Datamonitor analyst Peter Ryan tells Andrew Holt about his company's assessment of how offshoring and outsourcing will expand around the globe
Canada
Offshore agent positions will rise from 11,300 now to 18,000 in 2007. "Outsourced offshore agent positions are projected to outpace in-house equivalents as foreign firms maintain focus on cost reduction. But pace will slow as the Canadian outsourcing industry continues to mature. The drivers are that Canadians and the US are united in their commercial nature, there is fast quick access to major US cities and a common. Negatively, in outsourcing Canada's competitive pricing edge is eroding, and is there enough of a linguistics mix? And some regions have already become call centre hubs meaning there are limited incentives."
Latin America
Latin American offshore agent position were 13,000 in 2003 and will grow to 34,000 in 2008. The largest call centre markets in the region are Brazil, Argentina, Chile and Mexico.
"Growth will be noted in telecommunications, financial services and outsourcing due to deregulation and increased competition resulting from foreign investment. The driver is that Latin America is among the lowest price per outsourced agent in the world. It offers proximity to the US, it has ongoing stability and high labour availability. On the downside there are perceived security risks and a problem with language skills."
Western Europe
West European outsourced operations are set to rise from 150,000 to 196,000 by 2009.
"The main growth areas will be in southern Europe, while northern outsourced growth will remain relatively slow. But outsourced agent positions will fall from 309,000 in 2005 to 285,000 in 2009 - down 7%. The main reasons for this drop include pricing pressures forcing a move to low cost locations and increased self-service automation."
Central & Eastern Europe
Offshore central and eastern Europe agent positions totalled 1,900 in 2004 - or 10% of the region's outsourced total. By 2008 there will be 6,400. "Outsourced growth will slow through 2008 as the regional labour marker tightens. Inflation related to economic development will also erode competitiveness."
North Africa
In North Africa the number of outsourced agent positions was in 3,100 in 2004 and by 2009 this figure will be nearly 12,800.
"Egyptian customer care is growing rapidly due to scalable and multilingual agents. Morocco's contact centre market will penetrate the UK and Spanish markets and Tunisian customer care will remain French-based."
Morocco will remain the largest single national market, but will lose proportionate share says Ryan. Wheareas Tunisia's focus on administrative French customer care will also lead to stagnating growth. Egypt is the only contact centre outsourcing destination in North Africa that will increase market share.
South Africa
South Africa will have a strong presence in outsourcing and captives. "There is an increased visibility. The US and UK interest in South Africa as an offshore location will lead to faster market growth," says Ryan. 1,400 offshore agent positions existed in South Africa in 2003 and this will see a 34% growth to reach 6,200 in 2008.
"The drivers are the cultural affinity of agents, an established call centre industry, multiple urban centres, a first world infrastructure and multilingual staff. But competition abounds from India, the Philippines, eastern and central Europe, and the issue of crime in South Africa leaves a question market about whether it is a safe place to do business."
Other Africa
Other African offshore markets to watch:
Botswana
"It has an educated labour force and a stable investment climate. A strong English language fluency, a focus on IT investment, an aggressive global promotional strategy and excellent incentives," says Ryan.
Kenya
"The launch of KenCall has put Kenya on the map as a new offshore possibility. It is also scaleable in terms of workforce size and has solid English language capabilities."
Senegal
"There are a number of French offshore facilities currently in existence, a big IT and telecommunication emphasis by national government has really helped, backed up by a relatively stable environment."
Malaysia
Malaysia will see its offshore agent positions rise to 5,100 in 2007 from 1,300 in 2003, and the annual growth will peak at 44% in 2006 and taper to 42%.
"But there will be a likely year-on-year growth as offshore contact centre services market matures. There will be an expansion in financial services. The drivers are lower agency costs, inexpensive property costs, multiple urban centres and strong government support.
"Inhibitors are concerns over language, the legal environment with many asking 'does Malaysian commercial law protect western investors?' And political and religious concerns, as well as a suspicion of corruption."
India
India's offshore agent positions will be 162,500 in 2009 up from 64,700 in 2004 - a 20% increase.
"The strongest growth during 2005-06 was due to post-US election uptake of offshoring and offshore outsourcing. But consolidation continues. Captives are being squeezed by increasing economies of scale of outsourced operations."
Ryan says there will be 500 plus offshore outsourced call centres in 2009 with 320 agent positions on average up from 250 in 2004.
"The drivers are the leverage of labour arbitrage, which is still the biggest attraction to offshoring, and it is an established call centre market. But staff attrition remains high. There is also a public backlash in target markets and India still lacks sufficient skilled middle managers."
Philippines
Offshore agent positions in the Philippines will see them more than double reaching 50,700 in 2009. There will be 370 offshore-outsourced call centres in 2009 - up from 174 in 2004. The average call centre size will increase from 121 agent positions to 137.
"We see offshore outsourcing here picking up strongly. And the drivers for the Philippines are that it offers diversity in an offshore portfolio, an established western presence. There is a US military legacy and culture and governmental support for the industry.
"Holding it back are limited real state and locations, political tensions and terrorism, and higher labour costs than India."
In conclusion
"Contact centre growth is notable, but it is also limited due to outward migration of skilled labour and rising wage rates. South Africa's offshore contact centre industry is moving forwards with commitment from the government and the private sector.
"India is to remain the largest offshore market for many years, but growth is slowing due to escalating labour costs, tightening market and global offshore competition.
"The Philippines is well placed to service English speaking markets due to the presence of multinational corporations. Latin America is varied. On the positive front there are low agent prices and cheap real estate, but perceived instability and distance do not have an effect. Canada is favourite among American investors but it's being hurt by a slide in the US dollar and a maturing domestic market."