Figure: Size of the Outsourcing industry (in 2021) – Source: Deloitte and others

Ethiopia: Attributes as an Of shoring Hub Talent

Ethiopia is the second most populous nation in Africa, with more than three hundred thousand students graduating each year with a STEM degree. Talent cost is on average fifteen times cheaper when compared to western countries, and very competitive when even compared to South Africa.

Ethiopia presents raw talent at scale with graduates that are highly trainable, tech-savvy, and multilingual professionals who can participate on a global platform. In fact, some young Ethiopians speak English without any accent, which is ideal for processes such as contact centers requiring voice.

Connectivity

The telecom liberalization has had a palatable impact on the outsourcing industry. The incumbent Ethio Telecom has made tremendous improvements on their operations, services, and quality of products and cost.

Real estate

Cost of real estate can be highly attractive within the ICT park – a park dedicated to companies offering digital related services -compared to that in the capital city, Addis Abeba. The quality of office buildings is increasing and their classes are maturing.

Unique Value Proposition

Cheap electricity, internet redundancy and labor cost arbitrage are the main traits of the country in the outsourcing industry and gives Ethiopia an opportunity to become an offshoring hub for multinationals looking to relocate their middle and back-office processes.

Ethiopia is uniquely positioned to provide remote outsourcing service to the Americas, European, Middle Eastern and African markets as it is located in a time zone that is more suitable to create overlapping hours.

In addition, extremely speedy resource ramp up time (2 to 4 weeks) and very low attrition rate (average rate below 5%) are very attractive value propositions compared to outsourcing destinations in Asia.

Ethiopia’s Government is making ITO/BPO/KPO a top priority

The Ethiopian government is now recognizing the potential that outsourcing brings in terms of hard currency and GDP increase. Education has been in the top three government budget expenditures for the last few years and the country hosts one of the largest pools of educated talent on the African continent.

The government realizes that the time has come to reap the benefits of its decades-long investment. The Ministry of Labor and Skills (MoLS), the Ministry of Innovation and Technology (MInT) as well as the Ethiopian Investment Commission (EIC) have been at the forefront of pushing the ITO/BPO/KPO (Information Technology/Business Process/Knowledge Process Outsourcing) agenda.

Job creation has been a constant preoccupation for policy makers seeing two million individuals entering the labor market each year and with the economy needing to create close to eight thousand jobs every business day.

The government recently issued a directive for companies in the outsourcing industry to be exempted from business profit tax for up to five years. More incentives are expected in the months to come.

Industry mobilization and increasing presence of global players

With the ongoing support of the Ethiopian government, local outsourcing providers have gained more recognition and visibility. The providers have now formed an outsourcing association which serves as a liaison between policy makers and the industry, as well as a platform for promotion.

With the liberalization of the telco sector, domestic outsourcing is increasingly being realized. The opening up of the banking sector to foreign investors is also pushing local banks to focus on their core competencies and outsourcing some of their back-office and middle-office processes. Recognized global brands in the outsourcing industry are also setting up shop in Ethiopia. Safaricom Ethiopia recently outsourced their QA Testing operation to Excellerent-Ethiopia; their Contact Center capability to iSON, a global leader in Customer Experience Management
and BPO.

CCI, one of the largest BPO companies in Africa, launched in 2022 BPO operations from Ethiopia recruiting hundreds of agents in just a couple of months in partnership with MMCY.

An increasing number of global logos are expressing interest to enter Ethiopia and set up their offshore or nearshore operations, a trend well noticed by the office dedicated to Outsourcing at the EIC.