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Tunisia close to BRIC group in ICT outsourcing

The Outsourcing Unit at the London School of Economics and Political Science launched the ‘Beyond BRIC’ Report which provides an original analysis of the offshoring competitiveness of 14 non-BRIC countries setting Egypt within the context of these locations.

The study compares Egypt with countries including Tunisia,: Romania, Bulgaria, Poland, Slovakia, Czech Republic, Belarus, Morocco,  Costa Rica, Mexico, Venezuela, Vietnam and the Philippines.

The study pointed out that the global offshore outsourcing market for IT and business services exceeded $55 billion USD1 in 2008 and some estimates suggest an annual growth rate of 20% over the next five years.
The BRIC countries are not without their problems, with Brazil and China hardly leveraging their potential. Russia lacks government support and is being led into high-value but niche work, while India and China may even be seen turning to non-BRIC locations for some of the solutions; for example, to secure low cost and labour availability.

This report  provides an assessment of the emergence of non-BRIC countries, and their competitiveness, with specific reference to the positioning of Egypt within this group. In order to fulfil this mandate, first the long-term context and trends are set out, through which these countries are emerging as IT and business service ‘hot spots’. Then 11 major global sourcing trends and seven pressures are identified that will develop over the next five years, and the implications are assessed of how non-BRIC countries can ride these waves of change. Next, the main active non-BRIC countries fall into four regions, namely Central and Eastern Europe, the African Mediterranean, the Americas, and Asia Pacific. A representative sample of 14 countries provides the focus for comparison of their competitiveness based on 20 criteria organised into six major areas: cost, availability of skills, environment, quality of infrastructure, risk profile, and market potential. Finally, the report turns a more searching spotlight on one non-BRIC country, Egypt, to assess its current positioning, the future path it can take, and the challenges it faces as well as actions needed to get there.

Benchmarking favorable to Tunisia

As part of a process of benchmarking, the study found out that labour costs in Morocco are higher than in Tunisia and Egypt, but below those of the European Union countries , stressing that these costs are 20% cheaper  in Tunisia while  in Egypt, wages post 50% less than in Morocco. Property prices are much lower than those in EU countries.

Concerning the skills availability, Tunisia is tantamount to Morocco, with  2.9 points on a scale of 5 where Egypt was credited with 4 points.

Regarding the country attractiveness in terms of environment, Tunisia is clearly better and doing as well as Egypt and Mexico (4 points) and more than Morocco, which is scores 2.9 percentage points while Poland, the Philippines and Romania are top ranking.

In terms of infrastructure quality, Tunisia is credited with 3 points with both Morocco and Egypt, noting that the Czech Republic posts 4 points.

In terms of risk, Tunisia is posts 3 points, a little more than Morocco, Egypt is credited with 3.4 points.
Regarding the market potential, Tunisia is tantamount to Morocco (3) while Egypt is leading the whole group with 4.3 points.

A key finding of this report is that the non-BRIC countries investigated are creating new and profitable outsourcing and offshoring opportunities, capable of development and exploitation even in recessionary times. Their ability to deliver on the opportunities and deal with the related challenges will serve as a foundation for moving further up the value
chain; for example, in some cases from mainly call centre work to software development and effective R&D. IT and skilled labour shortages in client and supplier companies in Western Europe, North America and BRIC countries represent both real opportunities and a set of strong challenges to non-BRIC countries. They point to the need for long-term strategy and investment in education and training, together with attractive employment conditions to draw in and retain skilled labour.
The larger issues of environment, risk and legal conformity are driven and policed by governments, and this determines the levels of confidence that businesses have in making
investments. The non-BRIC countries that have provided stable economic and political environments are attracting more complex and longer-term offshoring and outsourcing contracts. The current findings show that a major trend toward non-BRIC locations exists, but is being driven primarily by regional rather than global customers, with nearshoring becoming a notable market phenomenon. This is likely to increase in the current recession as the time convenience, cultural fit, skills, language accessibility, and niche market compatibilities become more sought after and more widely known.


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