July 2023

Tech companies have banded together to push for policy changes and to market the country as a top outsourcing destination, looking to replicate South Asia’s success in using digital skills to transform the economy. More than 10 tech companies have joined together to form the Ethiopian Outsourcing Association, driven by the firm belief that their industry can create more and better jobs than any other part of the economy. ‘Every member is very passionate about this,’ said Wondwesen Zewdie, president of the new association. The company he co-founded, R & D Ethiopia, has more than 120 employees supporting companies located around the world. He believes that’s just the beginning, with outsourcing poised to bring major changes to the national economy. ‘We can see that it’s going to create an immense amount of jobs, and not just jobs but dignified jobs,’ he said. ‘Our employees get to know technology, they get to know how development works, they get more globalized.’ There are growing pains. Until the association was formed, Ethiopia didn’t have a single license for all outsourcing companies. Instead, they were registered by the specific type of work performed — cybersecurity versus software development, for example. One early result of the association’s outreach to the government is the creation of a new license, the kind of administrative change that makes business development easier, said Tadios Tefera, chief technology officer of MMCY Tech. ‘The association gives us more power when it comes to influencing policy from government and other institutions. Our challenge was previously I would go to a certain ministry to say, for example, we’re having challenges with telecom. We always went to the government to explain how we lose business, and when we lose business we have to lay off people,’ he said. ‘Each one of the association members had a similar experience. When we create an association, we have a more powerful voice and we are taken more seriously than if we speak individually.’ Growing the impact of tech hubs The International Trade Centre (ITC), through the Netherlands Trust Fund V Ethiopia Tech project, supported the association’s creation by bringing an international expert to help design its strategy. That’s part of the program’s mission to work with digital businesses and business support organizations, including tech hubs, to increase their impact. For Ethiopia, harmonizing regulations and the tech ecosystem can help attract more business to a growing sector — key points that emerged during the strategy sessions. ‘This was a three-day course that was very beneficial to us,’ Tefera said. Their strategy boils down to two key planks. Within Ethiopia, they want to create a conducive environment for outsourcing, by engaging with the government to make sure they have the right policies for the industry. The second part is marketing outside of Ethiopia to attract business to the country. Outsourcing businesses here see a model in India, where tech companies turned the country into a back office for global businesses. Zewdie sees outsourcing as a way to create jobs in his country, where 70 percent of the population are youth and eager for decent work. ‘The domino effect is quite big,’ he said. ‘The $4 billion that Ethiopia exports every year, that is an amount that we can generate in the coming years just in this industry.’ About the project The Netherlands Trust Fund V (NTF) (July 2021 – June 2025) is based on a partnership between the Ministry of Foreign Affairs of The Netherlands and the International Trade Centre. The program supports MSMEs in the digital technologies and agribusiness sectors. Its ambition is two-fold: to contribute to an inclusive and sustainable transformation of food systems, partially through digital solutions, and drive the internationalization of tech start-ups and export of IT&BPO companies in selected Sub-Saharan African countries, including Ethiopia.

Outsourcing has become a popular business strategy for many companies around the world. Outsourcing is the practice of hiring a third party to perform services or create goods that were traditionally performed in-house by the company’s employees and staff. It is a business practice that can affect a wide range of jobs, ranging from customer service representatives/ customer support, manufacturing up to the ICT sector to the back office.  One example of outsourcing is when a company hires a third-party vendor to handle its customer service operations. Instead of managing an in-house customer support team, the company contracts with an external call center or customer service provider to handle inquiries, complaints, and other customer-related issues. This allows the company to focus on its core business functions while benefiting from the expertise and resources of the outsourced vendor. This helps enterprises to focus most of their resources on the main activity.  Why business chooses Outsourcing  · Cost savings: Outsourcing can help businesses to reduce their costs by hiring third-party providers that offer lower wages and other operating costs.  · Increased focus on core competencies: By outsourcing non-core functions, businesses can free up their resources to focus on their core competencies.  · Improved access to specialized skills: Outsourcing can give businesses access to specialized skills and expertise that they may not have in-house.  Ethiopia’s Outsourcing landscape In Ethiopia, there are various outsourcing service provider companies that have been operating for over a decade. However, many public and private companies are unaware of their existence, and the government has not provided sufficient coverage for this sector.  In 2020, the formerly Jobs Creation Commission and the now Ministry of Labor & Skills, recognizing the impact of the gig economy, established the Freelancing, Outsourcing, and Gigs (FROG) Taskforce. The aim was to place FROG at the core of Ethiopia’s service sector transformation. A significant milestone in the sector is the recent establishment of the Ethiopian Outsourcing Association, which serves as the representative body for offshore outsourcing services and providers in the country. The association’s main objective is to promote Ethiopia as a global outsourcing destination, while also focusing on enhancing the policy framework and addressing talent gaps within the industry. One of the primary advantages of outsourcing for Ethiopia lies in the creation of employment opportunities. Numerous companies from developed nations opt to outsource their work to Ethiopian companies due to lower labor costs compared to their home countries. This cost differential allows Ethiopian workers to be employed at a more affordable rate, making the outsourcing business model in Ethiopia highly attractive to foreign companies. In addition, outsourcing possesses a distinct advantage over other sectors in Ethiopia due to its minimal resource requirements and conditions. Unlike manufacturing companies that demand substantial capital, equipment, and raw materials, or the tourism sector that necessitates extensive infrastructure and world-class hospitality standards alongside stable peace and security, outsourcing companies solely rely on skilled manpower, computers, and stable telecom infrastructure. As a result, outsourcing emerges as the optimal business model for Ethiopia, offering efficiency and accessibility without the need for extensive resources. Why Ethiopia is attractive for outsourcing  Availability of abundant talent: Ethiopia has a large and young population, with more than 70% under the age of 30. It also has a high number of graduates in STEM fields, with over 200,000 students graduating each year from universities and colleges. over 42% of public university graduates are unable to secure employment after completing their studies. Of these graduates, more than 70% hold STEAM degrees, and considering that over 70% of the country’s population is under the age of 30, there is a significant need for job creation in the IT sector. These talents are eager to learn and grow in their careers and can provide quality services to global clients. Very low attrition rate: One of the challenges of outsourcing is retaining employees who may leave for better opportunities or higher salaries. However, Ethiopia has a very low attrition rate compared to other outsourcing destinations such as India, the Philippines, and China, as its workers are loyal, motivated, and committed to their employers. This reduces the cost and time of hiring and training new staff and ensures continuity and stability of service delivery. Strategic location and time zone: Ethiopia is located in the Horn of Africa, which gives it access to both African and Middle Eastern markets. It also has a favorable time zone, which allows it to work with clients from Europe, Asia, and North America with minimal overlap. This means that Ethiopian outsourcing providers can offer round-the-clock services and respond to customer needs quickly and efficiently. In conclusion: Outsourcing companies can help fill the gap in the employment market for Ethiopian youth talented graduates by offering a stable and competitive employment market. By partnering with foreign companies, graduates can gain valuable experience across industries and technologies. They also stand to benefit from salaries, professional development opportunities, and access to cutting-edge technology. In addition to creating job opportunities, outsourcing companies can boost market visibility and generate revenue for the country, making them an important player in the Ethiopian economy. 

 Africa’s Tech Talent: A Rising Force in the Global Economy Africa Has the Potential to Become a Global Leader in Technology said R&D Group CEO Mrs. Rahel Boon-Dejene GITEX Africa is an annual technology trade show that takes place in Marrakech, Morocco. Renowned as one of the largest tech events in Africa, it attracts a staggering number of over 30,000 visitors from more than 50 countries. This expo serves as a platform to showcase the latest technological innovations, ranging from artificial intelligence (AI) to cloud computing and even 5G. Additionally, the event boasts an impressive conference program featuring keynote speakers from prominent tech companies. The first-ever edition of GITEX AFRICA, which was held from May 31st to June 2nd, 2023, proved to be a resounding success. It brought together a diverse array of innovators, visionaries, and industry leaders not only from Africa but also from around the world. Among the esteemed panelists at this event was Mrs. Rahel Boon-Dejene, CEO of the R&D group, Mrs. Rahel Boon-Dejene shared her thought-provoking discussion on “Positioning Africa as a Net Exporter of Tech Talent. Key takeaways: In her remarks, Mrs. Rahel highlighted Africa’s young and growing population, abundant natural resources, and strategic location as key factors that make the continent an ideal destination for the development of the tech sector. She emphasized the potential of Africa to become a net exporter of tech talent to the rest of the world with the right investments and support. There are successful African tech companies like Andela and Flutterwave as evidence of the continent’s growing tech talent pool. With the right investments and support, Africa could become a net exporter of tech talent to the rest of the world. Mrs. Rahel debunked the misconception that AI would eliminate millions of jobs, explaining that AI still requires human input to be effective. Africa, with its large pool of potential tech talent, can leverage this need for human interaction and position itself as a leader in the tech industry. In addition to calling for investment in the tech sector, Mrs. Rahel emphasized the importance of addressing the challenges hindering Africa from becoming a net exporter of tech talent. These challenges include limited access to quality education, inadequate infrastructure, and a shortage of skilled tech workers. To overcome these challenges and establish Africa as a leading player in the global tech industry, Mrs. Rahel concluded her remarks by urging African governments and businesses to collaborate. She highlighted the need for joint efforts to invest in the tech sector, which would result in job creation, economic growth, and improved lives for the people of Africa. The panel discussion, where Mrs. Rahel Boon-Dejene served as a panelist, received positive feedback from the audience. Her insights were praised by both panelists and attendees, further solidifying the R&D Group’s commitment to helping Africa become a global leader in technology. Here are some specific examples of how Africa is already exporting tech talent: These are just a few examples of how Africa is already exporting tech talent. With the right investments and support, Africa has the potential to become a major player in the global tech industry. Here are some of the challenges that Africa faces in becoming a net exporter of tech talent: These are just some of the challenges that Africa faces in becoming a net exporter of tech talent. However, with the right investments and support, Africa can overcome these challenges and position itself as a leading player in the global tech industry.