Outsourcing Reaches Africa

It's hard for me to describe just how exciting I find this particular story, and my one frustration on reading it is that outsourcing shouldn't have taken off in a bigger way in West Africa, despite the offshore presence of the fiber-optic lines needed to support a competitive industry. This is yet another reminder of how great a barrier to growth the continent's monopoly telecommunications providers continue to be.

NAIROBI, Kenya, Jan. 30 - Susan Mina, a Kenyan who has never stepped foot out of Africa, speaks English like the haughtiest of Britons. She can also put on a fair imitation of an American accent by swallowing all her words. Still, every once in a while, some Swahili slips out of her and that is not at all helpful as she tries to enhance Africa's role in the global explosion of outsourcing.

It happened the other day when she was trying to get a British man to sign up for a new cellular telephone service. He was in his home, minding his own business. She sat near the Nairobi airport, doing her business as a sales agent for KenCall, Kenya's first international call center. The man's accent - she pegged it as Irish - was unintelligible to her. "Pole sana?" she blurted out, which is what one says in Swahili instead of "Huh?"

Controlling one's Swahili is just one of the challenges that Kenyans are facing as they play catch-up in an industry that India and other countries have turned into major job generators.

Kenya's regular phone lines are so abysmal that the founders of KenCall had to go through the cumbersome process of getting government approval to use a costly satellite hookup. Even more dollars were burned on an elaborate generator system aimed at keeping KenCall's computer screens running during Nairobi's frequent power failures.

[...]

Although just a tiny entrant in the call-center market, KenCall has enough clients to keep 200 telephone operators busy. Some of the Kenyan sales agents dial up Britons and urge them to save money on their cellular phones. Others dial up Americans and ask if they are interested in refinancing their home mortgages. Without knowing it, some Americans even dial up Kenya, responding to advertisements offering low-income grants or job assistance.

After looking on for years as Asia cashed in on the outsourcing boom, Africa is now aggressively seeking its piece of the action.

Datamonitor, a consulting firm that follows outsourcing, estimates that there are 54,000 call-center jobs in the most advanced countries in Africa, out of a total of 6 million such jobs worldwide. But the 54,000 figure only includes South Africa and the countries of North Africa, not emerging call centers in places like Ghana and Kenya.

"There's a lot of potential in Africa," said Peter Ryan, an analyst at Datamonitor. "India, the Philippines and Canada are relatively mature, and that means wages and real estate are higher. So companies are asking, 'Are there other locations?' "

South Africa is far ahead of the rest of the continent, with an estimated 500 call centers employing about 31,000 people. South Africa boasts that the accents of its workers are neutral enough to fool English speakers everywhere. It also has the same time zones as parts of Europe, making doing business easier.

Ghana, which makes similar claims about its population's understandable English, has lured Affiliated Computer Services Inc., an outsourcing company based in Dallas that employs about 2,000 Ghanaians to process health forms for Aetna and other insurers.

With vast populations of French speakers, Africa is working to claim that part of the market as well. French-language call centers are operating in Morocco, Senegal, Tunisia and Madagascar, all of them dialing up Parisians and pretending to be just down the "rue."

"They say, 'You have a charming accent,' " Fanta Diop, a supervisor at a call center in Dakar, the Senegalese capital, told Reuters recently. "They never guess it's black Africa."

As the story makes clear, these jobs aren't exactly at the cutting edge of the outsourcing business, but they are at least a start.

Much of the outsourcing in Africa is focused on telemarketing, which is less profitable than processing medical forms or acting as the customer service department of an overseas corporation. But making cold calls is considered an entree to the highly competitive industry.

"The market for this is huge," said Nicholas A. Nesbitt, the chief executive of KenCall, which he founded with his younger brother, Eric, and his brother-in-law, Steve Liggins, a retired banker. "It's not possible to put a figure on it. Any job that is being done that doesn't require face-to-face contact can be outsourced. And why not to Kenya?"

Why not indeed?

Not only does the country offer an advantage that stems from its tepid economic growth over the years, its people have what Mr. Nesbitt calls a "pleasant Anglicized accent." Many of its college graduates are unemployed or underemployed, and are eager to dial around the world for a paycheck that would be considered meager in the United States - about $4,500 a year, including performance bonuses. That income is well above that of the average person in Kenya, where subsistence farming is the most popular job. Still, it only provides for a rather no-frills life in the costly capital.

That may be true for an expatriate reporter, but for the typical Kenyan graduate with no job prospects whatsoever in sight, I'm willing to bet that such a wage must seem almost too good to be true. One mustn't lose sight of the fact that this is a country in which the per capita income is a mere $1,000, and the equivalent American salary in terms of multiples of per capita GDP would be $170,000; even slashing the American equivalent in half, it's still easy to see that in Kenyan terms these really are dream jobs, so hasty accusations of "exploitation" by unwitting dupes of protectionist Western trade unions are entirely out of place.

Outsourcing has the potential to prove as great a boon to French and (particularly) English-speaking Africa as it has for India, if only the national carriers could be shoved out of the way. Unfortunately, the incentives in most sub-Saharan African countries are such that this is unlikely to happen in the near future without significant external pressure: why privatize a parastatal which is both a handy tool for ethnic patronage and a cash cow? If the likes of Gordon Brown and Jeffrey Sachs really wish to make a difference in Africa, I'd suggest they hold off on the calls for debt forgiveneness and start by cajoling the continent's rulers to open up their telecoms and electricity sectors to local and foreign competition.

Comments

[Delmore Macnamara]

Undoubtedly there is no reason you should care tuppence about the thousands of people in the North of England who will lose their jobs because of outsourcing of Telemarketing to India, Africa or wherever. But it seems likely that they would be likely to vote for any party they believed would implement protectionist measures to prevent it.

[Frank McGahon]

Those people in the North of England aren't losing "their" jobs because of outsourcing, but because they are so little enamoured by that type of work that they have to be cajoled to work in call centres by all sorts of perks and unsustainably high wages. The "churn" in call centres is notoriously high, there are few career telemarketeers and many people only last a few months. This suggests to me that, while outsourcing is a potentially emotive issue, nobody is going to get too bothered about the loss of telemarketing jobs in particular.

[Abiola Lapite]

Frank,

The great irony of this bit about "thousands of people in the North of England who will lose their jobs" is that unemployment in England hasn't been lower than it currently is in well over 25 years. I think someone needs to acquaint himself with the principles of free trade *and* take an occasional look at economic statistics before engaging in protectionist whining about the hard-done-by workers of the North.

[Delmore Macnamara]

You may be right, Frank. Why the scare quotes round "their"?

[Abiola Lapite]

". Why the scare quotes round "their"?"

Because jobs don't come into this world with particular individuals' names attached to them? A job is a contract between two parties, not an entitlement.

[Delmore Macnamara]

Abiola, where did I say it would be a bad thing, necessarily for those workers to lose their jobs, or whine about it? The implicit question was about what their reaction might be. Quite possibly Frank's answer was the correct one.

[Delmore Macnamara]

Abiola, where did I allege that jobs come into the world with people's name attached to them? Perhaps someone needs to reacquaint themself with ordinary English usage. Would you honestly never refer to e.g. "my" mobile phone contract, "my" rental agreement or, in fact "my" job?

[Abiola Lapite]

"Perhaps someone needs to reacquaint themself with ordinary English usage. Would you honestly never refer to e.g. "my" mobile phone contract, "my" rental agreement or, in fact "my" job?"

I think you're the one in need of the reacquainting here. You asked why Frank used quotes around "their", and I explained it to you - to make clear that there is no justifiable basis for viewing a job as one's personal property, as those who complain about outsourcing are wont to do.

[Delmore Macnamara]

Surely no-one posting at an explicitly libertarian blog is likely to be unaware of this view of the nature of employment. Hence the quotation marks were entirely superfluous.

Do you suppose that pointing out to newly-unemployed people that the jobs they lost (or, if you prefer, employment contracts that were terminated) were never theirs in the first place would be a wise move politically? Of course this is not your problem & there is no reason you should have to answer the question. Since I live in England, however, it may very well become _my_ problem.

[Abiola Lapite]

"Since I live in England, however, it may very well become _my_ problem."

And where do you think I am at this very moment? So much for that argument.

[Delmore Macanamara]

Abiola for some reason was convinced you were in US. No idea why. Well then, it may become your problem & you _should_ be concerned about the possible political fallout from extensive outsourcing. The current government rarely makes arguments in favour of free trade & neither of the sllegedly alternative governments seem particularly inclined to do so either. Are you really not at all concerned that protectionism may be on the rise in UK, politically speaking? Particularly since the EU is getting physically big enough to aspire (_foolishly_) to autarky?

[Abiola Lapite]

"Are you really not at all concerned that protectionism may be on the rise in UK, politically speaking?"

No, not at all. Britain has the longest free-trade legacy in the world, while Brown and Blair aren't protectionists, nor are the Conservatives or the UKIP (which has many other failings); in any case, as you note, trade policy is now made mostly in Brussels anyway, so domestic grumblings about outsourcing couldn't do much harm unless the UK were to withdraw entirely from the EU, a move for which I see little support.

[Delmore Macnamara]

I hope you are right. Note that BNP espouses leftish economic policy plus nationalism & racialism, & are gaining ground in some Northern areas where very few would usually vote anything but Labour. Perhaps nothing will come of this, perhaps something will.

[ogunsiron]

I was reading a similar article on a french speaking african oriented site ( www.grioo.com). It's possible that this Fatou is the same one ( although it's a rather common nam in Senegal). Well educated university graduates get to earn relatively excellent wages in return from selling or providing customer service in parisian french. Some readers were actually "outraged" about the accent thing ! As if that ridiculously minor irritant negated all the good that those jobs did in the lives of those young senegalese !

[Abiola Lapite]

" As if that ridiculously minor irritant negated all the good that those jobs did in the lives of those young senegalese !"

Man cannot live on "negritude" alone ...

[An african]

I say this as an African, in the country mentioned in the article.

You're right. People have and will loose their jobs. However, you have to understand that, just like you, we have stomachs, families to feed and lives to live. As much as I have sympathy for your predicament, it's a dog eat dog world -- and if I have to pin down somebody else for my betterment, sadly, I will.

I wish it were not so, but at the end of the day, if we can provide the same service, at a lower price, I see no reason why the jobs should be protected in the UK/US. After all, this is what 'globalisation' is supposed to be about. It's not only about flooding African markets with gvt. subsidised Western European produce -- it's about much more.

Sorry, but then again, tough!

[Delmore Macnamara]

Dear "An"

You are right, it is indeed a "dog eat dog world" & people will protect their own (however they may choose to define "their own") usually by any means necessary. Thus, as outsourcing increases, there will be political capital to be made out of the imposition of trade barriers to the practice. Sooner or later (maybe in the next downturn in the economic cycle) some politician will be sufficiently desperate for votes that they will make the relevant policy proposals, they will be elected & the trade barriers will be imposed.

I know I bang on about this, but there is no reason whatever to suppose that democracy is compatible with free trade. It is precisely questions such as this that will test this (unoriginal I know) proposition.

[chinedu]

how about outsourcing in other lndustries like say fast eg juice cans , agriculture,used blackoil,and the torisim industry Africa is very good in that. SAY
e gNigeria

[ben boateng]

how can get contacts for out sourcing companies who are interested in africa