Africa will be ‘next wave’ of offshoring

Will Green is news editor of Supply Management
22 November 2013

Africa will be at the centre of the “next wave” of offshoring, a webinar was told.

Eric Simonson, managing partner at Everest Group, said service providers were driving growth on the continent and “global in-house centres” (GICs) would follow.

He said: “Overall, we believe Africa is the next wave of offshoring. The growth in Africa has been driven by service providers. It won’t be long before GICs consider Africa in a big way.”

The webinar, organised by Everest, was also told hybrid models of outsourcing that combine in-house and external provision were going to evolve in the future.

Global sourcing consultant Michael Koontz said there would be more integration of pure outsourcing and GICs in the future, offering companies ways to expand into new territories more quickly.

“We’re going to see the evolution move to not choosing one model. We’re going to see a combination of these models,” he said.

“As you start to expand into new geographies, the question is how you do that as quickly as possible. These models give you a way to do that.”

Suzanne Aquino, executive director of demand and supply management at UBS, said the bank had run a GIC in the past but now business and IT processes were outsourced.

“Although we divested our GIC quite a few years ago we are looking at the next phase of our hybrid strategy,” she said.

“This is the result of cost pressures. We are taking a long hard look at our entire value chain. Where can we produce ourselves and where do others produce better or more cheaply? We’re looking at near-shore low-cost models – it’s our new hybrid model.”

The webinar was told there had been a “notable increase” in the number GIC set-ups in Latin America and there had been a rise in demand for global services in the third quarter of 2013 due to improving economic conditions.

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