Africa as an Attractive Outsourcing Destination

Why Bother?

What will we gain?

Can we ever achieve it?

Africa Outsource Summit 2008

Employment with Dignity

Agenda

Recap of Yesterdays Presentation

Diversity and Commonality in Africa

Methodology and Data Sources

Infrastructure findings and remarks

People and Skills findings and remarks

Business Environment findings and remarks

Overall Outsourcing Attractiveness Score

Recap of Yesterdays Presentation

How does a country become an

attractive Outsourcing destination?

Political

Economic

Society

Technology

Conditions, situations and trends

leading to the confidence of the

Global Industry

Diversity and Commonality in Africa

Diversity

The Gross national Income per capita, Population,

Population density, un-employment poverty and other

major characteristics are so very diverse and at times

seemingly contradictory. All possible combinations are

there across these fifteen nations namely:-

Low GDP* and Low Unemployment**: Egypt, Morocco,

Tanzania, Uganda,

Ghana, and Zambia.

High GDP and Low Unemployment: Mauritius, Nigeria,

Tunisia

Low GDP and High Unemployment: Kenya, Mozambique,

Senegal

High GDP and High Unemployment: Botswana, South Africa,

Namibia

* GDP less than USD 2000 ** Unemployment less than 20%

Overview of African Countries

Unemployment

Commonality: Limited Connectivity

Connectivity expected by 2011

Methodology

Research Frame Work

Lower Level

Abstraction

Sub aspects of the

abstraction, flows from

the top

Detailed Data Parameters and

Operational Variables (DDP’s)

Variables actually

measure the entities

on the basis of defined

scale

Scale

Measurement

Abstraction

A multi-faceted concept,

which can not be directly

measured

Constructs, Sub-Constructs, Major

Data Points (MDP’s)

Specific measurable

aspects, more clear than

abstraction but still broad

Abstraction Level

Multi-faceted observations, which cannot

be directly measured; aspects important

in attracting a potential investor to the

country (Country reports)

Country Political & Economic Profile

Principal Government Officials

Foreign Relations

Living, Security and Safety perceptions

Abstraction Level

ICT and BPO Industry Environment

Human Resource Efficiency and Cost

Investment Policy and incentives

Labour & Expatriate workers permits

Revenue, Tax & Repatriation issues

Investment Policy and incentives

Government Agencies giving support

to Outsourcing

Data Sources for Abstraction Visit and Interviews to countries who invited

the Research Team

Correspondence with Countries who responded

Data provided in the Country's InvestmentPromotion Literature

US Department of State country overview andtravel alerts providing a snapshot of Political,Economic, Social and Security Scenario of thecountry

FDI.net maintained by World Bank GroupsMultilateral Investment Guarantee Agency

Web sites and tools maintained by the WorldAssociation of Investment Promotion Agencies –

Data Sources for Quantitative Analysis

Same data source and Time line used for a particular data parameter for each

country

World Economic Forum Global IT and Competitiveness Reports. (2008)

Word Bank ICT and Data Indicators (WDI) and African Development indicators 2006/2007/2008

United Nations Development Programme Human Development Report 2008

CIA Fact Sheet 2008

Knight Frank 2007 Africa Property Research Report

Detailed Data Points

a) Rating Scores representing the result of any extensive

survey and study conducted by recognised board like

World Economic Forum’s Global Information Technology

Report or Global Competitiveness Report, the United

Nations Human Developments Reports. Such scores are

in a index of 1 to 10, 1 to 7 or 0 to 1.

b) Absolute values of data like number of procedures to

start a business, total tax as a percentage of profit (World

Bank Doing Business Report or International Internet

Bandwidth (Bits per person).

The final score of a country arrived after addingthe weighted average score of ‘Detailed DataPoints’ after normalising on a scale of 1 to 10.Thus scores for the ‘Detailed Data Points’ aredetermined as follows:-

a) All rating scores in the range of 0 to 1, 1 to7 or 1 to 10 are normalised proportionatelyto a range of 1 to 10 across all thecountries.

a) All data in the form of absolute values arenormalised using a formula.

Normalisation of Data

Normalisation Formula

Score = 1+ ((LOG10 (Actual Value) - LOG10 (Min Value)) /

(Log10 (Max Value) - LOG10 (Min Value)))*9

Calculation

The calculations are done

as follows-

a) ‘Detailed Data Point’ Score =

the normalised value of the

data as per the rule and

formula.

b) ‘Major Data Point’ Scores =

Average of contributing

‘Detailed Data Point’ Scores.

c) ‘Construct’ Scores =

Weighted Average of

contributing ‘Major Data

Points’ Scores.

d) ‘Lower Level Abstract’ Score=

Weighted Average of

contributing ‘Constructs’

Scores.

‘Detailed Data Points’ Score

‘Major Data Point’ Scores

‘Construct’ Scores

Lower Level

Abstraction

Infrastructure – Rankings and Scores

Overall ‘Infrastructure Readiness Score’

The ‘Infrastructure’ lower level abstraction

Score is calculated as per the detailed

framework and the normalisation.

The Countries with an Infrastructure Score

greater than 6.5 are placed in the ‘Ready’

band.

The Countries with an Infrastructure Score

between 5.5 and 6.5 are placed in the

‘Upcoming’ band.

The Countries with an Infrastructure Score

less than 5.5 are placed in the ‘Yet to be

ready’ band.

Infrastructure - Rankings and Scores (Lower Level Abstraction)

People & Skills – Rankings and Scores

People & Skills – Ranking and Scores(Lower Level Abstract)

People and Skills Score

Emerges from parameters

related to Availability,

Suitability &HR Costs and is

based on the following

MDP’s

Quantity & Working

Satisfaction

Quality, ICT Exposure and

Education, Language

&Domain Skills

Personnel Compensation

& Cost of Living

People & Skills

Ranks Country Score

1 Egypt 3.620

2 Ghana 3.543

3 South Africa 3.491

4 Tunisia 3.447

5 Mauritius 3.385

6 Botswana 3.215

7 Morocco 3.173

8 Kenya 3.009

9 Uganda 2.964

10 Tanzania 2.948

11 Namibia 2.933

12 Zambia 2.884

13 Nigeria 2.879

14 Senegal 2.867

15 Mozambique 2.640

Business Environment – Scores and Rankings

Business Environment – Scores and Ranking

(Lower level Abstract)

Business Environment Scores

emerge from Political,

Economic

Social and Technology and is

made up of the following MDP’s

Business Environment

Index

ICT Industry Attractiveness

Economic Outlook

Risk Parameter

Tax & Financial Incentives

Business Environment

Ranks Country Score

1 Mauritius 3.695

2 Egypt 3.558

3 South Africa 3.486

4 Nigeria 3.419

5 Botswana 3.357

6 Tunisia 3.326

7 Morocco 3.261

8 Zambia 3.026

9 Namibia 2.976

10 Senegal 2.927

11 Kenya 2.813

12 Ghana 2.781

13 Tanzania 2.735

14 Uganda 2.713

15 Mozambique 2.711

Overall Outsourcing Attractiveness

Score

Overall ‘Outsourcing Attractiveness Score’

People & Skills and Business Environment Scores:

‘People & Skills’ lower level abstraction Score is

calculated as per the detailed framework and the

normalisation.

‘Business Environment’ lower level abstraction Score

is calculation method indicated above.

Overall Outsourcing Attractiveness Scores and Rank:

The ‘Outsourcing Attractiveness’ Score of the country

is determined for countries in each band. This is

the sum of the ‘People & Skills’ score and ‘Business

Environment’ score.

The rankings are made in each band using this total

score.

Overall Outsourcing Attractiveness Rank

Countries are ranked within Infrastructure Bands based

on:

Countries are ranked within their bands based on their

BE + People & Skill Scores

Business Environment

People & Skills

Outsourcing Attractiveness Rank

Countries are ranked within their bands based on their

BE + People & Skill Scores

Outsourcing Attractiveness Rank

Ranks Country Score

1 Egypt 7.18

2 Mauritius 7.08

3 South Africa 6.98

4 Tunisia 6.77

5 Morocco 6.43

1 Botswana 6.57

2 Ghana 6.32

3

Kenya 5.824

Senegal 5.79Mozambique 5.35

Nigeria 6.301

Zambia

2

Namibia5.91

3

Tanzania 5.68

Uganda 5.68

BE + People & Skills

Infrastructure

Band Country

Tunisia

South Africa

Egypt

Morocco

Mauritius

Ghana

Kenya

Botswana

Senegal

Mozambique

Namibia

Zambia

Nigeria

Uganda

Tanzania

5.91

567

READY

UP COMMING

YET

TO BE READY

Thank You