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.
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.
November 9, 2022
The 2nd National Job Summit took place at the Sheraton Addis on August 15 and 16 Enkopa Summit take-aways
The 2nd National Job Summit took place at the Sheraton Addis on August 15 and 16Enkopa Summit take-aways
The 2nd National Job Summit took place at the Sheraton Addis on August 15 and 16. A half-day was dedicated to the Enkopa Summit with B2B interactions, two-panel sessions, and pitches by entrepreneurs.It is to be recalled that Enkopa is a national movement to celebrate and promote Ethiopian Entrepreneurship stories, especially untold ones, to encourage all stakeholders (engineers, startupers, ecosystem builders, entrepreneurs, policymakers, educators, etc.) to build a thriving Entrepreneurship ecosystem. It is a movement with a pan-African ambition, to increase collaboration between African countries and collectively own the narrative on Entrepreneurship, to essentially re-brand the African continent.
The two Enkopa panel sessions centered around building and Digital Entrepreneurship Ecosystem and a FROG (Freelancing, Outsourcing, and Gig) Economy. H.E Muferiat Kamil, Minister at the Ministry of Labor and Skills was present along with many public officials, entrepreneurs, representatives from large corporations as well as development partners.
The sessions were rich in key and new insights- here are the main takeaways:
Ethiopia is situated in a triangle of a high unemployment rate, a large population of youth, and limited entry-to-mid level career opportunities.
The labor environment presents many challenges: labor laws and workers’ rights are limited, unemployment and underemployment are high, and the informal sector remains significant.
These challenges can be turned into a major opportunity. Without a burdensome legacy system, Ethiopia has the possibility to leapfrog into the future of work, where gig and freelance workers can perform multiple missions and tasks, leveraging different skills while earning a decent wage.
Informal gig workers exist in the millions. Digital platforms for gig work are recently emerging, there is a great potential for them to scale to create millions of decent jobs in the next few years.
2 million individuals enter the labor market each year; The economy needs to create close to 8 thousand jobs every business day.
Every year, more than 300,000 students graduate with a STEM degree.
Education has been in the top 3 government budget expenditure for the last few years and the country hosts one of the largest pools of educated talent on the continent.
Digital platforms for freelance work are also emerging, there is a great potential for them to scale to create thousands of decent jobs in the next few years.
Ethiopia has a great potential to become an offshoring hub for multinationals looking to relocate their middle and back-office processes. Cheap electricity, internet redundancy, and labor arbitrage are the main traits of the country in this sector. CCI, one of the largest BPO companies in Africa, announced last week it launched operations from Ethiopia. More of such logos need to be attracted to Ethiopia.
Traditionally startup support programs have been led by development partners present in Ethiopia; However, this is not sustainable. Going forward, incubation, acceleration, and venture capital investment in local startups need to be led by large corporations who are sitting on extra cash like Ethiopian Airlines, Ethio Telecom, and Banks in a win-win format.