Nigeria lags in global outsourcing industry.

Nigeria is lagging behind in the global outsourcing industry, contributing only $2 billion out of the $500 billion the industry generates worldwide annually. Investigation showed that globally, India is leading the pack followed by China, Malaysia, Thailand and Brazil without the presence of any African country.

Other countries on the top 10 list include Indonesia, Bulgaria, Philippines, Chile and Japan. Some of the operators in the industry who spoke to Financial Vanguard, said despite the potential of outsourcing in terms of revenue generation and job creation, Nigeria is lagging behind among the comity of nation.

The Association of Outsourcing Professionals of Nigeria, AOPN president, Dr. Austin Nweze, said that outsourcing holds the key to job creation. He noted that in 2020 it is expected that outsourcing will create a minimum of 38 million jobs globally, while the online industry will be moving from $15 billion to $25 billion, creating 30 million jobs.

Nweze said also that of the $25 billion, Nigeria is expected to contribute at least 20 percent  because of  her increased number of youths, but regretted that Nigeria is lagging behind in this process. “We have $25 billion for online outsourcing alone, at the last count the industry as a whole was close to $500billion, presently US is outsourcing    to India and China and has be able to recover from the economic downturn, and  US is becoming an outsourcing hub,”    Nweze stated.

He said the  job of the Association is advocacy – to sell the importance of outsourcing  so that people would understand outsourcing more. “That is why we are advocating that government should understand outsourcing and accord it its place in the development and creation of jobs. Outsourcing can solve their problem in job creation,” he noted.

According to him, “Online outsourcing alone can create about 30 million jobs. So what the Association is trying to do is to know the contribution of outsourcing specifically. So now we have to know the amount it is contributing to the economy. We are going to carry out a study.” Nweke who said that Nigeria is yet to come to terms with the reality of outsourcing, noted that Nigeria is still playing in the peripheral of the outsourcing business.

“Here (Nigeria) we started from the supply side, we have not started the domestic demand side, we are servicing the outsiders, the thing  is that Nigerian companies have not be able to embrace outsourcing because they don’t know the value. “If they know the value of the thing you want,   you have to invest and protect that thing. So we are saying that outsourcing is the key to economic growth, it  is the key to job creation, it is the key  to creating wealth, for individuals and for the nation.”

“And that is why we are saying if you understand the value of outsourcing, then you will invest in it. So we chose that theme. We want to realize the value, which country in the world, is either you are in the demand side of outsourcing or your are in the supply side, so both ways we are creating, the demand side is benefiting from the supply side, because the demand side the economics have moved, US economy for example, 70 to 80 percent service, so some other countries too that their economy have not really developed.”
On the other hand, Peter Jack, Director General,/CEO, National Information Technology Development Agency, NITDA who was represented by    Dr.Sunday Folayan, a    member of NITDA governing board was of the view that outsourcing is becoming a new thing in the Nigerian economy, “because talking about employment opportunity we believe that it is going to create a lot of opportunity for employment, that is the believe.”
Describing the difference between casualisation and outsourcing, Jack  said  outsourcing is a function instead of  setting up a means  of doing it, you get someone else to do it.

For example, he    explained;    you want to make a car, car would have tyres, seats and so on, you can get a company that makes tyres to make your car tyres, get another company that make seats to make your seats, when those companies make those things they bring it to your factory, may be you make the engine, you combine them together, then you make a car, so we say you have outsourced the manufacturing of your tyre to another company, that is outsourcing.

“You will notice a trend in banks now. When you go to banks, some banks no longer have their staff as tellers or cashiers, they outsource job of tellers or cashiers to some other companies, some even outsource security to another company, that is outsourcing, so the moment you have a security company that handles security within your organisation, you have outsourced security to that company.

“Now this is where it gets interesting, you cannot and it is not elegant to already have staff to carryout functions and you wake-up to say you want to outsource that company and you don’t have determinate thing to do with those staff, what will be right is to find a way to disengage them properly and compensate them properly, but not to say we no longer want to treat you like our staff, we now want to threat you as casual labourers. People who are already staff. That is casualisation and it is not in the spirit of outsourcing.

So where the people already do it, outsourcing will strive, but if you are trying to force existing resources who are doing things in outsourced model, is a recipe for disaster. I think ultimately Nigerians  will become more aware of the practice, like everything will strive for a balance, make sure things are done decently.”

He went on to say that this will now bring    value to the Nigerian economy if we start outsourcing most of our jobs. “Outsourcing is already growing in the sense that people build subject areas that they are very competent in, and you will find out that others who want to do things would yield to them.

“If you want to make computers, for example, you don’t start by manufacturing mother  boards, you go to China or India for companies that are already manufacturing boards, even those companies who make those things,  do not make everything. People that make screens  specialise in screens, those that make keyboard specialise in keyboard. So you get from all the sources and assemble. So as someone who wants to do something, you outsource all the parts to other people to do.

On whether if it’s being practiced in Nigeria, he was of the affirmative;  “It’s already being practiced in Nigeria. We don’t just get to recognise it as  outsourcing. I mean if you want to build a house today, you get a builder who builds it. You get a carpenter who does the furnishing; you get a draper to do your curtain, which is outsourcing. It’s not more complex than that. It is already something we are doing, we just need to put in more structure, and put it in a more definite form.”

On whether there are policies to this effect, he quipped;  “Of course, there are policies,  “NITDA is working very hard to show the roadmap and working with associations like the AOPN is a right logical step to let the policies work for the people.” Accordingly, in another development, global Information Technology, IT outsourcing (ITO) services in 2012 reached  $251.7 billion, a 2.1 percent increase from 2011 spending of $246.6 billion.

Also according  to the latest outlook by Gartner Inc. European sovereign debt crisis and economic volatility in the US are the major reasons Year on Year growth fell to 2 percent from 8 percent in 2011. Businesses in Europe and US    then    slashed their IT spends and budgets and most    of the Indian outsourcing vendors hinted that clients spending and budgets will either remain flat or will be cut down in 2013.