mortar store. Yes, it's limiting, but still doable in our society, but it gets increasingly hard to do. It seems every business out there wants all your info, and nowadays every other website wants your info just to look at the website. Screw it. I love the *theory* of the internet, and I use it up to what my personal-choice limits will allow now, but the *practice* of the internet as regards any sort of rational "security" is a 50/50 crapshoot near as I can see as soon as "money" is involved in any manner. If your software isn't insecure, then the humans at the other end might be insecure.

WorkForce Strength

[Greenisloved]

Reasons why India is better to Invest:

1.Upcoming Youth workForce:

I would like to remind everyone, that 50% of indian population is below 25 years of age and only 54% of popuation are literate.Slowly this is improving , people are imbibing english into their lifestyle more.After Bangalore, New Delhi ,Mumbai Hyderabad ,Chennai there are other cities like pune,Ahmedabad , Coimbatore ,Mysore coming up big time to meet up the standards.upLittle towns have already become better.Villages are improving etc.Looks like workforce is improving

2.Upcoming alternative IT workforce:

Already there are overwhelming amount of indians whose undergrad major is mechanical or electrical or some other non comp-sci degree but still they are seduced for quick bucks in IT.Honestly if u have good aptitudde and some basics of programming, one can sustain in IT field with hardwork.I was thus saying there is an upcoming workforce there.

3.upcoming Quality English Workforce:

Importance of english is overstressed in schools.Indians watch a whole lot of English movies , listen to Music and its almost a status symbol if you are good with english.And besides , Nerds are the heroes in India.You would watch Indian heroes in movies are projected to have a strong academic background .Anyone who can bring big bucks to the family is hailed and treated like a hero.So English workforce is improving tremendously.India has 18 official languages.Jus imagine if People in US speak so many languages.Languages come with diverse culture,customs etc.And English is undoubtedly the uniting factor among diverse Indians.All Work is documented in English becuz most of them dont know many regional languages.

4.Content with Salary
:
Most of the people with non comp sci majors who work in other areas earn half as comp sci workers.And if an IT employee asks for more money , that reform would not be easy cuz there are so many talented Indians wthout jobs stalking streets day and night to bring themselves and their families to a decent existence.Btw , The salaries provided to many IT people are very high already.They enjoy superior life style.The point is "Salary increase is minimal and would not be a burden to investros".So in the long run, they are stable and cheap.

I would still invest in India , cuz

1.Abundant and still latent talented English speaking IT workforce
2.Upcoming Quality of workforce
3.Democracy and approachable govt policies.
4.Already Established.
5.Investment cost is low and not likely to grow higher and would propagate to different unexplored places.

Sorry for the long Article , couldnt condense..

Equalization means down.

[Anonymous Coward]

The US standard of living is based on cosuming 60%of the worlds resources. So there is a problem bringing everybody up to that level.

US: Our Race to the Bottom

[reynolds_john]

If Gartner says it, It MUST BE TRUE (tm). Clowns.

The essence if stupidity is this - the more we "compete" with third world countries, the more we as a nation are going to lose. Third world countries don't have our living standards, our infrastructure, or many other opportunities we have worked for for so many years. They don't require benefits, which thanks to our broken healthcare industry (read insurance racket) eat up huge portions of company dollars. They don't require fair living wages, benefits, any kind of job security. So how do we compete globally? Do we push our standards into the toilet in order to accomodate corporate greed and government corruption?
We have two options - force our standard of living down to the early 1900s level in order to "compete" (what we are doing now), or have a US-based revolution that redefines America as a self-sustaining entity - reliance on our own farmers, manufacturing industry, service sectors, etc. In this mode, we refuse to give up the quality of life we have built for ourselves, and start requiring other countries to come to our level playing field if they wish to participate.

What amazes me is that with America's huge installed base of great programming and IT knowledge, there is no influx of jobs coming from the other direction.
Are we SO overpaid that our economy must first experience a massive depression in skills, education and fair wages in order to "compete" (artificially) with the rest of the world? Do other countries' people actually believe that somehow they won't experience the same problems and that they will all become rich and famous; their management won't outsource back to America if the wages are cheaper?

Say what you will about Unions, but my friends, America's Corporate Greed is ready and willing to exploit you, and teach your management the tricks of the trade. If you think we're overpaid over here, then check our statistics on labor at the department of labor and statistics url:BLS. Note that union workers on average get a few $ more per hour than non-union. And yet, people still believe they are evil. This is typical claptrap from businesses that don't wish to impact their profit margins in order to "compete". How soon we forget the awful abuse our parents and grandparents experienced at the hands of large business - and the need that created unions in the first place - it hasn't even been a hundred years.
Remember that everything over here costs a LOT MORE than in India or other countries, even if the vast majority of crap (and I do mean CRAP) we buy comes from China (hello, WalMart).

So, anyone care to speculate where the bottom is, and when we'll reach it?

Re:US: Our Race to the Bottom

[Corpus_Callosum]

The essence if stupidity is this - the more we "compete" with third world countries, the more we as a nation are going to lose. Third world countries don't have our living standards, our infrastructure, or many other opportunities we have worked for for so many years. They don't require benefits, which thanks to our broken healthcare industry (read insurance racket) eat up huge portions of company dollars. They don't require fair living wages, benefits, any kind of job security. So how do we compete globally? Do we push our standards into the toilet in order to accomodate corporate greed and government corruption? We have two options - force our standard of living down to the early 1900s level in order to "compete" (what we are doing now), or have a US-based revolution that redefines America as a self-sustaining entity - reliance on our own farmers, manufacturing industry, service sectors, etc. In this mode, we refuse to give up the quality of life we have built for ourselves, and start requiring other countries to come to our level playing field if they wish to participate.

There is one other alternative - the most practical one - make best use of our position as leader of the first world to innovate and bring new industries into existance (such as biotech, nanotech, advanced computer technologies [ AI, etc.. ], space tech, etc..) and allow the third world to commoditize the jobs that we cannot compete for anyhow. Allow them to take the jobs so that we can focus on doing what needs to be done anyway.

Re:US: Our Race to the Bottom

[frank_adrian314159]

make best use of our position as leader of the first world to innovate and bring new industries into existance (such as biotech, nanotech, advanced computer technologies [ AI, etc.. ], space tech, etc..)

Well, let's see...

Biotech - most of the drug companies are already moving R&D to India; it's a lot cheaper when you can dump your leftovers in the drain rather than having to dispose of them properly. Test subjects are cheaper, too. GE has moved their next-gen MRI stuff there, too. So much for medi-tech. as well.

Nanotech - Most MEMS fabrication is going to be done in China. Most economists say it doesn't pay to have your R&D for fabs far away from the fabs themselves. Most EDA outsourcing is already offshore (as is a lot of design). What makes you think MEMS work is going to be any different?

Advanced computer technology - Name one that an Indian or Chinese brain can't figure out as well as an American one. Most robotics AI work now is being done in Japan. US funding for same is in the dumper and it is highly unlikely that publically traded companies will see the short term payoff to invest in speculative technologies.

Space tech - Well, see what I said about "advanced computer technology" and double it for this. Plus the government is sloughing off research in this area as fast as they can.

Bottom line, we don't have a premier R&D system anymore. Corporations don't want to fund R labs to fuel the D. Regulated monopolies (which once provided them) are now simply quasi-protected entities that still have to answer to the corporate shareholders. Government R&D continues to be slashed and most of that money goes to universities to train foreigners because Americans know that once they work for X years studying science and technology their jobs will be gone.

High tech doesn't buy the future in a world of open and fast communication - the knowledge diffuses too rapidly. Unless you have some structural barrier to knowledge and/or job migration, it will happen.

My opinion - we saw the collapse of unfettered socialism about twenty years ago. It's about time for the collapse of unfettered capitalism. My best guess says about five years from now...

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Comment removed based on user account deletion

Austrian Economics and IT

[sdeath]

The fundamental problem is this:

The governments of these African countries, like the government of India before them, are in the process of subsidizing the development of what is perceived to be a cash cow of limitless milkability, IT. This process is nothing more and nothing less than seizing money at gunpoint from other, more productive domestic industry (natural resources development as one example) or getting it from dumber countries (like, say, the US and its billions of dollars of foreign aid, ironically likewise looted from the American taxpayer), and giving it to another industry to make it grow in defiance of market forces. Governments are subsidizing the production of millions of PhDs, handing out favors to "tech-savvy" "entrepreneurs" and foreign companies to take advantage of the perceived riches of the tech industry, not realizing a couple of very basic tenets of economics:

ALL OTHER THINGS BEING EQUAL, WHEN SUPPLY GOES UP, PROFITS (AND PRICES) GO DOWN.

and

IT IS NOT POSSIBLE TO CIRCUMVENT MARKET FORCES. USING GOVERNMENT TO FORCE THE ISSUE LOOKS BETTER NOW, BUT COSTS MORE LATER.

The problem is, this is not an endless phenomenon. It wasn't profitable to locate things in India before, for a multitude of reasons (lack of infrastructure, lack of education, social problems, whatever). It will likewise be unprofitable in the future, when their millions of PhDs are hacking cabs in New Delhi to make rent, or becoming farmers. (You can see this process beginning now. The market there has reached capacity, and other places - like Africa, Land of Ceaseless Warfare, Spam, and Disease - are being seriously considered as places to invest in tech, because the market in India is getting too inflated.) It sure as hell has been unprofitable and/or just plain dumb to locate any form of tech industry capital in basically any African country, where the odds of its being nationalized, destroyed, or devalued in the customary and predictable political upheaval are astronomical.

The cornucopia of benefit from IT and tech in general is mostly illusory. It came about in the US largely through a government/Federal Reserve easy-credit policy in the 90s that allowed all manner of idiocy to get funding and look great on paper (AKA the dot-com boom - pets.com, anyone?), followed by the bust when all of these crappy investments based on bullshit were exposed as the stupid ideas that they were. Yes, there is some benefit to tech, as long as it enhances productivity and quality of life. No, its benefit on life and productivity are not infinite, nor is this benefit anywhere near as bountiful as some think. It seems that the governments of other countries, enthralled by the idea of a trillion-dollar business tax base (or "loot pond") springing up overnight with a minimum of effort, are going to go down this same road with precisely the same heartbreak at its end. The citizens of these countries would do better to leave their neighbors alone and spend their time farming and defending their property from invaders. After a few decades of respect of property rights and natural rights have set in, then they could begin working their way up the industrial/informational ladder, and would be in a much better positioin than we are now. (For that matter, we in the US should probably take the same advice.)

Oh well.