It is no news that Nigeria‘s business process outsourcing industry is worth $285million, based on the Global Business Service report prepared by Knowledge Executive in 2021. However, Nigerian ranks behind South Africa, Egypt, Tunisia and Morocco with a meager 16,540 outsourced staff, where South Africa has 261,000. It is also important to consider that Nigeria has the largest GDP ($445 billion) in Africa, and its vibrant ICT sector, size of human capital, and high unemployment rate calls makes it little outsourcing numbers demand further introspection of the outsourcing ecosystem. Expert opinion and content analysis of credible platforms show that contact centre’s and staff secondment constitute the outsourcing ecosystem in Nigeria, compared to South Africa and Egypt where data management, digital contact center, contact center voice, customer administration and back office processing service delivery make up business process outsourcing services.
Our initial approach is to take a preliminary look into the business process outsourcing ecosystem in Nigeria. At Westfield Consulting, we put this question on the burner of our perspectives section by talking with Mr Emmanuel Abegunde; Head of Human Resources at Pedabo. Our discussion spanned the reasons why companies adopt outsourcing services in Nigeria, current considerations of an anti-casualization law by Nigeria’s highest law making organ- The National Assembly, and global benchmarks for outsourcing.
On the question of why companies consider outsourcing services, Mr Abegunde highlighted the need for having more strategic roles under headcount, definition of critical skills, enumeration of operative roles (roles that are pervasive in operations, but do not confer leverage) etc. Here, such operational roles are outsourced to save costs on recruitment, onboarding, motivation, talent management and other costs incident on the company managing such roles internally. “Besides, these roles come with consistent attrition”. The company with the HR outsourcing contract ensures that the client has a consistent supply of staff to help fulfill the needs of the HR function in the client’s organization.
Mr Abegunde highlighted economic considerations in outsourcing where he stressed that outsourcing may not save costs all the time, but may save businesses from being constrained by lack of staff due to consistent attrition and the need to always activate recruitment processes. Costs of service charge and or incidental costs may make outsourcing more expensive. However, it makes processes move seamlessly.
In another vein, we realize that global firms that a big buyers of staff outsourcing services also engage in outsourcing as a result of the size and prosperity of the home countries. They have great staffing needs and cannot fulfill this need by managing the entire HR value chain in house, thus, they engage professional employer organizations for HR outsourcing and business process outsourcing (BPO’s) for services such as contact centre, data management services, etc. The difference between these countries and African countries is that they have more robust and protective labour laws than in certain climes. This led to the question of casualization and impending laws that seek to eliminate casualization in Nigeria
These casualization laws according to Emmanuel has origins through an Act of the parliament. It seeks to upend casualization, which is depriving a worker of certain labour rights and status, such as a fixed pay, statutory medical and economic benefits. In some cases, employment contracts are limited by probationary periods where certain rights that are supposed to be triggered do not get affected. All of these happen within a 6-month period, most times, such staff do not enjoy full employment benefits even after the 6th month, hence a prolonged casualization status. Thus, the responsibility falls on professional employer organizations to ensure that their outsourced staff enjoy the benefits a full time employee enjoys, even while being seconded to client organizations. This will help the industry ensure sustainability and avoid legislations that will stifle development of the industry.
The industry is experiencing certain changes, where global outsourcing business recently has been defined as global business service, compared to the erstwhile business process outsourcing. This is largely due to further integration of economies and globalization, as well as impact and pervasiveness of digital transformational activities’ happening in the world.
Perhaps, this explains why countries like South Africa rank better than Nigeria because of presence of bigger organizations (national economy dimension) and its reputation as best country in terms of contact center voice, back office processing and customer administration service delivery, as confirmed by global executives. The country’s outsourcing sector is valued at $4.7 billion. Meanwhile, Egypt with the second largest economy has its outsourcing sector valued at $4 billion (excluding IT services).
The room for deepening the outsourcing sector in Nigeria is available, with the number of graduates churned out yearly, unemployment rate and adoption of digital devices and services. What is required is country-wide re-skilling and Upskilling. Multi-lingual trainings should also be encouraged to capture more value from the global business service/business process outsourcing market, which is expected to grow to $19billion by 2023.
Nigeria needs to improve its HR Outsourcing value chain and ensure sustainability, it also needs to seek to gain more share from IT outsourcing and other verticals in the global business services/business process outsourcing industry.
