August 2008
By Devi Kencki

Devi Kencki is Business Development Executive at TNT Document Services Mauritius. TNT was the first BPO company to settle in Mauritius in 1988.


Devi.Kencki(at)cendris.co.uk
www.tnt.mu

Mauritius – an international business hub

Crystal-clear waters, splendid white beaches and luxurious ressorts – these are usually the things associated with Mauritius. Far away from the world’s major markets and sources, the island nation in the Indian Ocean seems more of a touristic center of recreation than an international business hub. However, in recent years, Mauritius has come a long way in implementing its vision: transforming the island into a regional hub for information and communication technology (ICT).

The economic success of Mauritius – characterized by an average growth rate of five percent during the last 20 years – is attributed to the four traditional pillars of its economy: sugar, textile, tourism and finance services. In the past, the Mauritian government has protected the few dominant domestic players (Mauritian companies who had a pre-colonial oligarchy) by favoring them and excluding foreign companies. This was to the disatvantage to the development of entrepreneurship. Mauritius had to overcome this colonial legacy by adopting a new mindset.

Confronted with the effects of globalization, 9/11, and, in particular, the drop in sugar prices, Mauritius had to realize that the traditional pillars were not robust enough to foster future progress and growth. Mauritius transited into a post-industrial age which resulted in the island becoming less competitive in textile and sugar industries as it was facing global competition from giants like China and India.

Creating a Cyber Island

The Mauritian government realized that in order to become a favorable outsourcing destination and to attract foreign companies it needed to create an efficient, low-cost, business-friendly environment. It decided to invest in the promising information technology sector, laying the foundation for a new pillar in the Mauritian economy.

In the late 90’s the Mauritian government took the commitment to turn Mauritius into a ‘cyber island’, with ICT as the fifth pillar of the economy. To attract companies, the government put in place a legal framework and created financial incentives. For example it signed a double taxation treaty with approximately 32 countries to stimulate economic growth via foreign direct investment and offered a low corporate tax of 15 percent and 50 percent relief on personal income taxes for two expatriate staff members (Income Tax Act 1995).

Today Business Process Outsourcing (BPO) activities are at the forefront of the development in the ICT sector. It represents over 45 percent of the industry. BPO activities, outsourced by foreign enterprises to Mauritian-based enterprises, include not only the traditional tasks of payroll administration, processing of receivables and payables, document and data management, but also innovative projects in areas such as financial analysis, multimedia and web design. The sector has also seen the emergence of companies which specialize in software development, call centers for both inbound and outbound calls, web-enabled activities, disaster recovery centers and a number of other ICT-related services.1

In a fast-paced economy where quality, flexibility, and technology are important matters in establishing a competitive edge, the Mauritian government has been following its vision to transform the country into a ‘Cyber Island’.

State-of-the-art technology parks

In order to realize this vision, the government invested massively in the latest technological infrastructure. India offered its technological expertise and a 100 million dollar line of credit for development. This led to the construction of various technologically well-equipped buildings such as Ebene Cyber Tower 12 and Cyber Tower 2. After only one year, 90 percent of the buildings were already rented.

The private sector has also become part of this booming construction business as private investors recently announced their plans to construct several state-of-the-art buildings.

Apart from constructing technology parks, the Mauritian government paired up with the private sector to invest in the construction of commercial, residential and leisure facilities in order to become an international center with a global expatriate population similar to countries such as Dubai, Malta and Singapore.

The Mauritian government also put in place appropriate legal and regulatory frameworks concerning data protection, copyright and infringements as well as laws involving cyber crime.

Another aim was to offer global connectivity at competitive rates. Since 1964 Mauritius has invested in sophisticated communication means such as SAT1. After years of ongoing expansions, in 2002 Mauritius was connected to the SAFE (South Africa – Far East)/ SAT3 / WASC submarine fiber optic cable system. This resulted in high bandwidth, international connectivity and an alternative high-speed link to the existing satellite route from Asia via Africa to Europe. A major advantage of SAFE is that it provides an uninterrupted and secure connection to the internet even during the cyclonic season that may occur in the Indian Ocean. Therefore, Mauritius has proven to be a safe destination for business continuity services.3

A skilled, bilingual and cosmopolitan workforce

From a human resources point of view, Mauritius greatly benefits from its colonial history. Apart from its linguistic and cultural richness (French and English), the island is privileged with a well-educated and talented workforce.

The Mauritian government has made significant investments in education and training designed to cater to the global requirements in various sectors. The educational system is free and is modeled after the British system. The private sector contributed by providing a French educational system leading to the introduction of the French Baccalaureate.

Furthermore the government has encouraged world-class tertiary education by collaborating with reputed institutions/universities in the UK, France, India, Australia, and South Africa to enhance the skill level.

Prestigious international companies like Infosys, Microsoft, Accenture, and TNT that have a delivery center in Mauritius are now capitalizing on the local skills for their BPO operations.

A regional hub in the Indian Ocean

With a number of competitive advantages – such as state-of-the-art infrastructure, country-wide connectivity offered via a fiber optic cable, linguistic wealth, skilled workforce and cultural links with Africa, Asia and Europe – Mauritius is a reliable alternative for extended business centers to provide business continuity.

Changes are to be expected in the next few years in the Business Services Outsourcing industry. China and India are keen to invest to get a share of the Francophone offshore market and to do business with Africa. Mauritius is in an excellent position to serve as a bridge between these countries and the African continent. New models of cooperation with India, China, South Africa and Europe have started to materialize and are opening new doors to the world for Mauritius.

Prestigious brands such as IBM, Microsoft, TNT, ORACLE, HP or Infosys have already established a presence in the ICT sector in Mauritius.

After years of hard work and substantial investments, Mauritius has strengthened its position as a BPO supplier on the global market. The Mauritian ICT sector is determined to move up the process-value chain by channelling all the efforts and competencies towards being an international business hub on the global BPO map.

Located in the Indian Ocean, Mauritius benefits from its favorable time zone (GMT+4) and its strategic geographical location. The island is well positioned to become the prime off-shoring center for global companies allowing them to operate on a truly global delivery model. With a strong democratic tradition and political stability Mauritius has developed into one of the most advanced economies in the East African and Indian Ocean region.

Destination Africa

With globalization, the world of international business has evolved at a fast pace and a new paradigm has been created. Initially large organizations looked for cost-effective solutions to outsource non-core business processes. India and various other Asian countries saw this as an opportunity to invest in infrastructure and education in order to obtain outsourcing deals. It was common knowledge that it would be cheaper to engage Indian software engineers than local professionals.

This led to an enormous growth of IT-outsourcing projects in Indian/Asian countries. Over the past decade, Asian countries dominated the global BPO market by offering cheap labor. However, today’s outsourcers have different criteria for selecting a BPO supplier. BPO suppliers can no longer win outsourcing deals based solely on cost considerations; the BPO industry has moved beyond these criteria. If BPO suppliers, especially those from Africa, want to obtain more outsourcing deals, they have to leapfrog into a new paradigm. This relates to the whole concept of bringing value to the outsourcing company’s business wherein the smart outsourcer can dictate his requirements.

The outsourcer is therefore bound to examine other aspects such as proven track record, internal quality management processes, the legislative and economic environment, infrastructure and competitive skills such as language, labor pool and the flexibility to adapt to the fast paced global market.

While Asian countries are facing difficulties such as high attrition rates, poor language skills and rapidly increasing costs, Africa is positioning itself as the next strong alternative outsourcing destination. With a population of almost a billion, where 50 percent are under the age of 20, Africa is able to provide a large pool of human resources at competitive rates. With large infrastructure investments, language capabilities, favorable time zones and governmental support, Africa can become a major player on the Global BPO map.

The AT Kearney Global Services location Index 2007 shows a steady rise of African countries as interesting and world class outsourcing locations. Countries such as Morocco, Tunisia, Senegal, Egypt and South Africa are well established on the BPO market but indications are that Eastern African countries such as Kenya, Madagascar and especially Mauritius will become strong and interesting outsourcing destinations within the next few years. Mauritius ranks 25th on the Global Services Location Index 2007 as a preferred outsourcing destination .

Sources

1Source : www.investmauritius.com
2Source : http://www.e-cybercity.mu/
3Source : http://www.safe-sat.co.za and www.mauritiustelecom.com