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Nigeria as an Emerging Global Business Outsourcing Hub

October 20, 2023

Summary

The digital age has altered how people communicate, live, and work.

Nigeria is investing in its people, boosting economic competitiveness, and aiming for faster growth rates in the business process outsourcing industry to provide the necessary direct and indirect jobs as it transitions from a resource-based economy to a knowledge-based economy.

This article delves into the evolution of the BPO industry, roles offshored to Nigeria and how the country has emerged as a prominent global business outsourcing hub in Africa.

The business process outsourcing (BPO) sector has expanded into a multibillion-dollar industry since the COVID-19 pandemic forced businesses to outsource their administrative and non-core tasks to achieve growth and concentrate their time and resources on their core competitive business activities.

Nigeria has a fluent English-speaking culture and skilled talents which makes it a renowned country for its tenacity and ability to deliver excellent services.

The nation has created outsourcing opportunities that have attracted the interest of other countries globally.

Some Non-core jobs outsourced to Nigeria are customer service and support, accounting service, legal service, marketing, sales, payment processing, and information technology services, etc.

Evolution of the BPO Industry

Multinationals using BPO have increased over time.

Thanks to advanced technology and analytics, BPO businesses can now provide intelligent solutions with improved insights and problem-solving skills for more complicated situations.

In global BPO, a market value of USD 350 billion is expected for 2023. By 2027, Statista forecasts a further increase to $450 billion, representing a compound annual growth rate (CAGR) of 6.48% between 2023 and 2027.

In the global business outsourcing industry, the average spending per employee is anticipated to reach $1oo.50 in 2023. In terms of global comparison, the United States will produce the most revenue ($129.70 billion in 2023)

Evolution of the BPO Industry
Source: Statista

Nigeria’s Business Environment

Nigeria is the largest nation in Africa, with an anticipated population of over 213 million people as of 2021 (World Bank, 2022) and over 50% of the population under 19 (Statista, 2022).

Nigeria's population makes up almost 47% of that of West Africa (Mercy Corps, 2023), and the World Bank estimates that in 2021, the country's GDP will be above $504 billion.

According to estimates from the Nigeria Communications Commission for 2022, it has a well-developed mobile telecommunications sector with 150 million Internet-connected phone lines out of the 206 million phone lines in the nation.

The Services sector, followed by Agriculture, is the most significant contributor to Nigeria's GDP.

The Nigerian economy is building competitive strengths to benefit from the free flow of investments and commerce. Businesses now search for economies with less expensive labour, readily accessible skills, and knowledge to increase profitability.

Given its sizable youthful population and skilled talents, Nigeria now capitalizes on this win-win situation for economic growth.

The country reported over $285.8 million in combined domestic and international Global Business Services (GBS) for Africa in 2021.

According to The Guardian, the nation's outsourcing market is expected to expand steadily, reaching $19.8 billion in 2023. The country is Africa’s largest economy by GDP ($448 Billion).

A well-established ICT sector lays an excellent foundation for developing the BPO industry in Nigeria. It is currently the largest on the continent. BPO companies employ about 16, 540 people in Nigeria alone.

Roles That Can Be Offshored to Nigeria

The services most typically outsourced are IT, Business Processes and Knowledge Process services.

Business Process Outsourcing (BPO)

Low-Medium Skill Requirements. Some roles under this category are:

Information Technology Outsourcing (ITO)

Medium-High Skill Requirements. Some roles under this category are:

Knowledge Process Outsourcing (KPO)

High Skill Requirements. Some roles under this category are:

Why Nigeria Is a Good Destination for Global Business Outsourcing Services

Nigeria's advantage is in a low-cost value-creation strategy supported by the government.

The Nigerian market has significantly been strengthened and favourably propelled to the top outsourcing destination in the world by essential reforms in areas such as ease of doing business, increased government transparency, the privacy of information and intellectual property, and a general push for economic diversification.

The country has a vast population with several advantages. It is strategically located and can benefit from markets in North America, Europe, the Middle East, and Africa.

The business world is changing as non-core functions or occupations are outsourced to an external organization with expertise in that field.

Nigeria has a very high availability of the necessary skills, knowledge, and English language competency for the IT-enabled offshoring services business.

Nigeria's thriving business process outsourcing industry in Africa, positioned it as the next major outsourcing destination in the world after the Philippines and India.

Due to these outsourcing services' favourable results, the nation has forged connections with many other countries.

The following are some of the primary advantages of outsourcing to Nigeria.

Advantages of Outsourcing to Nigeria

Skilled Talent Distribution

Nigeria is home to skilled professionals who gain distinct skills and expertise in many sectors of specialization, just like any other location for outsourcing. The young people who comprise a large portion of the population are fluent in English.

Cost-Cutting and Improved Resource Use

Cost-effective solutions are essential to optimize the use of resources in all kinds of enterprises. Outsourcing talent is frequently more affordable than hiring staff for an office.

Compared to the global market, Nigeria offers cheaper outsourcing pay scales but still delivers high-quality services.

Productivity and Quality Outcomes

BPO experience helps companies deliver excellent results and boosts productivity in their daily operations in addition to being cost-effective.

Offshoring repetitive duties to offshore talent in Nigeria and delegating job deliverables help balance the performance of office-based personnel.

Government Support

The Nigerian government has introduced various incentives and policies to promote outsourcing and attract foreign investment, making it more attractive for companies to outsource to Nigeria.

With the move to digital services and governance worldwide, Nigeria needed to leverage its young population and technologically advanced environment to create new revenue streams for youths and attract foreign investments.

The government is promoting favourable institutional, legal, regulatory, technological, and infrastructure factors crucial for the long-term growth of Nigeria's business process outsourcing sector.

Accessibility (Time zone)

Nigeria's time zone is WAT, which is favourable for businesses in Western countries, as working hours often overlap significantly. BPO services to clients in Western time zones will lead to improved communication and collaboration.

Quality Assurance

Outsourcing companies in Nigeria are controlled by some regulatory bodies to thrive and grow.

These bodies are the Outsourcing Development Initiative of Nigeria (ODIN), Association of Outsourcing Practitioners of Nigeria (AOPN), Nigeria Association of Information Technology Enabled Outsourcing Companies (NATIEOC) and Assessment of Core Competencies for Employability in the Service Sector (ACCESS Nigeria) were put.

Through their activities, there has been compliance and consistent reporting of outsourcing regulations at an international level.

Conclusion

Nigeria is a promising gateway for businesses seeking to explore the potential of offshoring services in Africa.

Companies will benefit from a thriving ecosystem of talent, resources, and quality outcomes by partnering with the right offshoring firm in Nigeria.

This approach will help global businesses succeed while promoting economic growth in this emerging global BPO hub.

You can partner with Workforce Africa - one of Africa's leading offshoring firms, to provide the correct information and support needed to succeed. To get started,  click here to schedule a free consultation.

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