Issue link: https://www.e-digitaleditions.com/i/73199
Regional Report PeopleScout, Manpower, The RightThing, Ochre House, and Accenture—offering end-to-end RPO or recruitment support services within the African market. A handful of broader HRO contracts for Genpact, Hexaware, AonHewitt, Cap Gemini, and Business Connections also signal that outsourced solutions are gaining a toehold in Africa. That said, Seabury believes that revenues in Africa are limited. Tom Marsden, head of professional services at Alexander Mann Solutions, which also supports global clients in South Africa and Ghana, agrees with this—at least in the short term. Africa, he says, is not necessarily included within multi-country contracts, and the point at which volumes will take off "feels like it is still two to three years away." ISG's data also highlights that a number of payroll delivery centres have been established in Africa by global solutions providers including Genpact, BDO, TCS, NorthgateArinso, and Ceridian, reflecting the needs of large clients as they scale up their operations in the region. Seabury explains that "for multinationals, there is significant compliance risk in payroll in Africa. They are looking for partners who can provide certainty and management information—payroll can be done very simply in Africa, but that isn't necessarily what they want." Offshore Destinations In principle, Africa offers a number of potential advantages as an offshore location. It has relatively low costs, an advantageous time zone location between Asia and Europe, and its business environment and telecoms infrastructure are improving rapidly. African locations can also support major languages including English, French, Arabic, Portuguese, and Spanish. Despite some examples of global solutions providers offshoring HRO activity in Ghana, Mauritius, Morocco, and South Africa, ISG's latest Outsourcing Viability Index suggests that there is some way to go before African service destinations challenge for the top offshore rankings. Based on a range of criteria—including economic stability, educational levels, business environment, financial, and legal frameworks and infrastructure—South Africa ranked highest at 14th. Egypt has considered a rising star of offshoring in recent years, but its progress has been stalled following political unrest of the Arab Spring. ISG's Seabury points out that as wage differentials between Africa and other locations erode, and advances in technology make wages a smaller element of the cost equation, providers will be looking for other clear advantages in the offshore locations they select. Particularly, they will be concerned about maintaining service quality and continuity, and many are cautious about which African locations can offer this. To date, South Africa has been most successful in establishing itself as a BPO/HRO centre. One specific advantage is that its payroll systems are very similar to those in the U.K.; combined with time zone advantages, this has led to significant commerce between the two countries. However, some uncertainty exists as to whether the country has enough resources to maintain high levels of growth in offshoring. As domestic demand grows, HRO services might need to be delivered to client organisations there from offshore locations outside South Africa. So for the time being at least, Africa is unlikely to challenge more established destinations for the leading off shoring positions. A Model Future? During the next few years, the priorities for HR professionals in Africa will be to address practical issues. Ellis thinks businesses will be focussing primarily on "getting the foundations in place, establishing learning tools and systems." With a growing Chinese and Indian business community in Africa, as well as global multinationals and successful regionally headquartered businesses, HR models and approaches will evolve under a range of influences. "There is a desire to learn from the West," says Ellis, "but also a recognition that we haven't got it all right, and African organisations want to adapt and localise models." As HR outsourcing takes root, market dynamics are likely to be influenced by the Indian heritage providers, as well as Western firms. Differences between sub-regional and national markets within Africa could also influence the way HR practice and HRO provision develops, with North Africa grouped more closely with the Middle East, and subregions in West and East Africa. Marsden's feeling is that when growth does take off, it will be through innovative "leapfrog" means—like incorporating mobile applications that reflect the way Africans are communicating with each other. Africa will certainly be an interesting market to watch during the next three to five years, perhaps with some surprises in store for the HRO community as its full potential is revealed. [36] HRO TODAY GLOBAL | SPRING 2012