McKinsey study: Morocco's offshoring advantage
McKinsey study: Morocco's offshoring advantage
-
|
- Print |
- Email Page
In an integrated global economy, a country is fortunate if it can find a comparative advantage in an industry where major positions have not yet been taken. Morocco, within eyeshot of the European Union across the Strait of Gibraltar, has identified an opportunity to become an offshoring center for Europe's French- and Spanish-speaking companies. According to McKinsey's own study, from 2003 to 2018, business process offshoring in Morocco could add 0.3 percent annually to its GDP growth, reduce its international trade deficit by around 35 percent, and create a total of some 100,000 new jobs.
Morocco's appeal includes wages for white-collar workers that are half those in France, a relatively high proportion of university graduates, and many citizens who speak French, the second language in the central region of the country. Furthermore, the cost and quality of its already respectable telecommunications infrastructure are set to improve further with the expected entry of Spain's Telefónica as a second fixed-line operator. The country's nascent offshoring sector, with an estimated current turnover of €85 million, includes some 50 mostly small providers that will employ a total of about 10,000 people by the end of 2005. Still, Morocco has captured almost half of the fledgling market for call centers serving French-speaking companies. In addition, Telefónica has established a captive call center in northern Morocco, where Spanish is the second language.
Business process offshoring has yet to take off in any significant way among companies in Europe's francophone countries (Belgium, France, Luxembourg, and Switzerland) and in Spain. The main obstacles are labor laws, the political pressure against moving jobs abroad, and the fact that most existing offshoring vendors are predominantly English speakers. As these countries recognize that business process offshoring is vital to remaining competitive, however, we expect their market for it to grow to about €9 billion in the next ten years. Already in Belgium, a number of accountants send their clients' bookkeeping to Moroccan centers for data entry.
Morocco should establish itself as the destination of choice, primarily for francophone offshoring. To achieve rapid progress, it should focus its efforts on 10 to 12 niches within selected business processes (accounting and finance and human resources, for example) and IT functions. Morocco is in a strong position: compared with competitors such as Mauritius, Senegal, and Tunisia, it is geographically closer to France, has a larger and more qualified talent pool, and boasts a better telecommunications infrastructure. When measured against Eastern European countries, Morocco can point to lower labor costs and, naturally, a larger pool of French speakers.
In order to create an attractive business environment for multinational companies, Morocco is launching a few special development zones, or "nearshore centers," which will offer tax breaks, less cumbersome administrative procedures, more flexible labor rules, and world-class infrastructure and services. Attracting four or five multinationals to these zones at an early stage will be a key component of the initiative's success. The country could target major IT firms seeking a place to locate francophone IT offshoring centers, for example, or large companies setting up captive business process units. Such early deals would serve as reference cases for later entrants.
Source: The McKinsey Quarterly
-
|
- Print |
- Email Page
