4 reasons for North Africa's rise as a nearshoring GBS/BPO destination for Europe

4 reasons for North Africa's rise as a nearshoring GBS/BPO destination for Europe

Key facts and highlights:
European GBS/BPO buyers can save up to 73% on contact center agent salaries when nearshoring to North African locations.
Egypt is home to 38 million English speakers.
In the GBS World Competitiveness Index, Egypt is ranked second and Morocco is ranked third.

Following focused investment in infrastructure in recent years, North Africa has emerged as a global nearshoring hub for Global Business Services (GBS) and Business Process Outsourcing (BPO). 

And multiple factors make the region particularly attractive to companies based in Europe beyond time zone and location favorability in relation to buyer home markets.

Gains have been made in the region following an acceleration in outsourcing adoption from Africa in 2021, as companies looked to reduce costs and maintain revenue across the globe primarily due to the crippling economic impact of the Covid-19 crisis. 

With Egypt already a favoured location for global GBS and BPO in Africa, Tunisia and Morocco have also emerged as regional centers of excellence due to factors such as an abundance of educated talent in the local labor pool, comparatively lower salary and labor costs, multilingual capabilities of agents, and focused efforts from African policymakers to support this critical economic sector. 

  1. Cost arbitrage advantages of North African GBS locations

‘’North Africa offers highly competitive salary costs compared to established GBS/BPO hubs in other emerging markets such as India and South America as the market is not saturated,’’ says Rasha Ezz El-Din Mohamed, Sales and Marketing Director of Egyptian BPO/ITO outsourcer, Xceed.

European buyers in particular can realize significant labor arbitrage opportunities in the region, which can create savings on human resource costs and overheads.

Findings from the 2022 Africa GBS Benchmarking and Market Report highlight the prolific cost savings that GBS/BPO buyers can access, with contact centre agent salaries between 12.6% and 26.2% of those in home markets, depending on the region. 

While the emerging North African countries of Algeria, Morocco and Tunisia offer relative price parity on contact center agent salaries, the established and more mature market in Egypt offers significant cost arbitrage opportunities for buyers, offering an over 50% discount on salary costs in Tunisia.

Contact Center Agent Salaries:

Source: 2022 Africa GBS Benchmarking and Market Report

When accessing more specialized and scarce skills, such as IT help desk support, agent salaries across the North African region are more in sync, yet still offer significant savings over European home market labor costs. Algeria emerged as the lowest-cost country in the 2022 Africa GBS Benchmarking and Market Report. 

IT Help Desk Agent Salaries:

Source: 2022 Africa GBS Benchmarking and Market Report

  • Multilingual capabilities in European languages

Rasha Ezz El-Din Mohamed highlights the region’s multilingual capabilities as an enabling factor for nearshore GBS/BPO delivery to European buyers – ‘’North Africa is a melting pot of languages and cultures, which positions it favorably to support multilingual contact center support and business process and service outsourcing.’’

English and French are widely spoken in North Africa, with the first global lingua franca widely spoken in the region, particularly in the major cities within these countries due to tourism. 

According to findings in the 2022 Africa GBS Benchmarking and Market Report, Egypt offers a multilingual workforce, with clear regional superiority in English and significant French proficiency as well.

Number of English Speakers:

Source: 2022 Africa GBS Benchmarking and Market Report

However, Algeria and Morocco are the regional hubs for French-language proficiency and also offer a fair degree of accent neutrality, which is appealing to buyers from francophone home markets.

Additional European language capabilities in North African countries include 5 million Spanish speakers in Morocco, and 3.3 million and 32,000 Italian speakers in Egypt and Tunisia, respectively, according to statistics shared in the 2022 Africa GBS Benchmarking and Market Report.

  • GBS World Competitiveness Index – Africa insights

North African countries ranked highly in the GBS World Competitiveness Index, with Egypt second and Morocco third in terms of GBS capabilities. Tunisia ranked eleventh. Respondents in the index represented global organizations, including those from key European markets such as Germany, France and the United Kingdom.

Egypt ranks as a high performer in contact center voice services and near-shore and offshore back office processing and was rated as the top-ranked digital contact center services location in Africa for data management services and IT-enabling services thanks to its sophisticated and developed ICT infrastructure.

Similarly, Morocco boasts a strong ICT sector, which supports a strong BPO services offering in technology and ITO capabilities. Morocco also ranks as a high performer in contact center voice services and customer administration.

On the back of rapidly expanding telecoms and ICT infrastructure and low-cost connectivity and digital services, Tunisia continues to rise as a GBS destination of choice in Africa for digital contact center and data management services. It is also a competent regional outsourcing destination for contact center voice and customer administration.

  • Strong regulatory frameworks aligned to those in Europe

With advanced ICT capabilities and favorable government policies aimed at supporting regional BPO/GBS sector growth, numerous African countries have adopted data security and compliance regulatory frameworks that conform with European Union regulations, including the region’s General Data Protection Regulation (GDPR).

As the leading regional hub for ITO services in North Africa, Egypt has been quick to conform, adopting secure data storage procedures and implementing stringent security measures to protect customer data.

A compelling value proposition

North Africa offers clear benefits as a GBS/BPO outsourcing destination over other established emerging market locations due to multiple factors, including prolific cost arbitrage opportunities and an unsaturated market that offers a highly skilled and multilingual workforce.

Rasha Ezz El-Din Mohamed points out, ‘’Considering these enabling factors, it comes as no surprise that Xceed has flourished since its establishment in 2001.’’

Starting with one delivery site in Cairo, Xceed’s exceptional customer experience (CX) outcomes, combined with the region’s ability to support GBS/BPO growth has led to the company launching new site into the developing cities of Qena and Asyut in Upper Egypt, which employs over 1 200 impact sourcing and 200 visually impaired workers.

‘’In fact, Xceed’s success has spilled over into Morocco, where it has recently launched a delivery site’’, adds Rasha Ezz El-Din Mohamed.

Additional domain expertise in key sectors and important synergies with European home markets will continue to support North Africa’s rise as a nearshoring GBS/BPO destination for Europe with scope to grow the sector with reach into other global markets.

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