The 13th Enkopa Panel Series: “BPO/ITO/KPO: Pitching Ethiopia as an Emerging Offshoring Hub”

“BPO/ITO/KPO: Pitching Ethiopia as an Emerging Offshoring Hub”

As part of the Global Entrepreneurship Week #GEW the 13th #Enkopa Panel Series entitled “BPO/ITO/KPO: Pitching Ethiopia as an Emerging Offshoring Hub” held on December 3, 2022, at Haile Grand Hotel Addis Ababa with more than 300 attendees. The Enkopa panel sessions centered around the Unique value proposition of Ethiopia on Business Process Outsourcing (BPO).

Cheap electricity, connectivity, talent, and time zone that is more suitable to create overlapping hours and labor cost gives Ethiopia an opportunity to become an offshoring hub for multinationals companies.

H.E Ato Nigussu, State Minster at the Ministry of Labor and Skills was present along with many public officials, entrepreneurs, representatives from large corporations as well as development partners.

In his closing remarks, H.E Nigussu Tilahun stated that the Ethiopian government is now recognizing the potential that outsourcing brings in terms of hard currency and GDP increase.

https://www.youtube.com/watch?v=c3kqoZGNhIM


Graduation and Seed Funding Ceremony ‘Ahun Two’ Incubation Program for Digital Startups

Graduation and Seed Funding Ceremony ‘Ahun Two’ Incubation Program for Digital Startups

The Ministry of Labor and Skills in collaboration with the United Nation Development Program and Center for African Leadership Studies/xHub Addis recognized 22 digital high growth entrepreneurs that have graduated from the ‘Ahun two Incubation Program for Digital Entrepreneurs’ on the closing ceremony of Global Entrepreneurship Week. From the total graduates selected 12 startups received 5000 USD in seed funding to accelerate their growth.

The overall objective of the incubation program was to equip entrepreneurs with advanced entrepreneurship skills, business skills, marketing strategy, business planning, and etc. The goal of the program is to have at least 25% of the startups have a customer contract, commitment letter, or service procurement by the end of the 5th month after graduation. Over a period of 5 years, 40% of the startups are expected to grow their revenue double the size of the national economy growth rate.

The startups are engaged in various sectors, including ICT, manufacturing, health, transport, agriculture, and art & entertainment.

 

At the session of the program, the guest of honor Negeri Lencho (PhD) – House of Representatives Chairman of the Standing Committee on Human Resource Development, Employment and Technology – congratulated the start-ups and he indicated the government remains committed to working with all of the startups to support and strengthen the innovation ecosystem in Ethiopia.

In his closing remarks, H.E Nigussu Tilahun – MoLS State Minister – stressed that MoLS will continue to leverage the public-private partnership model to support startups in collaboration with development partners.


ITO/BPO/KPO: Ethiopia’s Unique Value Proposition

Authors: Rahel Dejene, CEO, R&D Group | Tadios Tefera, CTO, MMCY | Melaku Besha, Country Director,
Excellerent | Bernard Laurendeau, Managing Partner, Laurendeau & Associates

We are in a world where demand is met with service instantaneously. The veil that separates the physical world from the virtual world has been thinning as the unending demands of people grow with time. Consumers are finding it easier to get what they desire, whether it be hailing a taxi, ordering food, buying a set of earrings, or booking a plane. While the on-demand economy flourishes, supply comes with a wealth of choices making time and distance irrelevant.

Outsourcing: Global Dynamics

But as labor costs continue to rise in those parts of the world, some African countries are emerging as alternative destinations, especially due to labor arbitrage and the high availability of
trainable talent.

Size in USD Employed Workforce
$730B+ Global spending for 2023 10M workforce globally
$8B within Africa 350K within Africa
$6.5B between Egypt and South Africa
$10M in Ethiopia $10M in Ethiopia

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.

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