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

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.

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.

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.

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.

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.

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.

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....

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..

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[account_deleted]

Comment removed based on user account deletion

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: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.

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.