Ethiopia – Emerging destination for business process outsourcing

By Andualem Sisay Gessesse – When he and his four friends opened an ICT company 16 years ago, the country was only suing dialup Internet connection. Today Africom Technologies PLC is one of the Information Communication Technology (ICT) companies in Ethiopia, offering various solutions and services to the government institutions and foreign companies. Africom is one of the companies located in ICT park of Ethiopia in the capital, Addis Ababa.

“Initially we began the business building small website and providing ICT training,” says Baheru Zeyenu, one of the five founders of Africom. “Today our company is providing ICT services to foreign companies as part of its operation of providing business process outsourcing (BPO) services. Luckily using the dialup Internet service, we managed to get an outsourcing ICT job from a French company,” he says.

Mr. Baheru Today there is a huge opportunity for the growth of ICT sector in Ethiopia with the attention the government is giving to the sector and the huge amount of youth being graduated in the sector. “If we manage to improve the ICT infrastructure of the country, trainable pull of talent is available in the country, which is key for the growth of the sector,” he says, indicating the plan of the government to liberalize the telecom sector and privatize partially the state owned Ethio Telecom as an opportunity for the fast growth of ICT sector in Ethiopia. The Government of Ethiopia has launched a digital led economic strategy, which enables the country to become a middle income country by 2025.

Business Process Outsourcing (BPO) destinations like India have been becoming expensive. As a result many companies are now looking to our source their ICT operations to companies in Africa. Reports suggest that Ethiopia with over 65% of youth population of which thousands are being graduated in ICT related for from over 40 universities every year, has huge potential to generate significant amount of hard currency by providing BPO services.

“We have a very fertile ground for the growth of BPO services in Ethiopia. We at Africom have taken our steps and currently providing BPO services for companies from Finland and the Netherlands. We at times also get such businesses from India as well, which is known as one of the major BPO service providing countries,” Baheru says stressing that such service can create huge amount of jobs in Ethiopia if companies structure themselves to provide such virtual service like Africom.

Today it has been common for companies in the developed world to outsource part of their operations mainly the routine ones such as data entry, call center services and other ICT related operations to companies in the developing countries with good internet connections.

As working hours of call centers is usually 24/7, when people who give such service in one country sleep, employees from other countries can take over the services without interruption. “But providing call center services requires good language skills to serve citizens of the world,” Baheru says urging the young generation in Ethiopia to develop their international language skills to be engaged in BPO services.

“Even in Ethiopia there is a huge business opportunity to provide such data entry services for government agencies. Scanning and digitizing the huge volume of files in different government agencies can create thousands of jobs,” Baheru says, indicating that Africom has deployed some 500 youth to digitize land related files for Bahir Dar, Mekele and Dire Dawa cities.

“Can you imagine how many jobs we can create if we digitize all the 1,000 cities and towns of Ethiopia? This is only for land related services, you can think of ministry of trade files or court and the like…Digitization of such files can only create tens of thousands jobs in Ethiopia,” Baheru says.

BPO involves digitization (converting hardcopy documents into softcopies), automation and digital transformation, which is introducing a totally different way of doing business. Instead of going to a ticket office to book an airline ticket, such system allows a person to book a flight ticket, pay using his / her cellphone choosing where to sit in the place and print a boarding pass.

Due to lack of infrastructure, we are often experiencing difficulties for the services we have been providing to rural areas for projects such as, productive safety net program of the government.

Indian experience
Developing an ICT sector like India and nurturing BPO businesses requires a visionary government and policy makers like India. If the government considers ICT sector like other business and is busy to collect revenue every year from emerging companies, the sector will not bring the required transformational change in the economy of the country, according to Mr. Baheru.

“I had the opportunity to visit Bangalore and Hyderabad and witness their experiences. These two cities have robust ICT infrastructure with affordable multiple telecom and internet service providers. If your Internet is down and you don’t have another to immediately switch to, then you are out of the business,” he says.

For those companies who enter the BPO businesses, the Government of India has allowed them to import duty free all the materials they need. In addition, the companies were exempted from paying taxes for ten years so that they use their profits to employ more workers and expand their businesses, according to Baheru of Africom

“Such incentives have helped India to build big BPO companies, which after ten years are generating huge amount of hard currency and tax for the country as the revenue of the companies has increased to hundreds of millions of dollars,” he says, advising Ethiopian Government to follow Indian footstep. “If we do that, one big ICT company can compensate Ethiopia more than any industry be it industrial part or other.”

He stated that the companies in Bangalore and Hyderabad set targets specifying how many more jobs they create and how expand their business. The Government of India strictly follow-up the activities of these ICT companies with a carrot and stick model providing all the support they need to create more jobs and build giant ICT companies.

As the employees working in ICT parks in India are initially exempted from income taxes, the business has encouraged many youths to join the ICT companies, according to Baheru, who also suggested that Ethiopia should properly enforce intellectual property rights protection when it comes to ICT solutions and services.

He also suggests that the Government of Ethiopia through its embassies across the world should also promote Ethiopia as BPO destinations and also mobilize or devise a system that can finance domestic ICT businesses to help the startups takeoff.