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Mauritius as an Emerging Location for Delivery of Offshore Services
September 2009
Copyright © 2009, Everest Global, Inc.
Copyright © 2009, Everest Global, Inc.2
Table of contents (page 1 of 2)
Executive summary 4
Section I: Perspectives on global sourcing 9 Current state of play 10 Growth opportunity and outlook 15
Section II: A brief introduction to Mauritius 19 Key facts about the Island nation and its economy 20 ICT-sector – The Fifth pillar of the economy 23
Section III: Scope of current service delivery (IT-BPO) from Mauritius 29 Overall market size and growth 30 Key facts on current scope of services 33 Case studies that illustrate scope and maturity of services 40
Section IV: Comparison of Mauritius with other offshore locations 47 Costs 50 Talent pool 59 Structural factors and risks 69
Topic Page no.
Copyright © 2009, Everest Global, Inc.3
Table of contents (page 2 of 2)
Section V: Implications for investors 81 Roles that Mauritius can play for global investors and supporting rationale 84
Section VI: Appendix 89 Research methodology and list of participants 94 Glossary 98 Acknowledgements and Authors 103
Topic Page no.
Copyright © 2009, Everest Global, Inc.4
A. Introduction and context
Mauritius is emerging as an important offshore destination for IT/BPO. The industry currently employs ~10,500 people and has attracted a number of marquee global companies. Also, the industry has grown rapidly at a rate of ~45% per year.1
Mauritius is widely regarded as a relatively developed nation even though it is a part of the African continent. Its economy registered a healthy GDP growth (in excess of 5%) in recent years. Further, Mauritius witnessed a significant uptick in its services economy over the past decade. Though primarily driven by tourism, the services economy rapidly expanded into other sectors including offshore financial services and IT/BPO. Mauritius has identified IT/BPO as a key pillar for its economic growth and has put in place an ambitious vision for this sector. It targets to attract ~29,000 jobs by 2011 and also aspires to move towards “high value-added” niches. Further, Mauritius has put in place several enabling initiatives to support the growth of the sector. These include setting up infrastructure parks, talent development initiatives, and investor-friendly business policies.
This report presents a fact-based view of Mauritius’ current IT/BPO capabilities and highlights its key differentiators with respect to other offshore destinations. The reports also outlines potential ways investors could leverage Mauritius in offshore delivery ofIT/BPO services. As a starting point, the report outlines the significant growth opportunity in offshore IT/BPO and the opportunity for Mauritius to participate in this global sourcing phenomenon.
B. Global sourcing market: Opportunity and outlook
Global sourcing of services is a mature phenomenon, and the market represents US$90 billion in annual revenue across IT and BPO services. Over the last 10 years, this industry grew exponentially to employ over four million people across 150+ locations . While the industry is established, there remains significant untapped potential. Everest estimates put the addressable IT/BPOmarket opportunity at ~US$1 trillion, roughly 10 times the current market size.
The sector is currently witnessing slower growth (5-15%), given the recent economic crisis. However, the medium to long-term growth outlook is robust as firms will look to manage cost pressures by leveraging offshoring.
Further, as global firms expand their offshore footprint, they build global delivery networks. In doing so, they look beyond theestablished offshore locations (e.g., India, Philippines). This presents opportunities for Mauritius to participate in an increasing share of the global offshore market. Mauritius has established a good starting point, as described in the following section.
Executive summary (page 1 of 5)
1 Compounded Annual Growth Rate between 2004-08
Copyright © 2009, Everest Global, Inc.5
Exhibit 1
Exhibit 2
Executive summary (page 2 of 5)
C. Scope of current IT/BPO service delivery from Mauritius
The report examines the scope of current IT/BPO service delivery from the following perspectives: overall scale and growth of operations, types of functions delivered, languages, and client geographies served.
Overall scale and growth of operations
The IT/BPO industry in Mauritius currently employs ~10,500 people and has been growing at a rate of ~45% each year. A number of leading global suppliers (e.g., Accenture, Ceridian, Infosys) and offshore captives (e.g., Orange, DHL, Huawei) established operations in Mauritius. Further, some leading local suppliers (e.g., Rogers, Infinity BPO, Euro CRM) also built credible presence in this sector.
The offshore market size in Mauritius is comparable to many of its larger peer group countries, as indicated in Exhibit 1.
Types of functions served
The industry is successfully delivering a wide array of IT and BPO services to offshore clients. The majority of the service delivery (85%) is BPO focused, with a good mix of voice and non-voice BPO services. Exhibit 2 illustrates the split of the market across types of functions served.
ITO
35%
9%4%
11% 41%
100% = 10,400
Employee split by outsourcing services2009; Number of employees
Others1
Contact center
Non-voice BPO
KPO
Offshore-experienced IT/BPO talent pool by country2009; Number of employees in ‘000s
Has a large domestic market of over 100,000 jobs
Poland
Morocco
Egypt
South Africa
Mauritius
Tunisia
Senegal
Jamaica
Kenya 0.8-0.9
5-6
6-7
7-8
9-10
9-10
13-14
44-45
31-32
1 Include Multimedia, 3D/Graphic design, Engineering services, etc.
Copyright © 2009, Everest Global, Inc.6
Executive summary (page 3 of 5)
While there are some examples of relatively large centers (~1000 FTEs), the typical scale of operations is between 100-500 FTEs depending on functions served. Exhibit 3 provides a view of the typical scale of current delivery centers and also profiles the types of services delivered.
As shown in Exhibit 3, though most of the work delivered is transactional in nature, Mauritius is starting to move up the value chain with few instances of relatively higher-order work. There are emerging examples of success in areas such as customer surveys, reporting and compliance (F&A), and business research.
Languages and client geographies served
Mauritius has distinctive advantages in terms of its quality bilingual skills in both French and English. Given these strengths, Mauritius presents strong opportunities to serve French-speaking markets (e.g., France, Africa, parts of Canada) across both voice and non-voice functions. In addition, companies can leverage Mauritius to serve English-speaking markets in some areas (especially non-voice BPO).
As shown in Exhibit 4, while French and bi-lingual work constitute ~75% of the market, suppliers also delivermeaningful scale for English-speaking markets (e.g., US, UK). There are examples of global companies that have been successful serving English-speaking markets from Mauritius.
Exhibit 3
Exhibit 4
Typical processes deliveredTypical scale of large providers
Voice (French and English-language call center)
Inbound: Customer service, helpdesk, query resolution, bookings
Outbound: Campaigns, Customer surveys, telesales, collections
400-500 FTEs
Non-voice(Back-office BPO)
F&A and HRO (e.g., Account Payable, General Ledger, Accounts Receivable, Payroll, Employee benefits, Global mobility, Reporting and Compliance)
Insurance claims and policy administration Account servicing
250-350 FTEs
IT services Applications development and maintenance using Microsoft technologies, Java/J2EE, etc.
Technical service desk Datacenter operations and disaster recovery
100-150 FTEs
Knowledge services Business research Information services Data and document management Content management and publishing
50-100 FTEs
25%
40%34%
100% = 10,400
Employment distribution by language of service delivery2009; Number of employees
Only FrenchBi-lingual
(English & French)
Other languages1 – 1%
Pure English work is mostly non-voice BPO (e.g., payroll, claims processing)
Limited English voice work in Mauritius Only English
1 Spanish, Dutch, Italian and German
Copyright © 2009, Everest Global, Inc.7
Exhibit 5
Executive summary (page 4 of 5)
D. Comparison of Mauritius with other offshore destinations
The report compares Mauritius with its relevant peer group across three broad areas: costs, labor, and structural factors.
CostsMauritius is one of the lowest-cost emerging destinations for IT/BPO services as seen in Exhibit 5. Mauritius offers significant arbitrage potential (60-70% on an overall operating cost basis) relative to source markets such as UK and France. Further, we expect telecom costs in Mauritius to reduce further with the introduction of the second fiber-optic cable, which will further strengthen Mauritius’ cost position.
Labor poolWhile Mauritius has a small labor pool (~9000 tertiary graduates annually), it has certain key strengths with respect to its talent pool. First, the industry can tap into alternative talent pools (e.g., school leavers) that have proven effective for BPO. Second, the talent pool increasingly views IT/BPO as a relatively attractive career compared to other sectors. Third, Mauritius’ bi-lingual skills provide a significant competitive advantage. Given these strengths, the talent pool in Mauritius is sufficient to accommodate four to six new companies per year with moderate scale (~500 FTEs).
Structural factorsMauritius has clear strengths due to its stability, investor-friendly policies, and infrastructure. Further, the government and other stakeholders are putting in place multiple talent development and training initiatives to augment supply.
ENGLISH WORK
Emerging offshore destinations
Established offshore destinations
Source destination
MARKET AVERAGES
13-1614-1615-1715-1717-1918-2019-2121-2323-25
54-58
66-70
U.S. Tier 2
UK Tier 2
Lithuania South Africa
Jamaica Egypt Ghana Mauritius Kenya Philippines India
Direct operating cost per FTE for English contact center services2009; US$ ‘000 per annum per FTE
~68-74%
FRENCH WORK
Emerging offshore destinations
Source destination
MARKET AVERAGES
44-46
30-32 28-30 27-29 26-28 25-2721-23 20-22
15-17
France Tier 2
Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius
Direct operating cost1 per FTE for French contact center services2009; US$ ‘000 per annum per FTE
~61-67%
Copyright © 2009, Everest Global, Inc.8
Executive summary (page 5 of 5)
Everest experience suggests that investors often evaluate cost-risk trade-offs in making location decisions. Exhibit 6 highlights these trade-offs between Mauritius and its peer group. Given Mauritius’ strengths in bilingual skills, low costs, and its conducive business environment, it emerges as an attractive location for moderate-scale (~500 FTEs) offshore services targeted at both French and English markets.
E. Roles that Mauritius can play for investors
Mauritius has a strong role to play in delivery networks of global investors. Based on Mauritius’ structural advantages and companies’ experiences to date, the report highlights some potential ways in which investors could consider leveraging Mauritius for offshore IT/BPO services. These include:
Offshore hub for French work Bilingual work for multinationals with a pan-European
presence Small-scale, relatively higher-order work in some IT/BPO
areas (e.g., software development, finance & accounting, business research)
Regional delivery hub for Africa (e.g., shared services) Risk diversification (e.g., disaster recovery) option for
established offshore locations (e.g., India, Philippines)
Exhibit 6
HighLow
Low
High
Cost
Risk
Ghana
MauritiusKenya
South Africa
Egypt
Jamaica
IndiaPhilippines
Established low cost, locations for mega scale (multiple ‘000 FTE) operations
Large English-speaking talent pool suited to support large-scale centers (1000-2000 FTE), but relatively higher cost
Low-cost, stable location suited to support moderate-scale centers (<500 FTE)
Low cost however, small talent pool and relatively less evolved infrastructure
Native English-speaking location; but relatively higher costs
Cost-risk comparison for potential countries serving English-speaking markets
ENGLISH LANGUAGE WORK
Cost-risk comparison for potential countries serving French-speaking market
FRENCH LANGUAGE WORK
High
Low
Low
High
Cost
Risk
Senegal
Mauritius
Egypt
Poland Tunisia
Morocco
LithuaniaRomania
Low cost but relatively less evolved infrastructure and small talent pool
Limited French skills and relatively higher costs
Scalable and stable locations, but relatively higher costs
Lowest cost, stable location, suited to support moderate-scale centers (~500 FTE)
Copyright © 2009, Everest Global, Inc.9
Table of contents
Section I: Perspectives on global sourcing Current state of play Growth opportunity and outlook
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.10
The IT-BPO market has been growing at a rapid pace and has become an integral part of the global sourcing phenomenonGlobal offshoring market size2004-2008; US$ billion Business Process Offshoring (BPO) market
Information Technology Offshoring (ITO) market
1 Compounded Annual Growth RateSource: Everest Research Institute (2009)
Offshoring of business processes is becoming increasingly mainstream following the success of the offshore delivery of IT services
The growth in BPO has exceeded the growth in the overall offshore market growth in the past five years
2004 2005 2006 2007 2008
~40%
~60%
20-23
10-1244-47
26-29
30-35
70-76
59-65
47-51
89-93
30-32
17-19
37-40
22-25
54-56
35-37
~35%
~65%
BPO market growth (2004-2008 CAGR1): ~35% Overall offshore market growth (2004-2008 CAGR1): ~29%
Copyright © 2009, Everest Global, Inc.11
Offshore BPO market captures a diverse set of services and processes across industry verticals
Revenue distribution by service offerings2008; US$ billion
Human Resources mgmt.
Industry-specific
BPO services
Customer Interaction & Support (call center)
Procurement services
Other BPO services
Finance & accounting
100% = 13
Customer Interaction & Support, which has historically been the leading segment, continues to account for close to 40% of the market
Overall, over a quarter of the market is now providing vertical-specific processes
Knowledge services
2%
13%
27%
9% 4%
42%
3%
Note: Revenues and employees for domestic BPO (Indian clients) excluded from the analysisSources: Everest analysis (2008); response from study participants; NASSCOM
INDIA EXAMPLE
Copyright © 2009, Everest Global, Inc.12
The global sourcing location landscape is evolving rapidly as investors have multiple options today
Eastern EuropeWestern
Europe
Egypt
South Africa
Caribbean
S.E. AsiaIndia
China
Canada
Nigeria
Kenya
Investors today have over 150+ credible offshore delivery options (cities); up from 50 four years ago
Source: Everest Research Institute (2009)
Philippines a key destination
Multiple emerging countries (e.g., Malaysia, Vietnam, Thailand)
Multiple Eastern European countries (e.g., Czech Republic, Poland, Hungary, Romania)
Number of options in North Africa
Multiple location options (e.g., Brazil, Mexico, Argentina, Chile)
Large domestic market, but nascent offshore experience
Mauritius
Copyright © 2009, Everest Global, Inc.13
As a result, multiple countries are competing to grab share in the offshore market
India and Philippines together constitute over half of the offshore BPO market
Market share is shifting towards emerging offshore locations, as they become increasingly significant
2004
52% 45%38% 32% 27%
41%46%
49%52%
50%
7% 9% 13% 16%23%
10-12 17-19 22-25 26-29
2005 2006 2007
Share of offshore BPO marketUS$ billion
100% =
Established offshore destinations
(India, Philippines)
Traditional sourcingdestinations
(Canada, Ireland)
Emerging offshore destinations1
2008
35-37
1 Includes Czech Republic, Romania, Poland, Hungary, South Africa, Mauritius, Egypt, Nigeria, Morocco, Mexico, Brazil, Argentina, Colombia, Chile, Costa Rica, Singapore, Malaysia, Jamaica, El Salvador, Peru, Panama, etc.
Source: Everest Research Institute (2009)
India dominant in IT
BPO EXAMPLE
Copyright © 2009, Everest Global, Inc.14
Mexico
Mexico city
Sao Paulo
Brazil
Santiago
Chile
Mumbai
Bangalore
India
China
Shanghai
Singapore
PolandKrakowBelfast
Ireland
DalianBeijingBudapest
Hungary
Warsaw
IT work for Latin America
Application Development and Maintenance for North America
F&A for Europe and Middle East markets
Loans processing, contact center, and analytics for global businesses
Customer care, transaction processing for U.S. and Asia-Pacific businesses
Application Development and Maintenance, data processing for global businesses
Regional delivery centers
Offshore delivery centers
Example: Global financial services major
Investors assess locations based on a combination of cost, risk and labor pool available.
In addition, the role of each location in a network is determined based on fit across the following dimensions: Geographies Functions Industries Scale
Opportunity for Mauritius to participate in the growing offshore phenomenon
Source: Everest Research Institute (2009)
Metro ManilaPhilippines
Further, investors are building global delivery networks and in doing so, they are diversifying beyond the established locations (India, Philippines)
NOT EXHAUSTIVE
Copyright © 2009, Everest Global, Inc.15
Table of contents
Section I: Perspectives on global sourcing Current state of play Growth opportunity and outlook
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.16
The global sourcing opportunity is large and significant
60-61%
Global sourcing market size and opportunity2008; US$
Addressable offshore IT-BPO market opportunity
Current offshore IT-BPO market size (2008)
89-93 billion
1 trillion
Theoretical opportunity to grow market 10 times to
approximately US$1 trillion
42%
10%
58%
90%
Front-office
Back-office
13 220-280100% =
Offshore BPO market size by type of functionUS$ billion
India’s addressable offshore BPO market opportunity
Current offshore BPO market size (2008)
Within BPO, while voice work is likely to grow; non-voice is likely to become increasingly significant
Sources: Everest Research Institute (2009); NASSCOM
INDIA EXAMPLE
Copyright © 2009, Everest Global, Inc.17
However, the sector is witnessing some slowdown due to the global recession
ACV1 of outsourcing transactions signedUS$ million
Outsourcing transactions signedNumber of transactions
Average deal size has shrunk over the previous several quarters
4,0743,804
4,011
2,602
3,2073,553
2,972 2,989
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
The number of outsourcing transactions have remained flat and range bound
385333
403 417
481455
423467
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
1 Annualized Contract ValueSources: Everest Research Institute (2009); NASSCOM
Average
Copyright © 2009, Everest Global, Inc.18
While offshore market growth is likely to be tempered over the next 12-18 months, the medium-long term outlook remains robust
Offshore BPO industry
Factors likely to affect offshore BPO growth
Factors likely to drive offshore BPO growth
Firms facing survival pressures
Drop in underlying business volumes
Uncertainty driving slower decision making
Political sentiments against offshoring (job losses)
Offshoring a key lever to cut costs
Significant untapped opportunity
Mergers and acquisitions driving additional opportunities
Given these countervailing forces impacting growth, The Everest Research Institute expects the growth rate of the offshore BPO market to be tempered (between 5-15%) over next 12-18 months.However, the medium-outlook remains robust, with growth rate expected to pick up to 20-30% levels
Copyright © 2009, Everest Global, Inc.19
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius Key facts about the Island nation and its economy ICT sector – The fifth pillar
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.20
Quick facts on Mauritius
Situated off the coast of African continent east of Madagascar, Mauritius is a small island nation in the southwest Indian Ocean with a population of 1.28 million people
History of colonialization by the Dutch, French and then by the British. Under the French rule, the island developed a prosperous economy based on sugar production and exports. Achieved independence from the British in 1968
Mauritians are bilingual (speak both English and French). Creole, the local language spoken by over 80% of the population, is similar to French. Some Indian languages (e.g., Bhojpuri, Hindi) also spoken
Ethnic groups comprise of Indo-Mauritian (68%), Creole (27%), Sino-Mauritian (3%), and Franco-Mauritian 2%. Majority are Hindu (48%) with the others being Roman Catholic (24%) and Muslim (17%)
Mauritius, an island nation, has strong cultural affinity with France, UK, and India due to its history…
…and is supported by a growing economy conducive for foreign investment
Key indicators 2005 2006 2007 2008
GDP growth (percentage) 2.3 5.1 5.4 5.3
Per capita GNI (US$) 4314 4810 5576 6157
Inflation FY (percentage) 5.6 5.1 10.7 8.8
Budget deficit FY, (percentage GDP) 5.0 5.3 4.3 3.3
Unemployment rate (percentage) 9.6 9.1 8.5 7.2
The Mauritian economy has registered a healthy average growth rate of 5.6% in recent years
Government has undertaken major economic reforms to facilitate business in Mauritius
These enable investors to set-up and operate in the country seamlessly
Mauritius
Africa Indian Ocean
Sources: CIA Factbook; US Department of State; World Economic Forum; World Bank, Board of Investment; Everest Research (2009)
Copyright © 2009, Everest Global, Inc.21
Even though a part of the African continent, Mauritius is widely regarded as a relatively “developed” nation
GDP per capita current prices US$ at PPP
Estimated at ~US$12,000 at PPP, Mauritius has the sixth highest GDP per capita in Africa, after Equatorial Guinea, Seychelles, Botswana, Gabon and Libya
Widely regarded as a developed country, Mauritius has a higher GDP per capita than several African countries that are emerging as offshore services locations
Mauritius has evolved from a low-income, agriculture-based economy to a growing middle-income economy reliant on sugar, textiles and apparel, financial services, and tourism
This has resulted in a more equitable income distribution and a much-improved infrastructure
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2007 2008 2009E
MauritusSenegalMoroccoTunisiaEgyptSouth AfricaGhanaKenya
Sources: CIA Factbook; US Department of State; World Economic Forum; World Bank; Everest Research (2009)
Copyright © 2009, Everest Global, Inc.22
14%
37%24%
5%14%
3%11%
38%
25%
17%
25%
38%
31%28%
48%38%
59%70%
48%
66% 61%
Egypt Ghana Kenya Mauritius Morocco SouthAfrica
Tunisia
Uptick in services economy, primarily driven by the hospitality sector but branching out into other servicesComposition of GDP by country2008; US$ billion
Agriculture
Industry
Services
100% = 16.1 34.5 8.6 86.3 276.7 40.1 Composition of the GDP is gradually shifting
from manufacturing and agriculture to wards services. The services sector accounted for 61% of the U$4.4 billion GDP in 1997, while by 2008 its share increased to 70% of the US$8.6 billion GDP
Rising tourism revenue is a key driver of this increasing share of services
Also, Mauritius has attracted more than 32,000 offshore entities, many aimed at commerce in India, South Africa, and China. Investment in the banking sector alone has reached over US$1 billion
Further, service sector is gradually expanding into information and communications technology, financial services, hospitality and property development
Tourism, agriculture, offshore financial services and manufacturing have been identified as the four pillars of the economy
There is a conscious effort by the government to grow the services economy with a focus on ICT
Key facts on the economy
Mauritius has a higher contribution of services to its GDP, than several other African nations. This underscores the positioning of Mauritius as a services platform, especially customer service orientation from the hospitality industry
162.8
Sources: CIA Factbook; US Department of State; World Economic Forum; World Bank; Everest Research (2009)
Copyright © 2009, Everest Global, Inc.23
The ICT sector is being recognized as the ‘fifth pillar’ of Mauritius’ economy
It is forecasted that the IT-BPO sector will contribute up to 7% of the country’s GDP by 2011
Mauritius’ vision for ICTa. Enable the ICT sector to contribute into the GDP of Mauritiusb. Lead to the ICT sector employing more Mauritiansc. Make for sustained availability of skilled manpower to power the sector, and d. Facilitate contribution from the ICT sector into the Mauritian export basket, initiatives to create an
information society revolve around the instilling of a “technology temper” in Mauritians to bring about increased adoption, ICT-enabled knowledge networking among citizens, and generally accepting ICT as a stream of professional persuasion at par with others
National ICT strategic plan Target to create 29,000 jobs in the ICT sector by
2011 and contribute to 7% of GDP by 2011 Develop a sustainable ecosystem (i.e., talent pool,
physical infrastructure, policies, regulatory environment, etc.) and create an investor-friendly environment Increased adoption of ICT as a preferred career
choice Create an ICT-ready environment through increased
usage and adoption of ICT Inculcation of a ‘technology temper’ and
knowledge networking among citizens
Contribution of the IT-BPO sector to GDPPercentage
1
4
7
2005 2007 2011(E)
Sources: NICTSP; Everest Research (2009); Board of Investment
Copyright © 2009, Everest Global, Inc.24
Mauritius has made significant progress in putting the ecosystem in place from an ICT-readiness standpoint(page 1 of 2)
Developing an ICT conducive environment
Infrastructure development
Ebene Cybercity Well-developed digital network infrastructure and high-bandwidth international leased lines through the SAFE fiber optic cable
Advanced services include the introduction of WiMAX technology, HSDPA technology and 3G mobile networks
Furthermore, the second fiber optic will connect Mauritius to France and UK, amongst other destinations, in 2011 This is expected to further bring down costs and
increase availability Development of technology parks and free-trade
zones. For example, Ebene Cybercity, a state of the art cyber park, houses 52 IT/BPO companies
Additional technology parks under construction
Highest penetration of internet users in Africa (internet penetration estimated at 14.5% for 2008 with a total of 185,000 internet subscribers)
Post liberalization of the telecom sector, the number of connected lines has grown to over 364,500 in 2008 from 65,00 in 1991.
Fixed line penetration of 28.7% for its 1.2 million population
Prevalence of e-banking and e-governance
Sources: Everest Research (2009); Board of Investment; NICT Survey, ICTA
14.513.1
10.910.3
6.35
2003 2004 2005 2006 2007 2008
Internet Penetration in MauritiusPercentage
Copyright © 2009, Everest Global, Inc.25
Mauritius has made significant progress in putting the ecosystem in place from an ICT-readiness standpoint(page 2 of 2)
Year Relevant legislation1998 Copyright Act (Amendment)2001 ICT Act2002 Electronic Transactions Act2003 Computer Misuse &
Cybercrime Act2006 Business Facilitation Act 2009 Data Protection Act
Talent development
Formal education Significant rise in secondary and tertiary education
enrolments Increase in adoption of knowledge-based
programs (e.g., information technology, engineering, finance and accounting, business management) among students
Training and skill-development programs HRDC: Administers training grants for employers Empowerment Foundation: Supports special
training and skill-development programs for unemployed people
ICT Academy: Soft skills and technical/domain training to industry workers and aspirants
Customized networking and telecom courses dispensed in French
PolicyDevelopment
Rise in tertiary enrolments‘000s
2629
33 35
2004 2005 2006 2007
Conducive business environment (e.g., low tax rates)
Streamlined process for investors to live and work in Mauritius (Occupation permit issued in ~3 working days)
Modern labour laws adopted to the needs of the ICT industry
Data Protection Act to comply with EU IP and data protection norms
Sources: Everest Research (2009); Education statistics department; Board of Investment
Copyright © 2009, Everest Global, Inc.26
Overview of the education system in Mauritius
Number of institutions
Type of institutions/ credentials awardedAnnual enrolments
~10,000 students in 2007/08; a 5.4% increase from the last year
6 public institutions
3 polytechnics
30 private institutions
~8,500 students appeared for HSC in 2007/08
~17,350 students examined for SC
180 schools
180 schools
University-level first stage (Diploma of 2 year duration)
University-level second stage (3-4 year Bachelor)
University-level third and fourth stages (Masters, M.Phil, PhD)
Upper secondary school
Length of program: 2 years
Primary and lower-secondary school
Length of program: 11 years including kinder garden
Universities, Institutes and colleges awarding Bachelor’s degrees, Diploma, Master’s Degree and PhDs
Tertiary level
Higher School Certificate (HSC) /
General Certificate of Education A-level
School Certificate (SC)/General Certificate of Education O-level
Education in Mauritius is provided free of cost till the senior secondary level and in government colleges till the tertiary level
Some SC qualified students may proceed directly for tertiary courses such as distance education, diplomas
Sources: Everest Research (2009); Education statistics department, Mauritius
Copyright © 2009, Everest Global, Inc.27
Key organizations involved in ICT development
The Board of Investment (BOI) is the official Investment Promotion Agency of the Government of Mauritius. It is viewed both locally and internationally as a strategic partner for any investor wishing to set up its operations in Mauritius.http://www.boimauritius.com
The National Computer Board (NCB) was set up by the National Board Act to promote the development of Information and Communication Technologies in Mauritius. It vision is to be the key enabler in transforming Mauritius into a Cyber Island and the regional ICT hub.http://www.ncb.intnet.mu/
Outsourcing & Telecommunications Association of Mauritius (OTAM) is an association of call centers/BPO’s, software developers, Internet Service Providers, International Long Distance operators established to promote the creation of an environment conductive to the growth of the ICT industry in Mauritius.http://www.otam.mu/
Human Resource Development Council was set up in accordance with the HRD Act with 27 members representing the different sectors of the economy. It’s aim is to promote human resource development in line with national economic and social objectives for successful transformation of the country into a Knowledge Economy. http://www.hrdc.mu/
The National Empowerment Foundation administers, controls and operates the Placement for Training Programme under the Empowerment Programme (EP). It attempts to address the problem of mismatch in the labor market, and the high rate of unemployment. The programme is designed to provide the unemployed with an in-company placement coupled with a work-related formal training so as to make them employable.
Copyright © 2009, Everest Global, Inc.28
Key organizations involved in ICT development
Enterprise Mauritius is a collaborative partnership between industry and the government that aims to help businesses in Mauritius expand into regional and international markets, and at the same time develop their internal capability to meet the challenges of international competition. Focus areas would be to promote exports, support enterprise development and provide competitive intelligence.www.enterprisemauritius.biz
Founded in 2003 the Chambre de Commerce et d'Industrie France-Mauritius (CCIFM) comprises of 96 companies and entrepreneurs from France and Mauritius. The CCIFM aims at nurturing the commercial relationship that exists between the two countries and works in close collaboration with the French embassy, the French economic mission, the Board of Investment (BOI) and the Mauritius Employers Federation. www.ccifm.intnet.mu/
Founded in 2001, the Mauritius IT Industry Association (MITIA) represents the interests of the data processing industry near the government and contributes to the setting up of an environment which will support the prosperity and the competitiveness of the data processing industry at the international level and which is to strategic and commercial alliances. MITIA also nurtures the establishment of close connections with other regional and international ICT associations.http://www.mauritius-mitia.org/join.html
Copyright © 2009, Everest Global, Inc.29
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius Overall market size and growth Key facts on current scope of services Case studies that illustrate scope and maturity of services
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.30
2,392 3,8015,513 6,960
10,440
29,000
2004 2005 2006 2007 2008 2011E
The IT-BPO industry in Mauritius has witnessed an impressive growth of 45% annually between 2004-2008
Evolution of employment opportunities in Mauritius2004-2008; Total employees in IT-BPO sector
The IT-BPO industry in Mauritius has experienced sustained growth from less than 100 companies in 2004 to 250+ companies in 2008. Employment opportunities have grown ~5 times since 2004 with several marquee players establishing operations
The IT-BPO sector generated revenues of ~US$200 million during FY 2008-09
Target to create 29,000 jobs in the ICT sector by 2011
Sources: Everest Analysis (2009); NICTSP, Questionnaire responses; Board of investment, Mauritius
Copyright © 2009, Everest Global, Inc.31
A numbers of suppliers and captives have established their operations in Mauritius
NOT EXHAUSTIVE
Source: Everest Research (2009)
Local/regional Mauritius suppliers
Captive operations
Global suppliers
Copyright © 2009, Everest Global, Inc.32
Offshore market size in Mauritius is comparable to that of other emerging destinations
Offshore-experienced IT/BPO talent pool by country2009; Number of employees in ‘000s
Source: Everest Research (2009)
0.8-0.9
5-6
6-7
7-8
9-10
9-10
13-14
31-32
44-45Poland
Morocco
Egypt
South Africa
Mauritius
Tunisia
Senegal
Jamaica
Kenya
Number of leading global suppliers and captives serving offshore markets 2009
Has a large domestic market of over 100,000 jobs
2-4
4-6
1-2
1-2
13-15
14-16
12-14
13-16
48-52Poland
Morocco
Egypt
South Africa
Mauritius
Tunisia
Senegal
Jamaica
Kenya
Offshore industry size in Mauritius is comparable to many of its larger peers (e.g., South Africa, Tunisia)
Copyright © 2009, Everest Global, Inc.33
11%
4%85%
Majority of the service delivery from Mauritius is BPO focused, with a fair mix of voice and non-voice BPO services
BPO ITO
100% = 10,400
Employee split by outsourcing services2009; Number of employees
Non-voice BPO (52% of
the market)
Corporate services (F&A, HR)
Voice BPO(front-office)
Industry specific- BPO(Insurance claims, account servicing)
Knowledge services (Data Mgmt., business research,
and information services)
Others1
BPO employees split by types of BPO functions served2009; Number of employees
1 Include Multimedia, 3D/Graphic design, Engineering services, etc.Note: The analysis is representative of ~70% of the market ( ~7,280 employees) extrapolated to cover the entire market (~10,400 employees)
Sources: Questionnaire responses; Interviews with leading service providers, Everest analysis
Mostly ADM
48%
28%
11%
13%
Number of employees
100% = 8,840
Voice BPO (48% of the
market)
Copyright © 2009, Everest Global, Inc.34
While diverse functions are currently being served from Mauritius, the scalability is limited
Typical processes deliveredTypical scale of large providers Player landscape
Voice (French and English-language call center)
Includes global and local/regional suppliers
Local/Regional suppliers have a larger average size of operations than their global counterparts
Inbound: Customer service, helpdesk, query resolution, bookings
Outbound: Campaigns, Customer surveys, telesales, collections
400-500 FTEs
Non-voice(Back-office BPO)
Numerous captives operating shared service centers
Significant presence of global suppliers running small scale transaction processing operations
F&A and HRO (e.g., Account Payable, General Ledger, Accounts Receivable, Payroll, Employee benefits, Global mobility, Reporting and Compliance)
Insurance claims and policy administration
Account servicing
250-350 FTEs
IT services Evidence of IT work, though small scale
Global suppliers more prominent in this space
Applications development and maintenance using Microsoft technologies, Java/J2EE, etc.
Technical service desk Datacenter operations and disaster
recovery
100-150 FTEs
Knowledge services Niche providers and global suppliers operating in this space
Business research Information services Data and document management Content management and publishing
50-100 FTEs
Sources: Everest Analysis (2009); Interviews with IT-BPO suppliers and captives in Mauritius
Copyright © 2009, Everest Global, Inc.35
Though most of the work delivered currently is transactional in nature, Mauritius is starting to move up the value-chain with few instances of higher-order work
Accounts payable | General accounting
Contact Center
Back-office BPO(F&A example)
Channel management
Lifecycle management
Customer data acquisitionCustomer service (simple queries)
Sales and marketing
Accounts receivableFixed assets | Tax
ReportingCompliance
Management reporting
Cross sellCustomer analyticsCustomer surveys
Treasury & risk
Audit
Capital budget
Knowledge services
Presentation supportData management and archiving
Information services
Business research
Investment research
Financial modelingRisk analytics
Legal process
Majority of current service delivery in Mauritius
Incr
easi
ng c
ompl
exity
and
val
ue d
eliv
ered
Increasing scope/diversification of service delivery
Customer survey, high-value customer service, etc.
Compliance, MIS and audit
Legal Process, Business Research
Early evidence of higher-order workRule-based/TransactionalJudgment orientedStrategic
BPO EXAMPLE
Source: Everest Analysis (2009)
Copyright © 2009, Everest Global, Inc.36
25%
40%
34%
Majority of service delivery is Bi-lingual with clear strengths in French-language delivery
Only French
Only English
Bi-lingual (English &
French)
Other languages1 - 1%
1 Spanish, Dutch, Italian and GermanNote: The analysis is representative of ~70% of the market ( ~7,280 employees ) extrapolated to cover the entire market (~10,400 employees)
Sources: Questionnaire responses; Interviews with leading service providers, Everest analysis
Employment distribution by language of service delivery2009; Number of employees
100% = 10,400
Pure English work is mostly non-voice BPO (e.g., payroll, claims processing)
Limited English voice work in Mauritius
Mauritius is one the few offshore locations that can support bilingual operations (French and English) in meaningful scale
Copyright © 2009, Everest Global, Inc.37
While France is the largest offshore market served, there is meaningful work delivered for English-speaking markets also
1 Includes Middle-East, Asia, Caribbean, Israel, RussiaNote: The analysis is representative of 70% of the market ( ~7,280 employees ) extrapolated to cover the entire market (~10,400 employees)
Sources: Questionnaire responses; Interviews with leading service providers, Everest analysis
Employment distribution by source geography served2009; Number of employees
7%
16%
3% 2%
10%
19%
43%
Domestic
U.S., Canada
UK
France
Benelux
Africa Others1
French-speaking population of Canada. However, there is evidence of U.S focused work as well
Key Anglo-Franco market
Largely non-voice work
Largest market served across Contact center, BPO and IT services
French-speaking population of North Africa and English speaking population of sub-Saharan Africa
100% = 10,400
Copyright © 2009, Everest Global, Inc.38
While local/regional service providers account for ~70% of the industry, global companies drive scale
Employment distribution by type of providerNumber of employees
17%
12%
71%
100% = 10,400
Global suppliers
Local/regional suppliers
Offshore captives
Average scale of operations by type of providerEmployees
250
150
50
800
350
650
Scale of largest provider Employees
Sources: Questionnaire responses; Interviews with leading service providers, Everest analysis
Multiple global suppliers and offshore captives in Mauritius (as illustrated on Page 26)
Global supplier
Offshore captive
Local/regional supplier
Copyright © 2009, Everest Global, Inc.39
22%8%
3%
26%
4%
14%
23%
A wide range of industry verticals are being supported, with some spikes in Telecoms and high-tech, BFSI
Employment distribution by vertical supportedNumber of employees
BFSITravel, hospitality,
and tourism
Telecom and Hi-tech
Other industries1
BFSI The evolved domestic offshore investments
industry potentially provides ‘transferable skills’ to the BPO industry
Tourism and Hospitality An incubator of foreign language skills (e.g.,
Spanish, Italian, German, Dutch), in addition to being fluent speakers of French and English
Customer service orientation helps in improved employability for the BPO sector
Logistics Several international logistics providers are
present in Mauritius given its geographical positioning to serve the African region
Examples of captives leveraging Mauritius as a shared services delivery location
Telecom Liberalization of the telecom sector has resulted in
availability of domain-specific skills within the domestic market. (e.g., Emtel, Orange)
Logistics
Manufacturing
E-commerce, media and entertainment
1 Others refer to all other client industry verticals (e.g., healthcare, pharmaceutical, retail, government etc.)Note: The analysis is representative of ~70% of the market ( ~7,280 employees ) extrapolated to cover the entire market (~10,400 employees)
Sources: Questionnaire responses; Interviews with leading service providers, Everest analysis
100% = 10,400
Copyright © 2009, Everest Global, Inc.40
Several examples and case studies demonstrate that service providers in Mauritius are successfully delivering a wide-array of services to offshore clients
Evidence of relatively niche/domain-specific work
IT and knowledge services
Contact center (French and bilingual)
Non-voice transactional BPO
1 2
34
Wide scope of services and multiple leverage models5
Copyright © 2009, Everest Global, Inc.41
Non-voice transactional BPO case studies1
Sources: Questionnaire responses; Interviews with leading service providers
1 2
345
Examples of non-voice BPO work delivered
The client is UK’s leading hospitality company that has outsourced its HR and payroll to the service provider as a part of a 5-year outsourcing deal
Mauritius offshore delivery center along with the service provider’s onshore facility in the UK, administers HR services, payroll and related technology services to more than 33,000 employees of the client worldwide
The Mauritius team has been set up with 50% of existing employees and 50% new graduates from universities and the domestic hospitality/tourism sector
The team operates 24/7 and provides non-voice and related-IT services in HRO
Software development using Microsoft technologies (e.g., .net, VB, C#)
HR transaction processing and payroll as per UK norms
Third-party administration of Payroll and related HR services for a UK client
Shared services unit of a large multinational delivers transactional F&A processes (e.g., invoice processing, claims) for its offshore operations in French-speaking countries
A global outsourcing services suppliers delivers F&A (AP, GL, AR, and business services (e.g., Visual aids) for its French-speaking customers in Europe
A leading global BPO supplier provides order management and transactional F&A to its French-clients
Qualified accountants of F&A shared service operations perform claims approval, payments, compliance and audit for the French-speaking African countries
Data capture, cleaning and data management services of media reports, press releases for a leading publication house in France
Case Vignettes: Back-office processing for the French market
Copyright © 2009, Everest Global, Inc.42
Contact center (French and bilingual) case studies2
Sources: Questionnaire responses; Interviews with leading service providers
1 2
345
Examples of contact center services delivered for French market
A global BPO supplier provides third-party sales support (e.g., quotations, follow-up, maintenance contracts) for the French operations of a leading high-tech and telecom MNC
Third party after-hours customer service for high-value French customers (corporate and platinum/priority) of a leading credit card company
Third Party campaigns on new product offering, sales support and post-sales customer service for a leading global media and publishing corporation
Third Party inbound customer service for France’s leading directory services/listing company focused on the French-market
Third-party outbound customer satisfaction surveys for the French customers of a leading auto manufacturer
Outbound fund-raising for the Art and donations for community service for a leading European insurer
Case vignettes: French Contact Center
The client is a leading player in the international assistance market operating in the vehicle, travel and lifestyle, medical, and home assistance space
The client sources inbound assistance services for France, Part of Europe and Canada and Southern African region, including transactional back-office services for the group company in UK
The inbound English call center team in Mauritius delivers hotline, emergency assistance, claims, helpdesk, concierge, and customer service for the client’s customers
On the non-voice side, the team in Mauritius provides claims processing, medical and legal transcriptions and software development services to its client’s group company in the UK
The center is complaint with the European Data Protection Act for processing sensitive financial information of its European clients
Administration of bilingual inbound assistance services for a leading assistance company
Copyright © 2009, Everest Global, Inc.43
Evidence of relatively niche/domain-specific work
Examples of relatively niche/domain-specific work delivered for offshore clients
3
Sources: Questionnaire responses; Interviews with leading service providers
1 2
345
With a team of over ~170 people, the offshore banking entity at Mauritius provides a range of offshore banking services to financial institutions, international business groups and its private clients
The Fiduciary team provides middle-office support services (e.g., accounting, administration) to the bank’s corporate trust structures and provides solutions for institutional clients
The private wealth management team provides custodian, investment, portfolio management services to high-net worth clients taking advantage of the extensive range of double taxation agreements available to the entity. Attractive concessions include reduction of withholding tax on bank interest in a number of DTA jurisdictions
The trust and securities team offers corporate services, Fund services and Trust Services backed by a supporting team providing Statutory and Fund Accounting support
The global transaction support team is responsible for the establishment and ongoing administration of capital markets special purpose entities through provision of management reporting, bookkeeping, accounting and accompanying administration services
Offshore financial services center of a leading European Bank
A leading European provider of worldwide business communication solutions operates its global service center from Mauritius
The team at Mauritius provides LI and L2 technical support for incident and problem management, service delivery coordination and project management for IT, Telecom and IP projects
~150 FTE managing service desk, ~50 engineers for network deployment, network optimization and IT security; ~50 FTEs performing IP telephony support, maintenance and upgrade functions
The talent pool employed are B.Sc graduates, engineers, A-levels with specialist networking certifications (e.g., CCNA, MCSE)
Managed services in communication network solutions
Copyright © 2009, Everest Global, Inc.44
IT and knowledge services case studies4
Sources: Questionnaire responses; Interviews with leading service providers
1 2
345
Examples of IT application outsourcing and knowledge services work delivered
A large global supplier provides Application development and outsourcing services to its French-speaking European clients using technologies such as Oracle family of applications, SAP, Java/J2EE and other Netcentric technologies, as well as dedicated testing services
Application development in Java/J2EE and Microsoft Technologies for supporting a large Anglo-Dutch bank’s applications
Application development and maintenance of document management and content management platforms for a leading publishing and document services supplier
Case Vignettes: IT Applications development
A leading provider of database and analytical tools providing investment research information to the investment industry/community, operates its delivery and research operations in India and Mauritius
The delivery centers create, manage and administer several platform-based product offerings around databases of environmental, social and governance information covering 2,500+ publicly listed companies
While the India team provides data mining and information gathering, the team at Mauritius verifies, cleans, tests and collates the information
~80 research analysts having backgrounds in Economics, Finance and Social sciences perform quantitative and judgment-based work from Mauritius
Delivery of platform-based business research and information services
Copyright © 2009, Everest Global, Inc.45
Investors leveraging Mauritius in multiple ways
Sources: Questionnaire responses; Interviews with leading service providers
1 2
345
5
Examples of distinctive role in global services supply chain
A leading global telecom equipment supplier operates its shared services center for the African region from Mauritius
Has selected Mauritius over other locations for bilingual skills, low cost structure, stable business environment, investor friendly policies, and favorable quality of life for its expatriates
The 170+ strong team delivers transactional F&A (AP, GL, AR). In addition, some higher-order processes such as compliance, closing of books, management reporting are also delivered from the operation
Leverages technology (ebanking, ERP platforms) to transmit high-volume of data/transactions
Employs B.Com graduates with ACCA/CIMA qualifications
Regional hub for the African region and parts of Europe
A couple of leading global suppliers of outsourcing services leverage Mauritius to support delivery of their projects for the European market or French Canada
While a typical ‘follow-the-sun’ approach is used to leverage Mauritius in certain projects, the French-skills of Mauritians proves to be a distinctive capability in several other projects
Reading technical specification documents, design documents, interacting with French-speaking client teams constitute areas in IT projects where Mauritius plays a distinctive role
Similarly, contact center (emails, chat) and processing invoices in French in BPO
Complementing supplier’s global delivery network in delivering IT projects
Copyright © 2009, Everest Global, Inc.46
Investor experiences have been positive
Sources: Questionnaire responses; Interviews with leading service providers
Investors express their satisfaction with Mauritius operations
Copyright © 2009, Everest Global, Inc.47
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations Costs Talent pool Structural factors and risks
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.48
Costs
Fully loaded operating cost (including salaries, real estate, telecom, etc.)
Granular views to costs as applicable to the type of function Call center (French and English) F&A (transactional) IT ADM
Multiple views Entry-level pool Language skills Specialized skills Experienced pool
Telecom and other infrastructure
Connectivity/Accessibility Geo-political and
macroeconomic stability Safety and security Quality of Life Legal and regulatory
environment Business environment Incentives
The report compares Mauritius with other offshore destinations across three broad factors that most companies trade-off in making location decisions
Note: FS stands for Financial Services
Copyright © 2009, Everest Global, Inc.49
Mauritius has been compared with its relevant peers in this assessment
Examples of countries Key characteristics
India Philippines
Suited to support large scale centers (multiple ‘000 FTEs)
Account for >50% of the global offshore marketEstablished locations
Types of offshore locations
Emerging locations
French-speaking locations Morocco Tunisia Senegal Romania Poland Lithuania
English-speaking locations South Africa Kenya Ghana Jamaica Egypt Sri Lanka Vietnam
Suited to support medium scale (1000-2000 FTE) to limited scale (~500) centers
Increasingly being considered by investors as they seek to diversify beyond established locations and build a global delivery network
Relevant peer group for Mauritius
The report primarily compares Mauritius with its peer group of emerging locations as relevant by function
Source: Everest Analysis (2009)
Copyright © 2009, Everest Global, Inc.50
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations Costs Talent pool Structural factors and risks
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.51
Total cost of operations has been assessed based on a bottom-up analysis of cost of delivery for a specific function at a city level
Agent salaries
Bonus Statutory
benefits Other
benefits: Transport, Meals
Supervisor and manager salaries
Bonus Statutory
benefits Other
benefits: Transport, Meals
Support staff (IT, HR, accounts) salaries
Statutory benefits
Training costs
Attrition-related costs
Real estate rentals
Fixtures and fit-outs
Utilities
Telecom Equipment
(servers, switches, networking, etc.)
Miscellaneous bucket
Captures 40+ data elements
Does not include supplier margins, travel, and one-time expenses
Elements included in above heads
Direct operating cost per FTE per annumUS$ per FTE
Salaries and benefits
Management Administration Facilities and real estate
Technology Other direct operating expenses
Total direct operating cost per FTE
ILLUSTRATIVE
Costs benchmarked across functions: Call Center (French and English), F&A and IT
Source: Everest Research Institute (2009)
Copyright © 2009, Everest Global, Inc.52
13-1614-1615-1715-1717-1918-2019-2121-2323-25
54-58
66-70
U.S. Tier 2 UK Tier 2 Lithuania SouthAfrica
Jamaica Egypt Ghana Mauritius Kenya Philippines India
For English language work, Mauritius offers a cost advantage over multiple emerging locations
Direct operating cost1 per FTE for English contact center services2009; US$ ‘000 per annum per FTE
Emerging offshore destinations
Established offshore destinations
1 Ongoing costs only; excludes margins/mark-ups, centralized corporate overheads, initial investment, set-up costs, and travel costs2 For Philippines and India, their respective capital cities Manila and New Delhi have been considered
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-2008 to 30-June-2009Source: Everest Research Institute (2009)
2 2
~68-74%
ENGLISH WORK
MARKET AVERAGES
Mauritius presents significant arbitrage opportunity (~70% on operating cost basis) over the UK
Source destination
Copyright © 2009, Everest Global, Inc.53
44-46
30-3228-30 27-29 26-28 25-27
21-23 20-2215-17
France Tier 2 Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius
Further, for French language work, Mauritius is the lowest cost offshore delivery location
Direct operating cost1 per FTE for French contact center services2009; US$ ‘000 per annum per FTE
1 Ongoing costs only; excludes margins/markups, centralized corporate overheads, initial investment, set-up costs, and travel costsNote: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-2008 to 30-June-2009
Source: Everest Research Institute (2009)
MARKET AVERAGES
FRENCH WORK
~61-67%
Source destination
Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) over France
Emerging offshore destinations
Copyright © 2009, Everest Global, Inc.54
Similarly, for F&A and IT, costs in Mauritius are lower than most other emerging destinations (page 1 of 2)F&A cost comparisonDirect operating cost1 per FTE for transactional F&A services2009; US$ ‘000 per annum per FTE
15-17
34-36 33-3530-32
27-29 26-2823-25 22-24
19-21 18-20 18-20
Poland Tunisia Morocco Romania Lithuania SouthAfrica
Jamaica Egypt Mauritius Kenya India
1 Ongoing costs only; excludes margins/markups, centralized corporate overheads, initial investment, set-up costs, and travel costs2 New Delhi has been used as a proxy for India to get the F&A cost
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-2008 to 30-June-2009Source: Everest Research Institute (2009)
MARKET AVERAGES
Emerging offshore destinationsEstablished offshore destinations
2
Copyright © 2009, Everest Global, Inc.55
Direct operating cost1 per FTE for IT Applications Development and Maintenance2009; US$ ‘000 per annum per FTE
41-43 41-43 40-42 37-3933-35
30-3225-27
22-2421-23
Poland Morocco Tunisia Romania Egypt Lithuania Mauritius Vietnam India
Similarly, for F&A and IT, costs in Mauritius are lower than most other emerging destinations (page 2 of 2)IT cost comparison
1 Ongoing costs only; excludes margins/markups, centralized corporate overheads, initial investment, set-up costs, and travel costs2 New Delhi has been used as a proxy for India to get the IT cost
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-2008 to 30-June-2009Source: Everest Research Institute (2009)
MARKET AVERAGES
Emerging offshore destinationsEstablished offshore destinations
2
Copyright © 2009, Everest Global, Inc.56
Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius
Key drivers are the lower salaries in Mauritius and in some cases, lower telecom costs relative to peers
30-3228-30 27-29 26-28 25-27
21-23 20-22
15-17
Salaries,Management,
andAdministration
Facilities
Telecom
Breakup of direct operating cost per FTE per annum2009; US$ ‘000 per FTE per annum
Miscellaneous1
Cos
t hea
ds
1 Miscellaneous costs include training, attrition cost etc.Note: Exchange rates for local currencies with respect to the Euro have been averaged for 7 months from 1-Nov-08 to 30-June-09
Source: Everest Research Institute (2009)
MARKET AVERAGES
FRENCH CALL CENTER
Entry-level salaries are lower in Mauritius compared to its peers for French call center work School-leavers (SC and HSC) typically employed in Mauritius, compared to tertiary graduates in many other countries However, school leavers have proven quite effective for call center work. Reasonably good employability of school leavers (20-25%), comparable to that of tertiary graduates in other countries
Salaries for experienced roles are higher given the relatively small pool of middle-senior management talent
Copyright © 2009, Everest Global, Inc.57
While there are opportunities for reduction in Mauritius’ telecommunication costs, they are lower than North African countries even at current levelsAnnual rental tariffs for IPLC (telecom)1
2009; US$ per E1 connection
1,63,200
1,36,800
1,33,200
1,26,000
93,600
79,080
72,000
67,200
66,737
60,000
58,800
46,691
13,325
Tunisia
Senegal
Romania
Jamaica
Morocco
Lithuania
Kenya
Egypt
Vietnam
Ghana
Mauritius
South Africa
India
Telecom costs in Mauritius have been falling significantly over the years (~30% each year) Costs expected to reduce further through connection to the fiber optic cable (expected in 2010) This is likely to strengthen Mauritius’ overall cost position
12,600
10,500
7,900
6,300
4,900
3,000
2003 Feb 2006 Jul 2006 Sep 2006 Jan 2009 2010(E)
Telecom rentals / license (IPLC 2 Mbps)MUR per annum
Trends in Mauritius’ telecom tariffs
Target
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09 Sources: Everest Research Institute (2009); Real estate reports, BOI
Copyright © 2009, Everest Global, Inc.58
Telecom costs in Mauritius are expected to decline further with the advent of the second fiber-optic cable
Planned initiative A high-capacity undersea
fiber-optic cable linking Africa to Asia and Europe via the Middle East
Expected capacity of 1.28Tb/s enabling high-speed services
Cable expected to provide Mauritius, and South and East African countries with access to major business centers globally, and support the growing demand for broadband
Current status Cable went live in July 2009
at a landing station in South Africa to meet the bandwidth needs of the Africa continent
Additional, landing stations have been planned at Mauritius, Kenya, Madagascar and other points along the east coast of Africa
Security teams have been beefed up at various places to protect the slow moving cable layers
Impact and implications The fiber optic is expected
to bring down international bandwidth costs substantially
Significant increase in bandwidth, ~ 10 times current capacity
Multiple telecom operators expected to become tenants on the cable and pass on its benefits to consumers
Higher availability and better SLAs are expected to be offered
Source: Service Provider Executive Interviews
Copyright © 2009, Everest Global, Inc.59
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations Costs Talent pool Structural factors and risks
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.60
Relevant views reflective of multiple functions (call center, non-voice BPO and IT)
Views on talent pool
Multiple relevant views on talent have been considered for this comparison
EmployabilityEntry-level pool
Entry-level specialized skills(e.g., accounting)
Language skills
Copyright © 2009, Everest Global, Inc.61
7-9
10-12
11-13
34-36
42-44
58-60
62-64
126-128
160-162
274-276
328-330
500-502
30-32
13-15
Poland
Egypt
Vietnam
South Africa
Romania
Morocco
Tunisia
Lithuania
Ghana
Kenya
Jamaica
Estonia
Sri Lanka
Mauritius
Mauritius has a relatively small talent pool
Annual tertiary education labor pool estimates1 by country2008; ‘000s
1 Estimated based on assessment of total enrolments annualized over past 3 years and the structure of the education system Note: Tertiary graduates in Mauritius refer to graduates from government universities, private education and distance mode
Sources: Everest Research Institute (2009); Country-specific education statistics
Copyright © 2009, Everest Global, Inc.62
2-4
13-15
14-16
15-17
15-17
18-20
31-33
60-62
62-64
147-49
3.5-4.5
2-4
Poland
Egypt
South Africa
Romania
Morocco
Lithuania
Tunisia
Ghana
Kenya
Mauritius
Estonia
Sri Lanka
Further, the pool for specialized skills is small
Annual supply of engineering and IT1 graduates2008; 000’s
Annual supply of F&A graduates2008; 000’s
3-5
4-6
52-54
35-37
30-32
27-29
15-17
14-16
10-12
7-9
6-8
1.5-2.5
1-2
1-2
Poland
South Africa
Egypt
Romania
Vietnam
Morocco
Tunisia
Kenya
Lithuania
Ghana
Sri Lanka
Mauritius
Estonia
Jamaica
Increasing propensity among graduates in Mauritius to pursue F&A and IT-related careers/qualifications
1 IT graduates includes students from pure sciences, mathematics and computer science streams Note: Excludes students enrolled in overseas programs outside the country
Sources: Everest Research Institute (2009); Country-specific education statistics
Copyright © 2009, Everest Global, Inc.63
While the scale is relatively small, Mauritius has certain strengths in terms of its talent pool
The labor pool in Mauritius is sufficient to support 4-5 additional centers annually with an average center scale of 400-500 seats
High employability of entry-level talent
Alternative pools available to augment supply
Mauritius’ strengths in talent pool
Willingness to work in IT-BPO
Competitive advantage in
Bilingual skills
1
2
3
4
School-leavers (HSC and SC) in addition to tertiary graduates
IT-BPO is a relatively attractive career option, compared to other sectors (e.g., manufacturing)
Ability to support both French and English
Copyright © 2009, Everest Global, Inc.64
While the tertiary educated pool is small, providers are leveraging high-school and school leavers for transactional and call center work in Mauritius
Mauritius: Total annual addressable1 entry level pool2008; ‘000s
Tertiary graduates2
SC qualified but not pursuing HSC
Total addressable entry level annual pool
2-3
7
12-13.5
3-3.5
HSC qualified but not pursuing tertiary education
Suitability for function / role in IT-BPO sector
Judgment-based back-office processes
IT outsourcing
Call centers Rule-based back-
office transaction processing
Contact center (Inbound/Outbound) French and English
High school leavers and school leavers are typically employed as entry level talent for call center and transactional back-office work in Mauritius
Profile of talent pool being employed in Mauritius for transactional BPO and contact center work2008; ‘000s
1
1 Estimated based on assessment of total enrolments annualized over past 3 years and the structure of the education system2 Tertiary graduates in Mauritius refer to graduates from government universities, private education and distance mode
Sources: Everest Research Institute (2009); Country-specific education statistics
Tertiary level
Higher School Certificate/
General Certificate of
Education A-level
School Certificate/ General Certificate of Education
O-level
Alternative pool
Copyright © 2009, Everest Global, Inc.65
However, the unique strength of Mauritius lies in its bi-lingual skills…
Mauritius offers robust capabilities in both French and English language skills
French is widely spoken in Mauritius Commonly used in day-to day communication Creole, the native language is very similar to French
and it typically requires 2-3 weeks of training time to convert Creole speakers to French
French spoken skills leveraged for call center work
English is the medium of instruction in schools and universities English is also the official language for conducting
business As a result, the quality of written English tends to be
better than that of spoken English Written English skills are widely leveraged for non-
voice operations Some challenges with spoken English skills,
evidence of a ‘French accent’ that needs to be neutralized
2
Source: Everest Research Institute (2009)
Copyright © 2009, Everest Global, Inc.66
…which gives Mauritius a competitive advantage over its peer group destinations
CommentsLow HighEnglish language
proficiencyFrench language proficiency
Mauritius Better French accent and cultural fit as French is widely spoken with a neutral accent; However, 2-3 weeks of training on business French/diction is required for native Creole speakers
Quality of written English tends to be better than spoken. Spoken English even though fluent has a “French” accent
Morocco Large pool of French speakers Some training required to neutralize “Arabic” accent;
accent is better suited for outbound campaigns Limited English skills
Egypt ~25% of the graduate pool is fluent in English Limited French skills (3-4% of graduates)
South Africa Large pool of English speakers; high-quality English skills due to the high-level of cultural affinity with UK
Limited French skills
Mauritius is well positioned to support Anglo-French markets that require both French and English languages
Tunisia Large pool of French speakers Some training required to neutralize “Arabic” accent;
accent better suited for outbound campaigns Limited English skills
Senegal Large pool of French speakers Some training required to neutralize “Arabic” accent Limited English skills
2
Note: These estimates represent the relative share of the population that is reasonably fluent in the language, and do not reflect the absolute size of the pool
Sources: Everest Research Institute (2009); Interviews with recruiters; investment agencies and BPO suppliers
Copyright © 2009, Everest Global, Inc.67
In addition, the talent pool has reasonably good employability for IT/BPO
30-35%
25-30%
20-25%Call Center(French)
F&A
IT
Typical employability percentage of entry level talent pool in Mauritius Typical profile employed Comments
Employability is comparable to other locations (e.g., Morocco, Tunisia, Egypt) that mostly employ tertiary educated or equivalent profiles for similar roles
F&A courses are modelled on the British system and impart industry-standard practices
Good written English skills Students opting for certification courses
(e.g., ACCA) have better employability
Suited to perform software development work on relatively common programming languages
Some pressures on talent due to relatively small pool
A-levels O-levels Diplomas
University graduates (e.g., Accounting, Economics, Finance, Management)
A-levels pursuing accounting specializations (e.g., ACCA, CIMA)
Engineering graduates Technical diplomas with
certifications (e.g., CCNA, MCSE)
3
Sources: Everest Analysis (2009); Interviews with recruiters and service providers
Copyright © 2009, Everest Global, Inc.68
The Government and the industry are putting in place multiple initiatives to enhance the quality of talent in the IT-BPO sector
OTAM (Outsourcing & Telecommunications Association of Mauritius) is involved in creating an ICT Academy with the Government of Mauritius, to cater to the sector’s talent needs
The Academy is envisaged to be a finishing school imparting skills-upgradation (“right-skilling”) programs to make students more employable Students finishing their Higher School Certificate would be offered focused courses tailored for
the ICT sector Conceived to be set-up as a public-private partnership with the University of Technology of
Mauritius The ICT Academy would also offer training to people in Reunion and Madagascar to
supplement Mauritius’ talent pool The Academy is expected to train its first batch of 2,000 students before end of 2009
ICT Academy
Conceptualized and initiated by the HRDC (Human Resource Development Council), the 24/7 Mauritius campaign is aimed at enhancing the competitiveness of Mauritius’ services-oriented economy by making businesses ready for 24/7 operations
The campaign is aimed at sensitizing the workforce to the needs of a “24/7” economy
The campaign also empowers authorities to provide the necessary support measures in the workplace to facilitate 24/7 operations
24/7 Campaign
The IT-BPO sector is an attractive career option for most students and job-seekers in Mauritius
Sources: Everest Research (2009); HRDC, OTAM
4
Copyright © 2009, Everest Global, Inc.69
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations Costs Talent pool Structural factors and risks
Section V: Implications for investors
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.70
Our risk assessment approach involves assessment of risks across multiple risk categories
Description/key metrics usedKey risk categories(risk weights)
Annual entry-level talent pool as relevant by function
Quality of infrastructure (rail, road etc.) Network Readiness
Scale and quality of French/English skills Scale of specialized skills (F&A, IT)
Political Stability Threat of natural hazards Macro-economic stability
Geopolitical and macroeconomic stability
Crime rates Enrolment in secondary education (%) Quality of educational system
Quality of life
Scale of experienced talent by function
Business environment risk
Corruption perception Government Effectiveness Ease of doing Business Ease of starting a business
Legal framework IP protection regulation
Legal and regulatory risk
Overall risk assessment
Labor availability
Other structural risks
Experienced talent
Fresh talent
Language/ specialized skills
Infrastructure
Environment risk
Business risk
Physical infrastructure
Connectivity International air connectivity (e.g., Paris)
(55%)
(25%)
(20%)
C
A
B
Risk assessment based on Everest’s proprietary methodology, involving quantitative and qualitative factors
Source: Everest Analysis (2009)
Copyright © 2009, Everest Global, Inc.71
Summary of risk assessment
Risk scores for French language work(Index: 0 to 1, higher score implies higher risk)
Morocco Tunisia Romania Mauritius Poland Senegal Lithuania Egypt
0.43 0.44 0.480.59
0.650.70 0.75 0.79
Labor availability
Other1 structural
Infrastructure
Risk buckets
Mauritius is a relatively stable location with well developed infrastructure and conducive business environmentChallenges with relatively small scale talent pool
South Africa Egypt Jamaica Mauritius Kenya Ghana
0.41
0.62 0.64 0.670.78 0.80
Labor availability
Other1 structuralInfrastructure
Risk buckets
Risk scores for English language work(Index: 0 to 1, higher score implies higher risk)
1 Other risks include geo-political, macro-economic environment, government support, ancillary support, overall business environment risks and legal/regulatory framework
Source: Everest Research Institute (2009)
A
B
C
Copyright © 2009, Everest Global, Inc.72
Good overall infrastructure and stable environment
Source: Everest Analysis (2009)
Breakup of comparative risk scores(Index: 0 to 1; higher score implies higher risk)
Infrastructure risksB
Tunisia 0.12
Egypt 0.13
Mauritius 0.14
Poland 0.14
Lithuania 0.14
Romania 0.15
Morocco 0.15
Senegal 0.21
Connectivity riskPhysical infrastructure risk
Other structural risksC
Mauritius 0.10
Lithuania 0.11
Tunisia 0.12
Poland 0.12
Romania 0.13
Morocco 0.15
Egypt 0.16
Senegal 0.16
Environment riskBusiness risk
Copyright © 2009, Everest Global, Inc.73
Network Readiness index1 (lower score implies higher risk)
3.25 3.35 3.59 3.67 3.76 3.79 3.79 3.80 3.97 4.03 4.07 4.07 4.34 4.40
Ghana Kenya Morocco Senegal Egypt SriLanka
Vietnam Poland Romania Jamaica Mauritius SouthAfrica
Tunisia Lithuania
ICT conducive environment; sharp rise in number of internet and mobile users
Quality of infrastructure1 index (lower score implies higher risk)(1=underdeveloped; 7=extensive and efficient) Good quality of commercial real estate,
roads and telecom network; some concern over reliability of public transportation
Drivers of infrastructure risk (page 1 of 2)Physical infrastructure
2.30 2.50 2.70 2.90 3.30 3.40 3.50 3.80 3.80 3.904.50 4.50 4.50 5.00
Romania Poland Vietnam Kenya Senegal Ghana Morocco SriLanka
Jamaica Egypt Lithuania Mauritius SouthAfrica
Tunisia
Mauritius has made significant investments in enhancing infrastructure for IT/BPO Establishment of IT Parks (e.g., Ebene Cyber City) Telecom costs have been declining by ~30% each year. Connection to the fiber optic cable is expected to provide additional bandwidth and
further cost reduction
1 Based on World Economic Forum ratingsSources: Everest Research Institute (2009); World Economic Forum (2008)
B
Copyright © 2009, Everest Global, Inc.74
Air connectivity to Paris, New York, and London
N/A 3 3.5 4.5 3 5.5 12 2.5
Number of direct flights to Paris
Duration of flight to Paris (hrs)
Average no. of direct flights to New York and London
Drivers of infrastructure risk (page 2 of 2)Connectivity and accessibility
While Mauritius is well connected to international destinations, the average flight time (e.g., to Paris) is longer compared to its North African counterparts (e.g., Morocco, Tunisia)
NOT EXHAUSTIVE
Sources: Everest Research Institute (2009); Travel Websites (Kayak.com, Expedia.com)
0
4 52
9
1
58
Lithuania Morrocco Tunisia Egypt Romania Senegal Mauritius Poland
0 1 1 2 2 2 2
6
Lithuania Morrocco Tunisia Egypt Romania Senegal Mauritius Poland
B
Copyright © 2009, Everest Global, Inc.75
3.07
3.25
3.56
3.91
4.03
4.37
4.44
4.73
4.85
4.87
4.91
5.06
5.23
5.25
Sri Lanka
Jamaica
Egypt
Ghana
Mauritius
Kenya
Senegal
Morocco
Romania
Tunisia
Vietnam
South Africa
Lithuania
Poland
10
60
65
86
831
874
1,057
1,137
1,234
1,439
1,735
5,384
11,434
Mauritius
Lithuania
Tunisia
Jamaica
Romania
Ghana
South Africa
Senegal
Poland
Egypt
Morocco
Kenya
Vietnam
Political stability (Percentile Rank; higher=better)
Risk of natural hazards
6
16
22
27
38
43
47
51
51
53
56
67
72
75
Sri Lanka
Kenya
Egypt
Morocco
Senegal
Jamaica
Tunisia
Romania
South Africa
Ghana
Vietnam
Poland
Mauritius
Lithuania
Deaths from Natural Disasters 1990-2009
Macro-economic stability score(Index: higher = better; 1 = low; 7 = high)
Low risk of natural hazards
Some concerns given high fiscal deficit
Stable democratic system
Fairly stable location; better positioned relative to peers especially in Africa
Drivers of environment risk (page 1 of 2)Geo-political and macroeconomic stability
1 Based on World Economic Forum ratingsSources: Everest Analysis (2009); World Economic Forum (2008)
C
Copyright © 2009, Everest Global, Inc.76
2.3
2.5
2.7
2.9
3.3
3.4
3.5
3.8
3.8
3.9
4.5
4.5
4.5
5.0
Romania
Poland
Vietnam
Kenya
Senegal
Ghana
Morocco
Sri Lanka
Jamaica
Egypt
Lithuania
Mauritius
South Africa
Tunisia
Crime rates per 100,000 inhabitants 2008; lower = better
Secondary education enrolmentPercentage
Human Development Index1
(Index: Higher score = better)Quality of educational system(1 = does not meet the needs, 7 = meets the needs of a competitive economy)
Secondary education is provided free of cost
Drivers of environment risk (page 2 of 2)Quality of life
1 World Economic Forum rating reflective of multiple factors such as literacy rate, standard of living, etc.Sources: Everest Analysis (2009); World Economic Forum (2008)
Safe location; also offers a good quality of life for expats, which is often a key consideration for investors
0.4
0.5
1.1
1.2
1.6
2.5
2.5
3.5
6.7
9.4
38.6
49.0
Egypt
Morocco
Vietnam
Tunisia
Poland
Romania
Mauritius
Kenya
Sri Lanka
Lithuania
South Africa
Jamaica
0.50
0.52
0.55
0.65
0.67
0.71
0.73
0.74
0.74
0.77
0.80
0.81
0.86
0.87
Senegal
Kenya
Ghana
Morocco
South Africa
Egypt
Vietnam
Sri Lanka
Jamaica
Tunisia
Mauritius
Romania
Lithuania
Poland
23.8
49.3
50.3
52.4
64.5
84.9
85.9
87.1
87.8
88.4
94.7
98.8
99.6
Senegal
Ghana
Kenya
Morocco
Vietnam
Tunisia
Romania
Jamaica
Egypt
Mauritius
South Africa
Lithuania
Poland
C
Copyright © 2009, Everest Global, Inc.77
Corruption perception indexHigher score = less corruption
Ease in doing business Percentile Rank; lower = easier
Government effectivenessPercentile Rank; higher = better
Ease of starting a business1
Percentile Rank; lower = easier
Clear strengths in terms of its investor-friendly business environment and government support to ICT sector growth
Drivers of business risk (page 1 of 2)Business environment
1 Includes procedures, time, cost of starting a business and minimum capital requiredNote: Based on World Economic Forum ratings
Sources: Everest Analysis (2009); World Economic Forum (2008)
5.5
4.9
4.6
4.6
4.4
3.9
3.8
3.5
3.4
3.2
3.1
2.8
2.7
2.1
Mauritius
South Africa
Lithuania
Poland
Tunisia
Ghana
Romania
Morocco
Senegal
Sri Lanka
Jamaica
Egypt
Vietnam
Kenya
77
75
72
69
67
60
55
55
53
47
45
41
39
30
Lithuania
South Africa
Mauritius
Tunisia
Poland
Jamaica
Morocco
Ghana
Romania
Sri Lanka
Senegal
Vietnam
Egypt
Kenya
24
28
32
47
63
73
76
82
87
92
102
114
128
149
Mauritius
Lithuania
South Africa
Romania
Jamaica
Tunisia
Poland
Kenya
Ghana
Vietnam
Sri Lanka
Egypt
Morocco
Senegal
7
11
26
29
37
41
47
62
74
95
108
109
137
145
Mauritius
Jamaica
Romania
Sri Lanka
Tunisia
Egypt
South Africa
Morocco
Lithuania
Senegal
Vietnam
Kenya
Ghana
Poland
C
Copyright © 2009, Everest Global, Inc.78
Legal frameworkIndex: 1= inefficient; 7= efficient and follows a neutral process
Drivers of business risk (page 2 of 2)Legal and regulatory environment
Note: Based on World Economic Forum ratingsSources: Everest Analysis (2009); World Economic Forum (2008)
Robust legal and regulatory environment in Mauritius; likely to be strengthened further through the Data Protection Act
IP Protection regulation Index: 1 = weak; 7 = strong and enforced
3.0
3.1
3.3
3.3
3.4
3.5
3.5
3.5
3.6
3.7
4.0
4.1
4.4
5.3
Vietnam
Kenya
Morocco
Ghana
Poland
Senegal
Romania
Jamaica
Egypt
Sri Lanka
Lithuania
Mauritius
Tunisia
South Africa
2.9
3.1
3.2
3.2
3.2
3.5
3.7
3.8
3.8
3.9
4.3
4.7
4.9
5.2
Poland
Senegal
Romania
Kenya
Jamaica
Lithuania
Morocco
Sri Lanka
Vietnam
Egypt
Ghana
Mauritius
Tunisia
South Africa
C
Copyright © 2009, Everest Global, Inc.79
Mauritius provides attractive incentives for investors
Fiscal Incentives
Network of Double Taxation Avoidance Treaties (DTA’s) with several countries
Free repatriation of profits, dividends and capital
Income and corporate tax-rate of 15% (flat rate for new companies after 2006 is15%)
VAT at 15% refundable; no capital gains tax; tax free dividends
No min foreign capital required; 100% foreign ownership permitted
ICT sector-specific scheme
Occupation permits granted to three categories; namely investors, professionals and self-employed
Multiple training related incentives available to investors under the HRDC Levy Grant Incentives Scheme
Indirect Incentives
Additional grants under the placement for training scheme for unemployed youth as per NEF’s scheme
Exemption from customs duty on equipment
50% annual allowance on declining balance for the purchase of electronic and computer equipment
Smooth process to facilitate set-up: Start within 3 days for non-regulated activities and 15 days for regulated activities
Liberal policy and quick on granting work permits
Sources: Board of Investment, Mauritius, HRDC; NEF; Everest Research (2009)
Copyright © 2009, Everest Global, Inc.80
Also, Mauritius also offers attractive training incentives for the IT/BPO sector
Levy Grant Incentives Scheme, Human Resource Development Council (HRDC)
The HRDC has been vested with the responsibility to administer, control and operate the National Training Fund. This fund provides the necessary incentives to companies to develop their human resources. The HRDC has worked in collaboration with the Mauritius Employers’ Federation and other stakeholders in developing the new schemes and offers various types of training incentives to employers
Types of incentives that companies can avail include Support of training needs analysis Pre-operational training Multimedia facilities Use of foreign expertise Overseas training Financial Support to individuals following first Degree and those pursing Masters programs In-house training
Placement for Training Programme, National Empowerment Foundation (NEF)
The National Empowerment Foundation administers and operates the Placement for Training Programme
The Placement for Training Programme is one of the programs under the Empowerment Programme (EP). The programme is designed to provide the unemployed with company placement coupled with a work-related formal training so as to make them employable. At the end of the training, the employer has to offer employment to at least 75% of those who complete the program
The National Empowerment Foundation offers a one off contribution to the employer, to meet 60% of the costs of formal training for each trainee and contributes on a cost sharing basis towards the stipend of the trainee for a maximum period of one year
Sources: Board of Investment, Mauritius, HRDC; NEF; Everest Research (2009)
Copyright © 2009, Everest Global, Inc.81
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors Roles that Mauritius can play for global investors and supporting rationale
Section VI: Appendix
Copyright © 2009, Everest Global, Inc.82
Cost-risk trade off across countries serving English speaking markets
High
Low
Low
High
Cost
Risk
Ghana
MauritiusKenya
South Africa
Egypt
Jamaica
IndiaPhilippines
Established low cost, locations for mega scale (multiple ‘000 FTE) operations
Large English-speaking talent pool suited to support large-scale centers (1000-2000 FTE), but relatively higher cost
Low-cost, stable location suited to support moderate-scale centers (<500 FTE)
Low cost however, small talent pool and relatively less evolved infrastructure Native English-speaking
location; but relatively higher costs
ENGLISH LANGUAGE WORK
Source: Everest Research Institute (2009)
Cost-risk comparison for potential countries serving English-speaking markets
Copyright © 2009, Everest Global, Inc.83
Cost-risk trade off across countries serving French market
Source: Everest Research Institute (2009)
Cost-risk comparison for potential countries serving French-speaking market
High
Low
Low
High
Cost
Risk
Senegal
Mauritius
Egypt
Poland Tunisia
Morocco
Lithuania
Romania
Limited French skills and relatively higher costs
Scalable and stable locations, but relatively higher costs
Lowest cost, stable location, suited to support moderate-scale centers (~500 FTE)Low cost but relatively
less evolved infrastructure and small talent pool
FRENCH LANGUAGE WORK
Copyright © 2009, Everest Global, Inc.84
Roles that Mauritius can play for investors
French language BPO
Distinctive ability to serve French language BPO work Lowest cost position amongst competitive North African locations Better accent and cultural fit Stable location with good quality infrastructure
Risk diversification / complementary location for India/Philippines Investors looking to diversify beyond India/Philippines Mauritius can complement scaled centers in India/Philippines. Examples Handling overflow volumes Supporting French-based work as part of global service delivery
Distinct role in delivery network of global companies
Regional delivery hub for Africa (e.g., shared services) Ability to support both North Africa (given French skills) and sub-Saharan Africa (given
English skills) Lowest-cost position among potential African sourcing destinations Stable location with good quality infrastructure
Bilingual BPO for pan-European multinationals
Competitive advantage in terms of bi-lingual skills (French, English) Significantly lower cost than competitive Eastern European (EE) locations Some challenges in terms of not having multiple European language skills (beyond French)
when compared to other EE locations (e.g., Romania, Poland)
Supporting rationale
Small scale work in some relatively higher order work
Opportunity to serve certain relatively high value areas in small scale (100-200 FTEs) IT; especially in helpdesk and software development in skills such as Microsoft, Java Back-office (F&A, HR); especially for transactional processes (e.g., invoice processing) Evidence of serving both French and English markets in these areas
A
B
4
3
2
1
Copyright © 2009, Everest Global, Inc.85
French language BPO work1
French speaking talent pool in reasonable scaleLowest cost location for French skills
Experience serving French markets Stable location with some risks on scalability of talent
44-46
30-3228-30 27-29 26-28 25-27
21-23 20-2216-18
France Tier 2 Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius
Direct operating cost1 per FTE for French contact center services2009; US$ ‘000 per annum per FTE
Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customers Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customers
MARKET AVERAGESMARKET AVERAGES
FRENCH CALL CENTERFRENCH CALL CENTER
~60-65%
Mauritius: Total annual addressable entry level pool2008; ‘000s
Tertiary graduates 2
SC qualified but not pursuing HSC
2-3
7
12-13.53-3.5
HSC qualified but not pursuing tertiary education
High school leavers and school leavers are typically employed as entry level talent for call center and transactional back -office work in Mauritius
Employment distribution by source geography served2009; Number of employees
100% = 10,400
7%
16%
3%2%10%
19%
43%
Domestic
U.S., Canada
UK
France
Benelux
Africa Others1
French-speaking population of Canada. However, there is evidence of U.S focused work as well
Key Anglo-Franco market
Largely non-voice work
Largest market served across Contact center, BPO and IT services
French-speaking population of North Africa and English speaking population of sub-Saharan Africa
Risk scores for French language work(Index: 0 to 1, higher score implies higher risk)
Morocco Tunisia Romania Mauritius Poland Senegal Lithuania Egypt
0.43 0.44 0.480.59
0.650.70 0.75 0.79
Labor availability
Other1 structural
Infrastructure
Risk buckets
Copyright © 2009, Everest Global, Inc.86
Bilingual operations for pan-European multinationals2
Offshore experienced pool with bilingual skillsCompetitive advantage in bilingual skills
Low cost location for English skills Lowest cost location for French skills
25%
1%
40%
34% Only French
Only English
Bi-lingual (English &
French)
Other langauges
Employment distribution by language of service delivery2009; Number of employees
100% = 10,400
Direct operating cost1 per FTE for English Contact Center services2009; USD ‘000 per annum per FTE
MARKET AVERAGESMARKET AVERAGES
ENGLISH CALL CENTER ENGLISH CALL CENTER
~67-72%
13-1614-1615-1716-1817-1918-2019-2121-2323-25
54-58
66-70
US
Tie
r-2
UK
Tie
r-2
Lith
uani
a
Sou
th A
frica
Jam
aica
Egy
pt
Gha
na
Mau
ritiu
s
Ken
ya
Phi
lippi
nes
Indi
a
2 2
13-1614-1615-1716-1817-1918-2019-2121-2323-25
54-58
66-70
US
Tie
r-2
UK
Tie
r-2
Lith
uani
a
Sou
th A
frica
Jam
aica
Egy
pt
Gha
na
Mau
ritiu
s
Ken
ya
Phi
lippi
nes
Indi
a
2 2
44-46
30-3228-30 27-29 26-28 25-27
21-23 20-2216-18
France Tier 2 Romania Tunisia Lithuania Poland Morocco Egypt Senegal Mauritius
Direct operating cost1 per FTE for French contact center services2009; US$ ‘000 per annum per FTE
Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customers Mauritius presents significant arbitrage opportunity (~65% on operating cost basis) for French customers
MARKET AVERAGESMARKET AVERAGES
FRENCH CALL CENTERFRENCH CALL CENTER
~60-65%
Comments Low HighLow HighEnglish language proficiency
French language proficiency
Mauritius Better French accent and cultural fit Quality of written English tends to be better than
spoken.
Morocco Large pool of French speakers, however some training required to neutralize “Arabic” accent;
Limited English skills
Egypt ~25% of the graduate pool is fluent in English Limited French skills (3-4% of graduates)
South Africa Large pool of English speakers; high-quality English skills
Limited French skills
Mauritius is well positioned to support Anglo-French markets that require both French and English languages
Mauritius is well positioned to support Anglo-French markets that require both French and English languages
Tunisia Large pool of French speakers Some training required to neutralize “Arabic” accent; Limited English skills
Senegal Large pool of French speakers Some training required to neutralize “Arabic” accent Limited English skills
Copyright © 2009, Everest Global, Inc.87
Small scale higher-order work for Anglo-French markets
3
Early evidence of niche work in some areasLow-cost location for specialized work
Small scale of specialized talent pool… …but, with good employability
Direct operating cost1 per FTE for IT Applications Development and Maintenance2009; US$ ‘000 per annum per FTE
41-43 41-43 40-42 37-3933-35
30-3225-27
22-2421-23
Poland Morocco Tunisia Romania Egypt Lithuania Mauritius Vietnam India
MARKET AVERAGESMARKET AVERAGES
Emerging offshore destinations
Established offshore destinations
Emerging offshore destinations
Established offshore destinations
2
30-35%
25-30%
20-25%Call Center(French)
F&A
IT
Typical employability percentage of entry level talent pool in Mauritius Typical profile employed Comments
F&A coursework is modeled on the British system and impart industry-standard practices
Good written English skills Students opting for certification courses
(e.g., ACCA) have better employability
Suited to perform commoditized software development work on basic programming languages and databases
Pressure for talent due to relatively small pool
A-levels O-levels Diplomas
University graduates (e.g., Accounting, Economics, Finance, Management)
A-levels pursuing accounting specializations (e.g., ACCA, CIMA)
Engineering graduates Technical diplomas with
certifications (e.g., CCNA, MCSE)2-4
13-15
14-16
15-17
15-17
18-20
31-33
60-62
62-64
147-49
3.5-4.5
2-4
Poland
Egypt
South Africa
Romania
Morocco
Lithuania
Tunisia
Ghana
Kenya
Mauritius
Estonia
Sri Lanka
Annual supply of engineering and IT1 graduates2008; 000’s
Annual supply of F&A graduates2008; 000’s
3-5
4-6
52-54
35-37
30-32
27-29
15-17
14-16
10-12
7-9
6-8
1.5-2.5
1-2
1-2
Poland
South Africa
Egypt
Romania
Vietnam
Morocco
Tunisia
Kenya
Lithuania
Ghana
Sri Lanka
Mauritius
Estonia
Jamaica
Increasing propensity among graduates in Mauritius to pursue F&A and IT-related careers/qualifications Increasing propensity among graduates in Mauritius to pursue F&A and IT-related careers/qualifications
Examples of relatively niche/domain-specific work delivered for offshore clients
Team of over ~170 people
The Fiduciary team provides middle-office support services (e.g., accounting, administration)
The private wealth management team provides custodian, investment, portfolio management services to high-net worth clients taking advantage of the extensive range of double taxation agreements available to the entity.
The trust and securities team offers corporate services, Fund services and Trust Services backed by a supporting team providing Statutory and Fund Accounting support
Offshore financial services center of a leading European Bank
Team of over ~170 people
The Fiduciary team provides middle-office support services (e.g., accounting, administration)
The private wealth management team provides custodian, investment, portfolio management services to high-net worth clients taking advantage of the extensive range of double taxation agreements available to the entity.
The trust and securities team offers corporate services, Fund services and Trust Services backed by a supporting team providing Statutory and Fund Accounting support
Offshore financial services center of a leading European Bank
A leading European provider of worldwide business communication solutions operates its global service center from Mauritius
The team at Mauritius provides LI and L2 technical support for incident and problem management
~150 FTE managing service desk, ~50 engineers for network deployment, network optimization and IT security; ~50 FTEs performing IP telephony support, maintenance and upgrade functions
The talent pool employed are B.Sc graduates, engineers, A-levels with specialist networking certifications (e.g., CCNA, MCSE)
Managed services in communication network solutions
A leading European provider of worldwide business communication solutions operates its global service center from Mauritius
The team at Mauritius provides LI and L2 technical support for incident and problem management
~150 FTE managing service desk, ~50 engineers for network deployment, network optimization and IT security; ~50 FTEs performing IP telephony support, maintenance and upgrade functions
The talent pool employed are B.Sc graduates, engineers, A-levels with specialist networking certifications (e.g., CCNA, MCSE)
Managed services in communication network solutions
Copyright © 2009, Everest Global, Inc.88
Investors leveraging Mauritius in multiple ways
Complementing supplier’s global delivery network in delivering IT projects
A couple of leading global suppliers leverage Mauritius to support delivery of their projects for the European market or French-speaking Canada
While a typical ‘follow-the-sun’ approach is used to leverage Mauritius in certain projects, the Frenchskills of Mauritians proves to be a distinctive capability in other projects
The Mauritius center plays distinct roles in IT project areas that require good French
skills (e.g., reading technical specification documents, interacting with French-speaking client teams)
French BPO including contact center (emails, chat) and invoice processing
Regional shared services hub for the African region and parts of Europe
A leading global telecom equipment supplier operates its shared services center for the African region from Mauritius
Has selected Mauritius over other locations given its bilingual skills, low cost s, stable business environment, investor friendly policies, and favorable quality of life for its expatriates
The 170+ strong team delivers transactional F&A (AP, GL, AR). In addition, some higher-order processes such as compliance, closing of books, and management reporting are also delivered
Leverages technology (ebanking, ERP platforms) to transmit high-volume of data/transactions
Employs B.Com graduates with ACCA/CIMA qualifications
Sources: Questionnaire responses; Interviews with leading service providers
Examples of distinctive role in global services supply chainA B
4
Copyright © 2009, Everest Global, Inc.89
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix Key data tables Research methodology and list of participants Glossary Acknowledgements and Authors
Copyright © 2009, Everest Global, Inc.90
35-37
29-31
35-37
39-41
28-30
25-27
30-32
13-15Senegal
Mauritius
Tunisia
Egypt
Lithuania
Romania
Morocco
Poland17-19
12-14
14-16
16-18
11-13
12-14
6-8
6-8Senegal
Mauritius
Tunisia
Egypt
Lithuania
Romania
Morocco
Poland
Salaries for French Call Center Work
13-14
10-11
9-10
8-9
7-8
6-8
5-6
4-5Senegal
Mauritius
Tunisia
Egypt
Lithuania
Romania
Morocco
Poland
Entry-level agent Supervisor
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09 Sources: Everest Research Institute (2009); Recruiter interviews; salary survey inputs
27-29
17-19
20-22
21-23
19-21
16-18
11-13
9-11Senegal
Mauritius
Tunisia
Egypt
Lithuania
Romania
Morocco
Poland
Average annual salary by role (including benefits and bonus)2009; US$ ‘000 per annum
MARKET AVERAGES
Sr. Agent Manager
Copyright © 2009, Everest Global, Inc.91
Salaries for English Call Center Work
Average annual salary by role (including benefits and bonus)2009; US$ ‘000 per annum
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09 Sources: Everest Research Institute (2009); Recruiter interviews; salary survey inputs
MARKET AVERAGES
44-45
27-28
25-26
33-34
17-18
25-26
30-311st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
13-14
10-11
7-8
7-8
6-7
9-10
6-71st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
7-8
6-7
6-7
5-6
5-6
5-6
5-6Mauritius
Jamaica
Kenya
Ghana
Egypt
Lithuania
SouthAfrica
Supervisor
19-20
15-16
11-12
11-12
8-9
15-16
11-121st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
Entry-level agent Sr. Agent Manager
Copyright © 2009, Everest Global, Inc.92
Salaries for Finance and Accounting Work
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09 Sources: Everest Research Institute (2009); Recruiter interviews; salary survey inputs
Average annual salary by role (including benefits and bonus)2009; US$ ‘000 per annum
MARKET AVERAGES
49-50
19-20
43-44
64-65
54-55
22-23
26-27
31-32
34-351st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
21-22
13-14
19-20
18-19
14-15
12-13
9-10
9-10
9-101st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
16-17
10-11
10-11
10-11
9-10
7-8
7-8
6-7
6-7Mauritius
Kenya
Egypt
Lithuania
South Africa
Romania
Morocco
Jamaica
Poland
Sr. Agent Supervisor
37-38
16-17
28-29
42-43
26-27
18-19
15-16
12-13
13-141st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
Entry-level agent Manager
Copyright © 2009, Everest Global, Inc.93
Salaries for IT Applications Development and Maintenance (ADM) Work
Note: Exchange rates for local currencies with respect to the U.S. Dollar have been averaged for 7 months from 1-Nov-08 to 30-June-09 Sources: Everest Research Institute (2009); Recruiter interviews; salary survey inputs
Average annual salary by role (including benefits and bonus)2009; US$ ‘000 per annum
MARKET AVERAGES
60-61
71-72
58-59
25-26
51-52
49-50
17-181st Qtr
2ndQtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
26-27
31-32
24-25
15-16
20-21
13-14
6-71st Qtr
2nd Qtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
17-18
17-18
16-17
11-12
10-11
8-9
5-6Vietnam
Mauritius
Egypt
Lithuania
Romania
Morocco
Poland
Sr. Agent Supervisor Manager
38-39
54-55
34-35
17-18
32-33
21-22
8-91st Qtr
2ndQtr
3rd Qtr
4th Qtr
5th Qtr
6th Qtr
Entry-level agent
Copyright © 2009, Everest Global, Inc.94
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix Key Data Slides Research methodology and list of participants Glossary Acknowledgements and Authors
Copyright © 2009, Everest Global, Inc.95
The research used four key types of input sources
Description
Questionnaires Questionnaires to 33 leading players to better understand scope of current
delivery Represent ~70% of the overall market Players with scale >100 FTE Representative of all key IT/BPO segments
Qualitative interviews
Interviews with 20 players to understand maturity of the industry and their experiences Mix of global suppliers (e.g., Accenture, Ceridian), regional/local suppliers
(e.g., Infinity BPO, Rogers, Euro CRM) and captives (e.g., DHL) Interviews with other key market participants (universities, training
providers, recruiters, telecom operators)
Interviews with potential investors
Interviews with 5 market participants who are not currently in Mauritius to understand their perceptions (demand-side view)
Everest’s knowledge and IP
Everest knowledge and IP: proprietary cost models, data on 150+ offshore locations (costs, talent pool, risks etc.)
Relationship with agencies, recruiters in 150+ locations for an ‘on-the-ground’ perspective
Copyright © 2009, Everest Global, Inc.96
List of questionnaire participants
33 companies represent ~70% of market
Representative of all key IT/BPO segments in Mauritius
Includes all players with scale >100 FTEs
Also includes few players (<100 FTEs), who perform niche/complex work
Rationale for selecting the companies indicated
Global suppliers Accenture Mauritius Ceridian Hinduja Infosys Intelenet Global
Global playersGlobal players
Offshore captives Axa Assistance Asset IV DHL Deutsche Bank Huawei Orange Business services Thomson Digital TNT Document Services
Apollo Blake Airmate Ltd ABC Datacall Euro CRM Evolution pre-press Infinity BPO Rogers Outsourcing Solutions ProContact Resaplanet Ltd. Vinivi Ltd.
Global playersRegional and local suppliers
Astek (Mauritius) Batch Image Processing Diadeis Dodo Outsourcing MMS Ltd. Parfip Mauritius TNC Consulting TheoFinance Satim Ltd. Valldata Services
Copyright © 2009, Everest Global, Inc.97
List of interviewees
21 interviews across these segments
Representative of IT/BPO segments and types of players in Mauritius
Global suppliers Accenture Ceridian Intelenet Infosys
Global playersGlobal players
Offshore captives Deutsche Bank DHL Huawei Orange Business Services TNT Document services
Scaled suppliers Infinity BPO Rogers Outsourcing Euro CRM ABC DataCall
Global playersRegional and local suppliers
Niche suppliers Airmate/Maureva Asset IV data services
Superfund Theofinance
Data Protection Office HRDC National Empowerment Fund Recruiters (DCDM Consulting) and trainers (Cyber IT Services) University of Technology Mauritius
Global playersOther market participants
Copyright © 2009, Everest Global, Inc.98
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix Key Data Slides Research methodology and list of participants Glossary Acknowledgements and Authors
Copyright © 2009, Everest Global, Inc.99
Overview of commonly used terminology in IT-BPO
Call Center
Corporate services
Industry-specific back-office
KPO
Inbound Outbound Technical Helpdesk
Finance & Accounting Human Resources Procurement
Insurance Travel Telecom
Functional groups Sub-functions
Non-voice (Back office)
Voice(Front office)
BPO
Data Management Document Management Investment Research Transcription
Disaster Recovery Web hosting RIM
Infrastructure Management
ADM Application development Application Maintenance
ITO
ther
s Others Multimedia, Animation Graphic Design Engineering Services Architecture services
Claims processing
Policy servicing
Business origination
Product development
Processes
Copyright © 2009, Everest Global, Inc.100
Glossary of key terms used in this report (page 1 of 3)
BPO Business Process Outsourcing refers to the contracting of some or all business processes to service providers
Buyers Buyers are companies/entities that purchases offshoring services from a supplier of BPO services. In the case of captive BPO providers, the buyers are the parent company which are referred to in the report as parents
Domestic captives
Domestic captives refers to 100% subsidiaries of companies in South Africa, which provide services exclusively to the parent company
Back-office functions
All non-customer facing services including corporate services, knowledge services and industry-specific services
Corporate services
Back-office functions including Finance & Accounting (F&A), Human Resources (HR) and Procurement
FAO/F&A Finance & Accounting Outsourcing refers to the transfer of ownership of some or all finance and accounting processes or functions to providers. This could include administrative, delivery or management-related processes or functions
Term Definition
Copyright © 2009, Everest Global, Inc.101
HRO Human Resources Outsourcing is the transfer of ownership of some or all human resources processes or functions to providers. This could include administrative, delivery, or management-related processes or functions
Global Sourcing / Offshoring
Transferring business process activities or its complete ownership to a different country from the country (or countries) where the company receiving the services is located is referred to as offshoring or global sourcing
FTE Full-Time Equivalent. An effort equal to one employee working 100% of the time
FS The Banking, Insurance and Asset Management sub-verticals collectively referred to as Financial Services (FS)
Infrastructure Infrastructure refers to the availability of basic services and social capital necessary to support BPO delivery from a location. Infrastructure includes physical infrastructure elements such as the availability of transportation services, real estate, facilities management, catering, security services, and recruitment agencies and social infrastructure such as availability of schools, hospitals, and entertainment options
Industry-specific BPO refers to BPO offerings that require a high degree of vertical-specific knowledge and that are not easily replicable across industries such as claims processing for the insurance industry and credit card collections for the credit services industry
Industry-specific services
Front-office functions
All customer facing services including general query handling, after-sales support, and sales and marketing services
Term Definition
Glossary of key terms used in this report (page 2 of 3)
Copyright © 2009, Everest Global, Inc.102
Term Definition
Procurement services
Procurement services is the transfer of ownership of some or all procurement processes or functions to providers. This could include administrative, delivery, or management-related processes or functions
Offshore captives Offshore captives refers to 100% subsidiaries of multinational companies in an offshore location, which provide services exclusively to the parent company
Labour arbitrage Savings gained during offshoring due to the difference in the labour costs between the source and destination locations
Third-party supplier
Third-party suppliers or vendors are companies/entities that supply outsourcing/offshoring services to other companies/entities (buyers)
Service offerings Service offerings refers to BPO offerings across horizontal BPO and vertical-specific BPO offerings
Sourcing models Sourcing models refers to the offshore business models adopted by buyers and includes the offshore captive model, third-party vendor offshoring, and other hybrid models
Service providers Service providers in this BPO report refers to third-party suppliers as well as offshore captives
Knowledge services refers to offshoring of some or all knowledge-intensive services such as business research, market research, data management, data analytics, and legal and IP support to providers
Knowledge services
Insurance The Financial Services sub-vertical that includes life & pensions, property & casualty, and health insurance
Glossary of key terms used in this report (page 3 of 3)
Copyright © 2009, Everest Global, Inc.103
Table of contents
Section I: Perspectives on global sourcing
Section II: A brief introduction to Mauritius
Section III: Scope of current service delivery (IT-BPO) from Mauritius
Section IV: Comparison of Mauritius with other offshore locations
Section V: Implications for investors
Section VI: Appendix Key Data Slides Research methodology and list of participants Glossary Acknowledgements and Authors
Copyright © 2009, Everest Global, Inc.104
Acknowledgements
We would like to thank the following organizations for their assistance/participation in the study
Accenture Mauritius Axa Assistance Indian Ocean Ceridian Mauritius Infosys Mauritius Intelenet Global Orange Business services DHL Thomson Digital Deutsche Bank Huawei Shared Service Mauritius TNT Document Services Rogers Outsourcing Solutions Euro CRM ProContact Infinity BPO Apollo Blake Airmate Ltd Satim Ltd. Batch Image Processing Valldata Services Theofinance Asset IV Data services Parfip Mauritius MMS Ltd. Dodo Outsourcing Evolution Ltee Heaven Multimedia
Service providers
Ministry of ICT, Government of Mauritius Board of Investment (BOI) National Computer Board (NCB) Human Resource Development Council (HRDC) National Empowerment Foundation Commissioner, Data Protection Office OTAM DCDM Consulting and Recruitment Services Cyber IT Training Services University of Mauritius University of Technology, Mauritius
Other organizations associated with the IT-BPO sector
Copyright © 2009, Everest Global, Inc.105
Authors
Everest Group is a global consulting and research firm that comprehensively serves the outsourcing and offshoring market. An industry leader since creating the sourcing consultancy practice in 1991, Everest has earned a worldwide reputation for ongoing innovation by helping clients capture optimum value through sourcing strategies and implementation. Everest provides information, insight, and advice to help buyers, suppliers, and enablers of services effectively navigate all stages of the sourcing lifecycle. Committed to thought leadership, Everest is noted for its fact-based analyses and insights on the outsourcing and offshoring marketplace.
Everest Group has extensive experience working with country associations and investment agencies. Everest partnered with Nasscom to develop the roadmap for the Indian BPO industry, engaged with the South African BPO program since 2007, created a whitepaper on Bogota’s potential as an offshore location, and recently authored a BFSI BPO report.
Everest Group Website: www.everestgrp.comEverest Research Institute: www.everestresearchinstitute.com
Report authors:1.Nikhil Rajpal ([email protected])2.H. Karthik ([email protected])3.Shyan Mukerjee ([email protected])4.Arshmeet Ahluwalia ([email protected])
Copyright © 2009, Everest Global, Inc.106
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With the vision of our leadership team, the personal commitment, and the passion of our professionals to deliver real value to our clients, our organization is unsurpassed in its ability to help guide your company’s future success.
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