ZHUL-QI’DA 24, 1429 A.H.
WEDNESDAY NOVEMBER 19, 2008
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Making Nigeria a preferred destination for outsourcing
E-mail:yzyau@yahoo.com
By Y.Z.Yau
This week Nigeria hosted an international conference on outsourcing at which also an agreement was reached to form the African Outsourcing Association well as the Nigerian Outsourcing Association. The conference provided an opportunity to assess what Nigeria is doing to make the country a preferred destination for outsourcing.
Over the last two decades, outsourcing, especially IT-enabled version, has taken the world by the storm, becoming one of the major business spinners in developing countries. With increasing high costs of labor and other operational costs, companies in developed countries are shifting their operations to third party companies located in developing countries that have comparatively lower labour costs with abundance of high level skills.
Countries like India, Malaysia, Singapore and even China are investing heavily to make their countries the preferred destinations for global outsourcing. Today India is rated the number one country in terms of volume of outsourcing that gets in to the country. In 2004, its share of Outsourced IT services alone was $12 billion, and this has been growing over the years. Global outsourcing which in 2005 stood at $140 billion, is expected to cross over $220 billion by 2010, growing at an average of 10% annually.
As part of the efforts to diversify the economy, Nigeria is slowly steering to the need to build an outsourcing industry that would see the country becoming a major destination for global outsourcing jobs. As part of this process, in 2006, the government convened a stakeholders' forum on outsourcing. The forum which was attended by representatives from the IT industry, emerging outsourcing companies, academia, professional associations, civil society, regulatory agencies deliberated on how to create the enabling framework for outsourcing industry in Nigerians.
One of the decisions of the meeting was the need to set up outsourcing training institutions that will train Nigerians to engage in outsourcing activities. Another outcome was the need fro the government to articulate a national Policy on Outsourcing. Accepting this recommendation, the government set up a committee in 2006 to articulate a national policy on outsourcing. The Committee submitted its draft report in the year and by January 2007, the government had approved the policy.
The overall policy of objective of the document is the promotion of an enabling institutional, legal, regulatory, technological and infrastructural environment for sustainable development of outsourcing business in Nigeria. Among the measures proposed to do this are the establishment of a special outsourcing development fund, increased funding for IT infrastructure deployment that will support outsourcing, establishment of a database of companies engaged in outsourcing, providing of a regime of incentives to local companies /entrepreneurs to venture into countries and the establishing of standards for outsourcing. Government also commits to accelerate the "national ID Project so as to provide standardised and secure national system of identification which will create more confidence in the international community regarding the cross border relationships that typify outsourcing businesses".
It also set up targets for the Policy. For instance, it is projected that 10,000 jobs are to be created during the first three years, enable the contribution of outsourcing to national GDP by a 100% within two years of launching of the outsourcing policy, grow and nurture about 500 new outsourcing enterprises employing on the average 20 staff each and achieve global recognition as a preferred destination for outsourcing business by the end of 2010. It estimates that within the fifth year profits from outsourcing in will grow from N55 million n to over N1.3 billion with the industry itself valued at over N90 billion.
With less than two years to this date for global recognition, it is important to assess what is so far taking place in the sector. The National Export Promotion Council (NEPC) has engaged on sensitization programmes on outsourcing as well building the capacity for local entrepreneurs to engage in outsourcing. It has also through a partner with an India based outsourcing company, trained 17 Microsoft certified outsourcing professionals. It is in this connection that it has partnered with the German based International Trade Centre to organize the African Outsourcing Conference, tagged Bridges across Borders.
Among the State Governments that have recognized the need to leverage outsourcing as part of their economic planning is Kano State. Having articulated an ICT Policy for the State in 2005, the state government decided to focus its attention on ICT as an economic sector that could used to generate wealth and employment rather than just as service sector, improving access to government service. To this end, it decided to establish an ICT Park as the fulcrum of its ICT Policy implementation. The Park which is being set up at the 10-sotry Gidan Ado Bayero, Kano is estimated to house over 300 different ICT businesses.
One of the key business activities in the first phase of the Park is outsourcing. To this end, the Government has contracted an international outsourcing consultant to provide local capacity building for both outsourcing training and business set up. The training aspect is targeted at three institutions of higher learning in the state. These institutions which are currently receiving training of trainers of outsourcing training would establish and run outsourcing training centers at the ICT Park as part of the efforts to generate the necessary manpower that would be needed by the outsourcing companies.
Another effort that would go into making Nigeria a preferred destination for outsourcing is the current review of the National IT Policy. It is expected that it would come up with strategies to develop the outsourcing sector in the country. With current forms of Galaxy Backbone and NIgSatCom, it is safe to say in terms of infrastructure deployment, there is some appreciable progress. Yet, infrastructure capacity is not always the same as infrastructure utilization. Much of this potentially available infrastructure has not found its way to the public that should use it
There is no doubt that charting the path of outsourcing is critical to addressing the unemployment crisis in the country. Luckily Nigeria has many endowments that make it attractive to outsourcing. For example, it has highly skilled manpower and there is excellent competence in the use of English language and last. What it needs is the enabling environment and framework to convert these endowments into competitive advantages. This is the challenge to policy makers in the countryd this article from Abuja, Nigeria.
Y.Z. Ya`u writes from Wuse zone II, FCT, Abuja,Nigeria.
