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'."

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.

Keeping Wages Down

[ObsessiveMathsFreak]

Whatever about the labour markets in India and China, the real reason for this move is too keep wages, everywhere, down. If the Indian or Chinese programmers start asking for an extra 50 cent an hour, move it to Africa. And hey! There's still South America and Latin America id things go wrong there too!

I know outsourcing is supossed to bring everyone up to the same level, but what happens if a cycle emerges, whereby companies just pick a region on a decade by decade basis, keeping wages down permenatntly! They'd like too you know. But that's worst case senario

Best case, years of outsourceing leads to an equalisation of wages globally. Lets just hope those wages are the level we're used to and not the level programmers in El Salvador.

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

[lofi-rev]

Africa is a lot bigger than just Nigeria. Plus it seems any company trying to attract outsourcing would need to do a lot to maintain security protocols - otherwise no one would do business with them again.

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?

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?

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:AIDS = Churn

[twiddlingbits]

Yea all those deaths of AIDS in Africa..those deaths used to be counted as starvation, diseases brought on by Malnutrition, parasites, dysentery, diseases and the like. If AIDs was truly an "epidemic" as they say such as other diseases then 3/4 of the entire African continent would be dead by now after 25 yrs of HIV/AIDS infection. Deaths (such as from TB) that used to be counted as due to a specific disease or the horrid living conditions are now classified as AIDS "related" so the countries can get UN money which the corrupt governments promptly siphon away. There are many studies that show that a lot of what we hear about HIV/AIDS are myths, and are not supported by sound science. But these voices have been silenced by the drugs companies and the researchers who live off of them as well as the companies live off Gov't funding for AIDS.

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.

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.

So what happens when...

[Christopher_Wood]

...all these outsourcing companies run out of newer, cheaper places to go? Asia, Africa, South America - all these places, as they climb the economic ladder, will eventually not be the cheapest place to outsource labour to.

I wonder what sort of economic adjustments will happen when price isn't such a huge consideration in the provision of IT services?

at what point should we worry that

[holy_smoke]

Core business functions like customer support, coding, design, and manufacturing are leaving North America?

Admittedly I am a tin-foil hatter by nature, but its scary to me that corporations are throwing work en masse over the borders seemingly without concern for long term impact (loss of core competency in the North American organizations) or strategic risks (war, etc).

At what point to we say to ourselves, "shit, we just sold the farm but we still need to plant crops(!)"

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 [bls.gov]. 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?

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[account_deleted]

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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?

[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?

[Glonoinha]

Hell, they trust our sensitive data to the Indians in the name of 'saving money' - yea, they will eagerly and happily hand it over to the Nigerians.
Because we are going to let them, just like we let them hand it over to the Indians.

The day people start calling in and canceling our accounts and orders because the company has moved 'operations' or 'development' overseas is the day the trend starts to reverse. Until then, expect it to get worse.

Islamic?

[spisska]

Please be sure of your facts before you post, and try to avoid statements that are foolish, offensive, and wrong.

Firsly, Ghana is not an Islamic country in any sense -- 63 percent of the population is Christian.

While half of the Nigerian population is Muslim, it is not an Islamic country. Would you call Canada a Roman Catholic country? Unfortunately, there are a lot of sectarian tensions in Nigeria that sometimes result in violence. But it is not an Islamic state.

Secondly, there is very little reason to believe that religious beliefs and AIDS are somehow corelated. Just look at some statistics from west African countries:

Country / % Christian / % Muslim / Adult AIDS prevalence rate

Ghana / 63 / 16 / 3% (2001)
Nigeria / 40 / 50 / 5.8% (2001)
Niger / 20 / 80 / 4% (2001)
Chad / 35 / 51 / 5-7% (2001)
Benin / 30 / 20 / 3.6% (2001)
Cote d'Ivoire / 20-30 / 35-40 / 9.7% (2001)
Togo / 29 / 20 / 6% (2001)
--source: CIA World Factbook

Outsourced IT work is a great economic opportunity for African countries. They continue to be shafted on agriculture through US and EU farm subsidies, and on natural resources through international conglomerates, kleptocratic governments, and war profiteers.

Things like call centers and support centers don't cost much to set up, bring money to local economies, and provide jobs for skilled workers, giving a boost to education systems.

This will also create local markets for IT goods and services, creating a positive feedback loop -- as more people learn the trade, more people demand products and services the trade offers.

How long before we see a cheap, solar-powered PC running an African-brewed Linux?

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

[DNS-and-BIND]

Please visit China sometime. Officials don't give a shit about the people, just like any other country. Chinese morality includes having no pollution laws, discharging whatever untreated waste you want into the nearest river, and a cloud of pollution that makes visibility 500 yards by 5pm?

Re:Keeping Wages Down

[hazem]

And people wonder why most tech people do not recommend Dell. Frankly, they suck. Our school district switched from Dell to a no-name computer outfit. Sure, there are some teachers complain, because they see the Dell commercials and think they're better. I ask them to give me evidence that the Dell computer is better than our no-name brand. It never comes.... the "Dell Dude" does not count as a qualified source for computer information!

I love it when the Dell salespeople call and ask why we switched, and we tell them, "because your computers suck, and your service is even worse."

One of my marketing teachers spelled it out really well. You can always get away with cheating in a one-turn game. But when you have to keep playing, you eventually find that you can only cheat for a while before you finally get burned.

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 [omaha.com] are focused there

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

[RWerp]

You're talking some propaganda. Communists are communists, once they get to power they don't give a shit about people. What did Mao bring on his country in times of 'Cultural revolution'? Terror and famine. What does the current party do to improve the living condition of ordinary people? Don't sell the bullshit that people who are not elected, face no criticism from the press , will suddenly feel responsible 'before heaven'. They put people to death for stealing oil.

Besides, you seem to have strange notions of the position of the ruler in Europe. There were rulers and rulers. Some didn't give a shit about the people, some did.

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[account_deleted]

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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.

Re:Nigeria!

[drooling-dog]

Oh yes this is the country you want to trust for your outsourcing needs.

Well, I know of a country where the CEO of a major corporation accepted a $30 Million "gift" from his company just before becoming Vice President of the country, and then pushed hard for a war that he knew would enrich that company (and himself) immensely. I don't know if I'd be willing to outsource there, either! Oh, wait...

As Theodore Vail once said...

[KC7GR]

Money is not an end. It is a means to an end.

My own view is that short-term profit is NEVER as important as long-term survival. So many companies and so many people, though, rarely look beyond the next quarter's profits.

Until that attitude changes WORLDWIDE -- until money itself is seen merely as the tool that it is, not as some sort of object of worship -- I think we'll continue to see this sort of insanity in terms of hemorrhaging jobs overseas.

I fully expect that such a radical view will get moderated down as 'flamebait' or 'troll' or something similar. So be it. No amount of Slashdot moderation will change the truth.

Re:ummmmm.... security?

[superpulpsicle]

Can Nike afford to hire security to stop shoe thief in China, yes.

Can Nike afford to have 20 pairs of shoes stolen a day in China, absolutely.

Can Nike afford to pay $1 US a day for an employee in China, yes

Can Nike afford to pay $100 US a day for employee in US, hell no.

Now replace the word shoe with computers. Capitalism is the same everywhere.

Followup prediction...

[Anonymous Coward]

>Gartner predicts that up to 25 percent of IT jobs today will be moved to emerging markets by 2010

The problem with emerging markets is that they don't remain 'emerging'.

n% of tech jobs will have moved to Africa by 2010.
n-1% of tech jobs will have moved to (oh, let's say..) central america by 2011