One of the topics that is rarely mentioned in offshoring discussions is the ability to access new markets. The focus tends to be on how companies can move services to lower-cost locations without considering how those new operating locations could also be new markets.
Brazil is a good example of this. Often it is talked of as an offshoring location because more than a million people work in the IT services industry there. But look closer – almost all the work these people are doing is for companies in Brazil and in many cases the software experts in Brazil are more expensive to hire than those in the USA.
It is Brazil that has the growing economy and it is clearly a new market rather than just a low cost far-flung location to do some IT or business process outsourcing.
And now many African countries are in the same position. Check what the consulting firm McKinsey said in their new report titled ‘The changing face of the African consumer’ – just out this week.
“Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies,” said Damian Hattingh, an associate at McKinsey & Company.
“Profit margins in Africa are some of the highest in the world and as more players come into the market the gap will narrow down,” added Mr Hattingh.
South Africa is listed as one of the top ten African consumer markets along with countries such as Ethiopia and Morocco – often seen by European or American business leaders as places with nothing more to offer than famine or labyrinthine souks.
The joke about Brazil was that it was always the country of the future. Some analysts have pointed out that Africa is going to be economically important in future, but with the attention of respected advisors like McKinsey, perhaps the continent of the future is about to arrive in the present.
Photo by Alex de Carvalho licensed under Creative Commons