NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

The global labor market has undergone two seismic shifts in the last two years: the COVID-19 pandemic’s normalization of remote work, and the resulting “great resignation,” which saw high-skilled employees across industries leave stagnant positions in favor of more flexible, engaging jobs that offered the option to work from home. This reshuffling of labor markets has resulted in a talent shortage in many key economic sectors, such as business services and information technology. 

While this shift has changed the lives of many workers in developed markets, it has also created opportunities for emerging market talent to stand out as a viable option for Fortune 500 companies looking to outsource various business functions, from data annotation to customer support. For years, “emerging market outsourcing” has had several negative connotations amongst corporate clients in developed markets, bringing to mind low-skilled call centers, sweatshops, poor-quality production, and the perception that a business was exploiting workers in developing countries. And there was some truth to those criticisms: While outsourced services have provided valuable opportunities to workers in developing markets, there was often a recognition that companies were not necessarily working with the highest quality of talent, especially in the late 20th century when outsourcing first started to gain traction with corporations. And even as recently as 2010, call centers in India were still grappling with the gap between their workers’ education levels and the level of education and experience needed to service modern companies. 

However, the industry has evolved to address these concerns and provide the quality of service that corporate clients need. Today, emerging market outsourcing increasingly involves prominent companies outsourcing high-value-adding tasks, like end-to-end customer experience, web development and data annotation to help train AI. These services require a much higher level of talent than the tasks originally performed by outsourced workers. 

This elevation of emerging market talent in the post-COVID world represents a historic opportunity for new sources of talent, like young workers in Africa, to shine on the international stage. In the process, these workers are redefining how global businesses think about labor in emerging markets. Below, I’ll explore the changing face of outsourcing and discuss how previously overlooked markets like Africa can capitalize on these changes by providing the highest quality talent to perform value-adding services that go far beyond traditional notions of cheap low-skilled labor. 

Shifting Trends in International Business Process Outsourcing

To understand this current opportunity, it’s important to recognize what brought us here. The trend of major corporations outsourcing labor has been ongoing for years, providing a boon to the international business process outsourcing (BPO) industry. Between 2000 and 2019, the BPO industry experienced substantial growth, reaching a global value of over $92 billion as businesses sought efficiency gains in an increasingly interconnected market. But in recent years, globalization has entered a new era as the barriers between countries in international business have genuinely been erased post-COVID. For example, remote work, digital teams and flexible labor contracting are widely accepted amongst companies looking to evolve after COVID. Meanwhile, as the economic disruptions of the pandemic and other crises continue to take a toll on businesses worldwide, a looming global recession will likely make these companies especially eager to reduce their operating costs by looking abroad for talent.  

Driven in part by these factors, the global market for BPO services is projected to grow even more this decade, increasing by over 8% annually until 2030. However, there have been some notable trends in the types of tasks and processes that businesses outsource. For example, front-office operations like complex technical support and omnichannel, multilingual customer experience and sales are growing services in the BPO industry. These differ from traditional BPO service models, since workers are expected to understand the full context behind the businesses they work for and the services they’re providing. So rather than simply contracting general tech support staff to resolve issues with their products, companies are outsourcing to specialists who have acquired a deep understanding of the company’s processes and systems. Today, modern BPOs offer teams that are nearly indistinguishable from their clients’ own teams — e.g., they are integrated into corporate practices and play integral roles in product development (beyond just programming). These new tasks challenge the traditional perception that BPO is exclusively for back-office functions like data entry and basic IT support. 

The Broadening Geographic Focus of Business Outsourcing

In addition to the types of tasks businesses outsource, the geographies they outsource to are also changing. Labor shortages and rising costs in traditional outsourcing destinations like Indonesia, India and the Philippines are forcing companies to look elsewhere for high-quality talent. African talent is therefore experiencing an upsurge in BPO interest, given the continent’s distinct advantages as a motivated challenger to these mature, saturated incumbent markets. Whether it’s due to the region’s robust economic growth, its strong levels of education powered by globally recognized universities, or its young demographic, it is clear that the African continent is one of the final frontiers of untapped human and economic potential, offering a multitude of flexible, experienced and multilingual workforces. These characteristics make Africa’s talent pool both adaptable and trainable. The multilingual nature of the African workforce enables its BPOs to offer services that are both broad and deep, covering the most sought-after global languages while also providing services in regional dialects. 

By surpassing the traditional confines of “tech talent,” the African tech ecosystem is producing talent experienced not only in programming but in meeting every need of companies across multiple sectors. This full-spectrum training is an asset for BPOs looking to provide multinational companies with experienced, entrepreneurial and independent-thinking workers who are used to being integrated into a team. These BPOs can tap a sizable talent pool that’s ready to contribute: In Africa, software developers alone total around 716,000, roughly half of whom are in Egypt, Kenya, Nigeria and South Africa. Importantly, the average age of these developers is 29, which is younger than the global average of 36. A younger workforce is more likely to integrate well into virtual work and be adaptable to new systems and processes. It’s also interesting to note that small businesses and startups are increasingly joining their larger corporate peers by outsourcing to African BPOs. And this talent is already operating globally, considering the flood of international venture capital firms and incubators entering the African market. In light of these benefits, it’s no surprise that a 2021 Africa Global Business Services report found that the African BPO sector was primed to grow by nearly $5 billion by 2023.

Businesses seeking to improve their bottom line while growing their market share should consider diversifying their operations by engaging with outsourcing partners from international talent pools — and Africa should be at the top of their list. African markets are proving to be viable, high-quality and competitive options for these processes, and their success promises to dramatically change the narrative around emerging market outsourcing. 

Orinola Gbadebo-Smith is CEO & Co-Founder of Hugo Technologies Inc,.

Photo courtesy of Hugo Technologies.