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6 Research Context

This chapter briefly discusses the research context by pointing out some of its general

features, economic structures, socio-economic challenges and by touching upon the ICT-led

development strategy that the Government has implemented in 2003 to accelerate economic

growth.

6.1 General features

The Republic of Ghana is a Western African country, bordering the Gulf of Guinea and

sharing borders with Ivory Coast to the West, Togo to the East and Burkina Faso to the North

(see image 1). Ghana has a population estimated at 25,24 million people as of 2011. The

fieldwork has been conducted in Ghana’s capital city, Accra. It is Ghana’s largest city, with

an estimated urban population of approximately 2,30 million inhabitants in 2012. Accra is the

country’s primate city, hosts the country’s financial business center and serves as the nation's

economic and administrative hub.

Image 1 Research area

Source: CIA Factbook 2012

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With a Human Development Index3 (HDI) of 0.541, Ghana ranks 135 out of 187 countries in

2011 (UNDP, 2011). Although its HDI places Ghana above the average in Sub-Saharan

Africa, Ghana is nevertheless a low-income country with 30 % of the population living below

the international poverty line $1.25 (in purchasing power parity terms) a day (World Bank,

2011a). However, Ghana’s economic growth has accelerated to an annual growth rate of 13.4

% in 2011. Based on this rapid growth, the World Bank has projected that Ghana will be the

fastest growing economy in Sub-Saharan Africa (UNDP, 2011).

6.2 Economic structures

Ghana was the first African country to gain independence in 1957. At that time it was well

endowed with natural resources and foreign exchange due to its position as world’s leading

producer of cacao and globally dominant position in gold. This made Ghana the country with

the highest GDP per capita incomes compared to other African nations and gave Ghana the

status of a role model to the rest of the continent (OECD, 2012:14). This triggered the general

believe that the country could modernize its economy through an industry-based and state led

strategy. However, this development scenario changed in 1983 when the industrialization

strategy had failed and resulted in accelerated economic decline, macroeconomic imbalances

and a rise in poverty levels. A modern industrial sector was unfeasible, as the narrow base of

export sectors did not generate enough capital to invest in an industrialized economy (OECD,

2012:14).

With the adoption of the International Monetary Fund’s (IMF) and World Bank

structural adjustment policies (SAPs) in 1983, the government of Ghana implemented a

combination of measures to improve the investment climate and make the country more

attractive for private Foreign Direct Investment (FDI) (Grant, 2001). These measures include

privatization of state-owned enterprises; establishment of export-processing zones; and the

reduction and eventually elimination of import tariffs and other trade barriers to attract

foreign investors. By the year 1983, privatization measures were undertaken which improved

Ghana’s macroeconomic stability. However, it nevertheless did not trigger a broader

modernization process to take place (Grant, 2001).

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!3 The HDI represents a push for a broader definition of well-being and provides a composite measure of three basic dimensions of human development: health, education and income (UNDP, 2011).

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6.3 Socio-economic challenges for Ghana

Despite macroeconomic improvements since liberalization policies in 1983, Ghana is still

faced with a number of development issues, particularly high unemployment rates. Ghana has

a high population growth rate of 1.8 % (2012), and a relatively young population with

approximately 60 % of the population between the age of 15 and 64 years, and less than 5 %

of the population over the age of 65 years. Currently the majority of the working population

(56 %) is involved in the agricultural sector, only a small proportion (15 %) of the working

population is involved in the industrial sector and 29 % is involved in the services sector (CIA

Factbook, 2012).

The informal economy employs the mass of the population. With 81 % of the working

population actively involved in the informal private sector, it is by far the largest employment

sector of the Ghanaian economy. Further, job creation capacity in Ghana is extremely low.

This is acerbated by the fact that the dominant type of employment does not have the potential

to create additional jobs or employment opportunities. By way of illustration, nearly 70 % of

the working population is self-employed. They often work in their own enterprises with no

employees, therefore not generating additional jobs. The underdeveloped formal economy and

the low job creation combined with a high and growing youthful population has resulted in a

severe unemployment rate of approximately 10 % in 2011 (CIA Factbook, 2012).

6.4 The need for an ICT-led development agenda

The Government of Ghana identified the potential of technology and IT-enabled services as

one of the key areas to accelerate economic growth and reduce unemployment rates. In the

ICT4AD policy it is stated that in the current and emerging information and digital age,

development of the economy and society is not possible without an ICT- driven development

agenda. The government of Ghana attempts to pursue the following vision: To improve the

quality of life of the people of Ghana through the rapid development and modernization of the

economy and society, using information and communication technologies as the main engine

for accelerated and sustainable economic and social development. (Government of Ghana,

2003a: 21). Developing a business process outsourcing (BPO) industry is a key strategy in

achieving its ICT4AD development vision.

Currently, the ICT for Accelerated Development policy is driving ICT developments

in Ghana. The policy has been initiated by the Government of Ghana in 2003 and has

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received funding from the United Nations Economic Commission for Africa (UNECA). The

eGhana project has been designed and funded by the World Bank to assist the Government in

implementing the ICT-led Development agenda.

The section below gives an indication of Ghana current position in terms of its ICT

landscape and what the challenges are in pursuing such an ICT led development strategy.

6.5 Ghana’s ICT landscape

Ghana’s telecom sector is one of the most liberalized markets in Africa. It was one of

the first countries in Sub Saharan Africa to deregulate and liberalize the telecommunication

market when it privatized Ghana Telecom in 1996. Since then Ghana has a competing

telecommunication market with major regional providers such as Bharti Airtel, MTN,

Vodafone and Tigo (World Bank, 2011). As a result, prices of basic telecommunication

facilities dropped and access to ICTs increased. In 2008, Ghana witnessed a telephone

penetration of 52.4 % in 2008. In terms of telephone penetration, Ghana is leapfrogging the

development of fixed-line telephones. The telephone penetration in the country has been

declining since 2004, and only contributes 1 % to the overall telephone penetration. The

mobile telephone penetration on the other hand is accelerating very fast and accounts to 99 %

of the total telephone penetration in the country (Buddecom, 2009). Competitive pressures

have led to considerable consumer gains and have made Ghana one of the countries in Africa

with the lowest mobile telephone tariff (OECD, 2010:12).

Ghana is also considered to be a pioneer in introducing the Internet into its ICT

market, however the overall internet penetration at the household level remains very low with

only 4,9 % of the households having internet connections at home (see table three). Unlike

heavy competition in the mobile phone telephone segment, competition in the Internet

segment is lacking, which restricts the further development of Ghana’s ICT market

(Buddecom, 2011). Fortunately, the introduction of wireless and mobile broadband

technologies have enhanced access to Information and Communication technology services.

Further, the arrival of two new international submarine fibre optic cables in 2009 and 2010,

which connects Africa to the global communications networks, has put an end to the

monopolistic pricing of international bandwidth. This has brought down the prices in the

period between 2006-2011 from US$2,500 per mbps per month to US$297 per mbps per

month (World Bank, 2011).

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Table 4. An overview of Ghana’s ley telecom parameters of 2008 compared to 2004

Sector! 2004! 2008

Fixed-line services:! ! !

! Total subscribers! 313,000! 279,000!

! Annual change! 4%! -26%!

! Fixed-line penetration

(population)!

1.5%! 1.2%!

Internet:! ! !

! Total users! 368,000! 1,100,000!

! Annual change! 47%! 25%!

! Internet penetration

(population)

1.8% 4.9%

Mobile services:

! Total subscribers (million) 1,427 11,572

! Annual change 83% 51%

! Mobile penetration

(population)

7.0% 51%

!

Source: BuddeComm, 2009

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6.6 Ghana’s unique case of ‘leapfrogging’ the industrial stage

In the last decade the economic structure of Ghana has changed significantly. As of 2008

Ghana is no longer an agricultural-based economy, but is now a service-based economy with

services contributing highest to Ghana’s Gross Domestic Product (GDP) (see figure five)

(Ghana Statistical Services, 2012).

Figure. 5. The contribution of agriculture, industry and services to Ghana’s gross domestic

product (GDP)

!Source: Ghana Statistical Services, 2012

When comparing Ghana’s development with other African economies, it becomes evident

that the growth patterns in the non- agricultural sector, resulting in a leap from an agricultural

based economy into a service economy, are not consistent with the modernization theory.

Ghana has not gone through a stage of industrial development to increase the development

process, before it developed a service sector (Breisinger et al., 2009).

Although the services industry has expanded over the years and has turned Ghana into

a service-based economy, the goal of expanding the sector of higher-valued services in ICTs,

which lies at the heart of the IC4AD policy has not been met. The information and

communication related services sector has increased over the last years, however its share of

the total services industry has declined (see figure six) (Ghana Statistical Services, 2012).

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Figure 6. The contribution of Information and Communication services and of the total

services to Ghana’s GDP in the period between 2006-2010

Source: Ghana Statistical Services, 2012

Although Ghana has thus embarked on an alternative growth path as desired by the

Government, agriculture remains the backbone of the country with the highest number of

people employed, and the country has not yet achieved the status of a middle income and

information-rich and knowledge-based economy, as pursued in the ICT4AD policy. Despite

the liberalization of the telecom market and the competitive affects, the development of the

ICT sector is still faced with a number of constraints. These include, high telecommunication

costs, particularly in the Internet segment and unreliable electricity with frequent electricity

outages etc. Further, the developments of the ICT industry are mostly confined to the urban

areas of Ghana, leaving a large share of the population deprived from access to ICTs

(Frempong, 2010:21). To continue the efforts of the ICT4AD policy, the Government

received additional funding from the World Bank in 2008.

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7 Size and Characteristics of Ghana’s ITES/BPO Industry

According to a McKinsey report (2009) Ghana is suggested as one of the rapidly developing

nations for Business Process Outsourcing (BPO) and the number one preferred destination in

Sub Saharan Africa. This chapter discusses the main developments that have given rise to a

offshoring and outsourcing industry in Ghana. An explanation is given why Ghana is

considered a preferred offshoring destination by referring to its status as a gateway to the

West-Africa market. These optimistic views are in contrast with the notion that the industry is

rather modest and small in size because the growth of the industry is hampered by a number

of restrictions. These will also be discussed in this chapter. The last section demonstrates the

importance of Ghana’s domestic outsourcing market as opposed to offshoring.

7.1 Key enablers of Ghana’s ITES/BPO industry

When looking at the development of the BPO industry in Ghana, the country has undergone

similar developments as leading BPO country India. Cost arbitrage, global parity in telecom

infrastructure and the improved regulatory environment (tax exemptions on the export of

ITES services) have been important factors in driving the Indian ITES/BPO industry

(NASSCOM, 2004). In the last two decades, Ghana witnessed similar developments, which

enabled the offshoring/outsourcing industry to emerge. These include: liberalization and

deregulation policies (particularly liberalization of telecommunications), cost arbitrage

(labour costs) and efforts to boost the ITES/BPO industry, under the banner of the ICT4AD

policy. These enablers will be discussed.

First, according to the World Bank (2011), the introduction of liberal policies and the

privatizing of state owned-enterprises, particularly in the telecommunications industry have

been essential conditions in fostering a BPO industry in Ghana. These liberalization measures

have produced a dynamic and competitive telecom market, which led to a drop in basic

telecommunication costs and improved access to ICTs. These developments have allowed

Ghana to become a producer of IT/BPO services, particularly of basic voice and broadband

data services (World Bank, 2011). Furthermore, the liberalization policies improved Ghana’s

financial regulatory environment, introduced incentives such as tax exemptions for foreign

investors and reduced the cost of doing business, making Ghana more attractive as a BPO

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destination (Sourcingline, 2011). Prior to the liberalization and privatization acts around the

year 1996, no BPO activity was signalled in the country.

Secondly, as argued by Dossani et al. (2007), labour cost are among the primary

measures that determine the cost competitiveness of a country and form an important

determinant in attracting foreign direct investment. Similar to India, cost arbitrage has proven

to be a major advantage in Ghana as well. The minimum wage in Ghana is set at $1 a day

(12cts. an hour), which gives the country a significant cost advantage in the service sector

(Mainsah, 2004:12). Figure seven shows that Ghana has lower labour costs than India and

China, giving the country a cost advantage in terms of labour.

Figure 7. Salaries of a skilled BPO employee in percentages4

Source: World development Bank

Thridly, as indicated by Massini (2010), the availability of skilled workforce also

contributes to the investor’s decision to outsource or offshore. Although Ghana needs to

continue its efforts in building human resources in ICTs, it has a growing pool of graduates at

secondary level, which is a prerequisite for BPO activities such as call center operations and !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!$!The analysis compares salaries of a range of skilled resources including human resources managers, accountants, business analysts, engineers, and other managers. The salaries in the figure are expressed as a percentage of comparable resources in the United States. Salary of a skilled laborer in Ghana is 14.8 % compared to resources in US and India has a percentage of 21.2 %) (Sourcingline, 2011). !

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data processing operations. This growing pool of graduates with English proficiency has

contributed to the development of ghana’s BPO-sector (Hewitt Associates, 2006:78).

Finally, the World Bank (2011) revealed that since 2003, four out of thirteen pillars of

the ICT4AD agenda have been partially put in place, removing some of the key barriers to

achieving a viable ICT environment that supports BPO activities. These 4 pillars include: 1)

enabling physical infrastructure development 2) facilitating the development of the private

sector 3) regulatory and institutional framework provisions and 4) promoting funding and

local direct investment in ICTs. While slight improvements have been made in these areas,

constraints remain that hamper the development of the industry, which will be discussed

further in this chapter.

As a result of these developments Ghana has been promoted and suggested as one of

the rapidly developing nations for BPO and a hub to the West-African market (Sourcingline,

2011). This will be highlighted in the next section

!"#$ Gateway to West African market

It is interesting to explore why firms have started BPO operations in Ghana, especially since

Asian countries have been leading destinations for offshoring services. This section argues

that five factors have attracted firms to start BPO operations in Ghana, which include an

improved telecommunication infrastructure, improved attractive business climate, availability

of human resources, political climate, and Ghana as a gateway to the West-African market.

The last factor is of particular importance.

Apart from factors described above, interviews with employees from foreign BPO

firms revealed that Ghana was chosen as a BPO destination because of its strategic location in

Sub-Saharan Africa, from where companies can expand their operations to the West-African

market. Ghana’s trading access to other African nations through its Economic Community Of

West African States (ECOWAS) membership has made the country attractive to foreign

investors, seeking to expand their operations across Ghana, to the West-African market.

Although, according to a CEO of a US-based company, African countries lag behind India as

BPO destinations in terms of experience and technological readiness, Africa is a developing

continent with emerging opportunities. The telecommunications industry offers the company

the chance to position itself as a major provider of services to telecom operators in African

countries, thereby increasing its client base. Especially Ghana cannot be ignored as an

important hub for other African countries in the BPO industry. According to the CEO, their

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presence in Ghana is seen as a strategic step in becoming part of Africa’s development

process, in which Ghana serves as a gateway to the West African market. In a Ghanaian

newspaper the following was stated: “Setting up a head office in Ghana was a major stepping

stone towards increasing the presence of our company in West Africa and the Ghanaian

market in particular” (Daily Graphic, 05-02-2011).

Image two shows that the US-based company has established an office in India in

2003 and in the Philippines in 2003, and has recently started operations in Sub Saharan

Africa. This firm is a common example of a BPO firm that was first located only in advanced

countries and then moved to developing economies in Asia to eventually explore

opportunities in Sub Saharan Africa.

Image 2. Locations of BPO headquarters of a US-based firm

Source: Interviews with particular BPO company Made in ArcGis by: Keijser, 2012

Interviews also established that Ghana is an emerging industry within the global BPO market

because of the economic opportunities arising in the country.!For instance, another foreign

BPO company, which, until 2009, only operated in the United States, has started operations in

Ghana because of the potential of a local outsourcing market. The manager of this company

mentioned that since Ghana is developing (especially its financial industry) a lot can be

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outsourced. He stated that, although there is not such a large local BPO market yet, there is

nevertheless a lot of potential as companies in Ghana are now becoming aware of and

knowledgeable about the payroll system (a common BPO activity) and have started to

embrace this system. The company started off its operations in Ghana and is now serving six

other African countries. The manager added the following: “We expect to take up more IT

outsourcing activities from businesses located outside of Ghana; because of the credibility

that we have put across, Ghana has been an important starting point for us” (03-22-2012).

This shows that because of the improved financial environment Ghana is attractive as

headquarter to serve other West-African markets. Image three illustrates this. The US-based

company decided not to establish a BPO office in Asia, but launched a subsidiary firm in

Ghana to benefit from the opportunities arising in terms of payroll processing. A head office

is located in Ghana from where it delivers outsourcing solutions to other firms in Africa

(Nigeria, Congo, Congo Democratic Republic of the Congo (DRC), Malawi, Gabon and

Zambia).

Image 3 Foreign BPO firm expanding operations in Africa

Source: Interviews with particular BPO company Made in ArcGis by: Keijser, 2012

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When asked why Ghana has been chosen as a BPO destination in Africa and why it is in some

cases preferred over other African countries, other explanations given by various interviewees

were: improving telecommunication infrastructure, improving and attractive business climate,

and Ghana’s peaceful political climate.

First, the majority of the respondents mentioned the fall in basic telecommunication

costs over the last decade, adding to Ghana’s attractiveness as a BPO destination.

Secondly, liberal policies have improved the regulation environment and investment

climate. For instance, at least three foreign BPO’s mentioned their position in the Ghana Free

Zones Board (GFZB) as an advantage. According to them it has made Ghana’s business

climate more attractive, because it offers them certain benefits, like tax exemption on the

export of IT enabled services.

Thirdly, according to the foreign companies, Ghana has a reputation of being a stable

and peaceful country in West Africa, which gave them more confidence to establish their

businesses in Ghana. This perception of a peaceful political climate has been confirmed in all

interviews with domestic firms and is seen as a major advantage Ghana has over other

African countries.

Finally, according to some interviews Ghana’s position on the equator, where it shares

the same time zone with the United Kingdom (the Greenwich Mean time (GMT)) has been

mentioned as an advantage. For instance, a foreign BPO company decided to establish an

office in Ghana and not in India, arguing that the GMT time puts Ghana in a better position to

deliver services to the United States.

The government officials that have participated in this research increasingly promote

Ghana as a gateway to the West-African market. These promotional activities are further

elaborated on in chapter nine.

7.3 Characteristics of Ghana’s ITES/BPO industry

Currently, there are 34 ITES-BPO companies located in Accra, Ghana (excluding BPO

training centres). Ghana’s BPO activities are mainly concentrated in Accra, with the

exception of three companies, which are located in Ghana’s second biggest city, Kumasi.

Ghana’s ITES/BPO industry is in a nascent phase of growth as 78 % of the BPO companies

have been established since the year 2000 (see figure eight).

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Figure 8: number of companies established per year

!

!Source: interviews BPO managers en interview with GASSCOM

Between 2000 and 2007, a remarkable growth in the establishment of IT/BPO

companies has taken place. This rapid growth can mainly be ascribed to the fall in basic

telecommunication costs (from US$2,500 mbps per month to US$297 mbps per month) and

the increased efforts of the Government to promote the IT/BPO industry (implementation of

its ICT4AD policy) during that period.

Since 2007, the ITES/BPO industry has experienced stagnated growth. In the last five years

(2007-2012) only three companies have been established in Ghana, whereas in the five years

previous to that (2002-2005) 18 companies had been established. According to the director of

a domestic BPO company and confirmed by MASDAR (2011) the industry has not reached

its limits yet, but is similar to other BPO destinations faced with the global economic

recession. In Ghana, the revenues generated by the ITES/BPO have been growing from 41.8

million Ghanaian Cedi (GHC) in 2008 to 53.7 million GHC in 2010. However, the export-led

revenues generated by the ITES/BPO industry fell from 22.5 million GHC in 2008 to 17.7

GHC in 2010 (MASDAR, 2011). This decline in export-led revenues is caused by the

economical downturn of a few BPO companies, especially those firms that are highly

dependent on customers in the United States, which outsourced fewer business functions to

BPO firms in Ghana.

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Similar trends were observed in the same period elsewhere. In general, the growth rate

of the global offshoring market slowed down between 2007 and 2009. For example, while

India’s ITES/BPO market is still growing, the pace of expansion of its outsourcing market has

dropped from a growth rate of 35% in 2007 to 15% in 2008 (Palugod, 2011). Even though the

stagnated growth in the global industry reflects for a great part the economic crises,

Suryanarayan (2010) points out that economic downturn might also encourage organizations

to outsource in order to meet competitive challenges and save cost, thereby boosting the

outsourcing industry. It is likely that the slow pace of the development of Ghana’s

outsourcing market is, therefore, not only caused by the global recession, but also caused by

restrictions the Ghanaian BPO industry faces, which will be discussed at the end of this

chapter.

While the industry is still rather small and develops at a slow pace, it should be noted

that Ghana has only since the last decade been recognized as host nation in the global

offshoring and outsourcing industry (A.T. Kearney, 2009). Therefore, a presence of

offshoring activities, though even small in size, should not be disregarded. An employee of

the eGhana project explained that for a country that for decades has been reliant on traditional

exports, the outsourcing industry, even when modest in size, might result in an alternative

development strategy. An employee of GIPC argued that for a country with low services in

ICT and little export services, the current size of the outsourcing/offshoring industry is

somewhat impressive. Further, it is seen as a sign that the country is capable of moving in the

direction of a modern economy that is based on a large information-intensive services sector.

This perception shows that besides actual benefits to the economy in terms of generation of

employment, creation of revenue etc., the presence of the industry also has the potential of

signalling to the rest of the world that Ghana is altering its economic structures and is capable

of performing IT and knowledge-based activities in the (global) services industry. This

symbolic value will be further explored in the next chapters.

7.3.1 Type of BPO services in Ghana

Ghana’s current position in the global offshoring industry can best be determined by

drawing upon Gereffi’s and Ferndandez-Stark’s Global Value Chain Analysis for offshoring

of services. As mentioned in chapter two, they identify three segments within the global value

chain analysis: ITO, BPO and KPO (see figure nine). The outsourcing industry in Ghana is

solely made up of ITO and BPO activities. It should be noted that while such a segmentation

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in types of value chains and activities within a chain exists, the majority of the companies

focus on multiple activities within the segments (for instance delivering both ERM and CRM

related services), and some are also involved in multiple fields, that is in the ITO and BPO

chains. For instance a company running a call centre could also be involved in software

development.

!Figure 9 Offshore Services Value Chain

!Source: Gereffi and Fernandez-Stark, 2010

Within the BPO segment the majority of the companies deliver Customer Relation

Management (CRM) services. At least ten companies perform as call centers5 or as contact

centers6. These services can be depicted as low-value added services, and are therefore

considered to be the lowest segment of the outsourcing industry. Further, eight companies

offer services related to Enterprise Resource Management (ERM), which entails mostly data

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5Call centers: (outsourcing voice (inbound) services on customer support, business partners or companies (telephone directory). 6 Contact centres: (outsourcing voice (inbound and outbound) services on activities such as marketing activities, customer retention (loyalty programs) and customer acquisition among others) (Gereffi et al., 2010).

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capturing and data processing services. Within the global value chain these types of activities

are categorized as content/document management, which is also characterized as the lowest

segment of the BPO industry. Finally, one company processes payroll activities, which is a

type of service within Human Resource Management (HRM), which requires higher levels of

human capital as compared to Customer Relation Management services (Call center/contact

center related services).

The ITO segment of the value chain counts the highest number of companies. Within

the ITO segment, 18 companies deliver Software- related services. To be more specific, all

companies are involved in application development7, which is considered a mid- to high value

added service. Among these 18 companies nine companies also offer application integration

services8, mid value added services and three of these companies also deliver desktop

management services, which is identified as a low to mid value added service in the global

value chain.

This indicates that Ghana’s offshoring/outsourcing industry is predominantly based on

low to middle value added services. In line with the argument made by Fernandez-Stark et al.

(2010) and similar to experiences in other host nations for offshoring, these low valued

activities have served as an entry point for Ghana into the global offshore industry. This is

because call centres and back office/data processing functions require comparatively low

levels of skills while the more high value added functions require higher levels of human

capital input (Hewitt Associates, 2006:78). While the Ghanaian BPO market is dominated by

ITO and BPO services, the companies delivering BPO services, are the largest in size in terms

of employees. On average, companies focused on Software and Infrastructure related services,

number 49 employees, whereas companies involved in Enterprise Resource Management and

Customer Relationship Management (BPO related activities) number on average 135

employees per company. Therefore, one may argue that the share of BPO activities is the

highest in the offshore/outsourcing industry in Ghana. As is illustrated in figure nine, the BPO

and ITO activities could apply to a wide range of industries. In the case of Ghana, outsourcing

solutions are offered in telecommunications, the financial industry, banking and health

industry. Telecommunications is by far the dominant industry, with the majority of the

companies delivering IT and BPO solutions to companies in this sector.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!7 Application development: software development (design, write and install applications such as a program to be run) and the provision of software and testing of software (Gereffi et al., 2010). 8 Application integration: development or adaption of software packages to integrate or connect applications to platforms and software.!

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It is not remarkable that there are no companies delivering services in the KPO

segment. This advanced form of outsourcing that deals with high-end knowledge work

requires highly skilled personnel. In the case of Ghana, the BPO and ITO segments are not yet

matured and based on globally observed trends, a country establishes itself first in the lower

segments of the value chain to gain experience, build capabilities and earn credibility by

companies that seek to outsource, before it moves up along the value chain towards KPO

activities (Fernandez-Stark et al., 2010). For Ghana to increase its share in these two segments

and to eventually move in the direction of KPO, improvements need to be made in the

telecommunication infrastructure and the business climate to make Ghana more favourable to

offshore operations. Furthermore, there remains a gap between the education sector and the

level of skills required in the KPO value chain. Thus, in order to carry out KPO functions,

there is a need to build and upgrade skill-competencies (President Ghana Telecom University

College, Ghanaian Times, 02-15-2012).

7.3.2 Geographical orientation of foreign BPO firms in Ghana

The view of developing countries as platform for the export of services is a dominant view as

most literature in the domain is primarily concerned with the opportunities of offshoring for

developing economies. The case of Ghana shows a different pattern, that of the dominance of

domestic outsourcing as opposed to offshoring. One quarter (23.6 %) of the ITES/BPO

companies in Ghana have their clients located outside of Ghana, predominantly in the United

States and a few in West-African countries. Almost two third (58.8%) of the BPO industry is

based on local contracts, that is having clients in Ghana only. There are a few companies

(17.6% of the industry) that have both clients in Ghana and outside the country. These figures

show that the Ghanaian BPO industry is predominantly characterized by domestic

outsourcing.

In general, foreign BPO companies that are operating in Ghana dominate the

offshoring industry. From these foreign BPO companies, five out of 13 companies serve the

international market, whereas only three out of 21 domestic companies perform offshore

outsourcing (see table five). The domestic companies are predominantly focussing on local

contracts, with the majority (66.67%) delivering outsourcing solutions to firms within Ghana.

The foreign BPO firms are focusing on the local and international market equally.

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Table 5. Overview of location clients of domestic/foreign firms

Location clients (local/international)

Number of Local BPO contracts

Number of international BPO contracts

Number of local and international contracts

Total

Type of company

Domestic BPO company

N=14 66.67%

N=3 14.3%

N=4 19%

N = 21 100%

Foreign BPO company

N=6 46%

N=5 38.5%

N=2 15.5%

N = 13 100%

Source: Masdar (2011) complemented with data from the field

These numbers show that Ghanaian firms are barely serving the global offshore market, but

are rather focusing on the local outsourcing market. The underlying reason for this trend is

that Ghanaian companies face challenges going offshore, due to competition from foreign

driven BPO companies or because they identify greater opportunities onshore. This will be

addressed in the next section.

7.4 The potential prospects of Ghana’s domestic outsource market

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While policymakers focus their attention on offshoring and the export of IT services, the case

of Ghana shows the importance of the domestic market for IT services. The importance

results partly from the risk involved in relying on the offshore market, the limited

opportunities Ghanaian companies have in terms of serving the international market as they

find themselves unable to compete with international firms, and also because of the

opportunities identified domestically.

The argument made by Hanna (2010:196) on the risk of overreliance on offshore

markets has been also expressed by several Ghanaian BPO companies. For instance, a

domestic company went offshore in 2006, but had to move its operations back onshore when

the economic recession affected the company severely in 2007. A director operator added the

following: “The global recession hit us bad, but when that happened fortunately we were

also outsourcing locally. Because we provided services locally, which were not affected as

much, meant that the business didn’t have to shut down” (02-22-2012).

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Rising Data Solutions is an example of a BPO company that relied on the offshore

outsourcing market entirely and had to halt its BPO operations in 2009. The economic

recession resulted in less work being outsourced from American firms to Rising Data

Solutions. Hence, these examples show the importance of the domestic BPO market since

focusing exclusively on the export of IT and ITES-BPO services is associated with high risk

of overreliance on economic trends abroad

Furthermore, the importance of a domestic market for BPO in Ghana also stems from

the difficulty for Ghanaian companies to compete on the international market. It should be

noted that regardless of the ambition of national companies to compete internationally, they

are facing more challenges compared to foreign led companies, such as inadequate financial

resources, lack of credibility and experience, which limits their options. A CEO of a domestic

company stressed the importance of focusing on the local BPO market in the following way:

“local experience is important. International companies looking to outsource will be far more

impressed by a company that already does, for example, call center work locally for a bank”

(04-03-2012). Another domestic company expressed similar objectives of building a strong

resource base domestically and working on international certificates and standards before it is

capable of getting offshore contracts. In general, there is an overall perception among

domestic companies that it is currently better to serve the domestic market to get their

operations and base domestically in order to than go offshore. This strategy is preferred

because of the risks involved in depending on the global market and because the majority of

the Ghanaian companies lack the capacity to compete on the international markets (example

see textbox one).

A manager from a domestic company pointed out that while nowadays it might be

better to focus on the domestic BPO market, a decade ago most companies in Ghana were not

IT based and did not have huge clienteles. In other words, there was no market to outsource

Textbox 1: Getting the basis right domestically before going offshore “We don’t see ourselves having a situation where we are departing or closing off the local side of our business, because we think having a local client base is important. If you are big and you serve the international market, but you can’t point to a local client you work with you don’t bring across a very good story or reputation. We are still very keen on long-term contracts domestically, because it takes some time to understand their business, their products and time to change things and do things more efficiently and time to build a reputation and credibility. So to make a long story short, for us the dream is to go international, but for now we have domestic business contracts. We are trying to excel and do very well domestically to show to the outside world that we can do it on a bigger platform. That’s the whole idea”. (CEO of a domestic company, 03-13-2012).

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domestically, thereby making the businesses mainly dependent on companies from outside.

Nowadays, a new promising segment of Ghana’s domestic ITES/BPO market is that of

domestic outsourcing. Developments in the telecommunication sector and banking sector are

contributing to outsourcing opportunities in Ghana, as these sectors demand a significant

amount of customer-care related services. Foreign BPO companies have also mentioned the

arising economic opportunities in domestic outsourcing as an important factor that

contributed in their decision making to start operations in Ghana. Remarkable is that only one

out of four foreign BPO company from the sample is exporting its services to American

customers. The other foreign firms have started operations in Ghana because of their interest

in the domestic outsourcing market and the potential of the regional outsourcing market

(West-African and African market). The perception of Ghana as a gateway to the West-

African market emphasizes the potential of near shoring to other African countries. This again

stresses the importance and the substantial prospects of the Ghanaian IT and ITES-BPO

market.

Although the prospects of a local BPO market are improving and even though the

majority of the local contracts are currently in the hands of local companies, respondents do

claim that for a domestic company it is nevertheless difficult to obtain a BPO contract, even

locally. Local companies face a lot of competition from foreign BPO companies when it

comes to getting a BPO contract. This and other challenges will be further discussed in the

next section

7.5 Restrictions to Ghana’s ITES/BPO industry

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Although Ghana has put several conditions in place for a BPO industry to emerge and has

increased its efforts over the last years to create an enabling environment for an ITES/BPO

industry, there are several restrictions that remain to hamper the development of the BPO

industry and keeps it from growing at a faster pace. These challenges include: technological

readiness; lack of a local outsourcing market; competition between domestic and foreign BPO

companies; the global recession and inadequate human resources.

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7.5.1 Technological readiness

Infrastructure bottlenecks have been overcome for a great deal by privatizing

telecommunications and with the arrival of modern technologies, such as the development of

undersea fiber-optic cables connecting Africa to the global communications networks. While

these developments have brought down telecommunication costs, which spurred the growth

of the industry between 2001-2006, prices remain high compared to the United States and

Europe. The connectivity remains unreliable and the country suffers from frequent power

outages, due to the unreliable nature of the power grid in Ghana (Daily Graphic, 04-03-2012). In short, although Ghana has some technological infrastructures in place, it lags behind in

terms of technological readiness for BPO, which may potentially damage Ghana’s prospects

of building a competitive BPO industry. It does not emit out a positive message to foreign

investors, and the high cost of bandwidth, power and telecommunication costs form a major

obstacle in setting up viable enterprises.

7.5.2 Lack of financial assistance

The high cost in telecommunications and other high costs (in particular of real estate) is

further implicated by the difficulty for Small to Medium size Enterprises (SME’s) to get a

loan and by the high interest rates on these loans. An official working at Ghana Multimedia

Centre (GMIC) added the following: “Financial assistance for small to medium size

enterprises to start up is very poor, which is a big challenge Ghana is facing: There is no

capital for people to start on their own and thus no collateral to show for a loan… As a

result, good ideas end up on a shelf, because young entrepreneurs cannot find the resources

to start a viable business” (03-19-2012).

In order to encourage ICT entrepreneurship, the Government has set up the Ghana

Multimedia Incubator Centre (GMIC) under the ICT4AD initiative to assist SME’s in their

critical start up period by offering them rent at subsidized rates, facilities, and training

programs until they have become viable enterprises. Although the incubation centre has

successfully assisted in the start up of firms, the number of incubators is relatively small with

only 20 companies in the incubation centre.

While foreign companies also emphasized the high costs of doing business, they did

not claim to struggle as much as domestic companies when it comes to having a capital base

to finance these costs. Foreign BPO’s from the sample have access to financial resources or

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loans at lower rates of interest in the country of origin. Besides, they enjoy tax exemptions

unlike domestic companies. A foreign BPO company pointed out that it is easier to get

investors to support their business than it is for new emerging domestic companies, because

the domestic firms have not yet established a brand or reputation. In general, in terms of

financial resources, foreign driven BPO’s have an advantage over domestic companies.

7.5.3 Fierce competition from foreign BPO companies

National companies appear to be at a double disadvantage when it comes to getting a BPO

contract: It is difficult for Ghanaian companies to compete globally and the local BPO

industry is also dominated by foreign businesses, as they are also preferred over national ones

when it comes to domestic outsourcing. The difficulty in getting international contracts lies in

the fact that international companies seeking to outsource are keen on certifications. Of the

foreign companies surveyed, all complied with certain international standards, whereas

national companies from the sample did not. It should be noted however that several of these

companies did indicate that they are working on getting the right certifications, which will

increase their chances of getting international contracts. Under the ICT4AD initiative the

Government has set up a scheme to encourage the certification of domestic companies,

however, little progress has been made (MASDAR, 2011).

The foreign led companies expressed to have fewer obstacles because they are more

established than domestic companies. Foreign companies are ‘already established’, which not

only means that in general they have the resources needed to start up a business and are in

better condition to survive periods of economic downturn. Moreover, they have also

established a certain brand and reputation, which gives them more credibility in the face of

enterprises looking to outsource.

“Although it is not always the case, there exists a general perception among investors that

foreign companies have the work ethics needed, they are expected to be more professional,

which puts them in a better state of getting contracts, both internationally and locally“ (stated

by an employee of GMIC, 03-19-2012).

Government officials interviewed for the purpose of this research confirmed the fierce

competition domestic companies are facing. They nevertheless, stressed the importance to

continue efforts to attract foreign BPO companies. Attracting big multinationals with an

established name and reputation is thought to have great benefits for the economy, as it will

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create jobs for Ghanaians (all foreign BPO companies had exclusively a Ghanaian work staff)

and bring in the needed foreign capital.

The incubation program that is hosted by the Government (GMIC) to help companies

start up and become profitable does not give preference to domestic companies over foreign

companies, because it believes that every vital company that has any chance of succeeding

should be given a chance to develop. Furthermore, it believes that whenever a foreign-based

company becomes successful in Ghana, chances are higher that more foreign-based firms will

establish their office in Ghana. All government officials highlight the importance of attracting

foreign BPO companies to Ghana while recognizing the competition and challenges it brings

for the smaller national companies. An employee at the Ghana Investment Promotion Centre

(GIPC) added the following about this: “There is a liberal climate, so there is equal chance:

the foreign companies develop and grow, sometimes at the expense of domestic BPO firms,

but they are needed to attract more BPO companies from outside and to develop a BPO

market”.

7.5.4 Lack of local outsourcing

Even if Ghanaian companies manage to set up operations, they still face challenges in

the local BPO market as the BPO industry in Ghana is still in a nascent stage. According to

respondents from local BPOs, companies in Ghana are not yet familiar with outsourcing or

convinced about the benefits of it. While the Government is stimulating the BPO-sector by

promoting Ghana as a preferred offshore destination, it does not promote the local

outsourcing market. “The government could promote the local BPO market by organizing

seminars or promoting the benefits of outsourcing for the local market. It should outsource its

own cores to set an example, but I believe that the Government itself is still hesitant about

doing that. The little it outsources goes to foreign companies”. (Director of a domestic

company, 04-03-2012).

At least 10 respondents from both domestic and foreign BPO companies have expressed

similar concerns about the government not supporting the BPO sector in the sense that it itself

does not outsource its business processes and thus fails to set a good example. These concerns

are supported by statistics that show that the outsourcing industry in Ghana is private sector

led. Approximately 80 % of the value of present BPO contracts comes from the private sector,

and 20 % from the public sector (MASDAR, 2011). While the government has made efforts

to create an enabling environment for BPO (such as privatization of telecommunication

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regulation and through its ICT4AD policy), it is the private sector that has created the jobs in

the ICT industry. An official of the World Bank who is engaged in the eGhana project stated

the following: “The private sector has been leading the ICT for development drive and

created the BPO jobs, almost on their own, with very little or no government support”. (04-

25-2012).

Furthermore, all respondents from the BPO-sector argued that the Government needs

to improve the exposure of the potential for domestic outsourcing. The latter should not only

be accomplished by promotional activities, but also by improving the overall ease of doing

business (regulation), an area where Ghana scores low compared to India (Sourcingline,

2011).

7.5.5 Lack of human resources

The availability of a pool of labourers with a degree in secondary education has been an

enabling factor for the BPO industry to emerge in Ghana. There is a gap between secondary

schooling and requirements of high-end valued services. Currently, Ghana’s existing ICT

proficiency only allows the country to host the low-end segments, such as call centre

operations (Hewitt Associates, 2006:78). Even in the case of these low value added BPO

activities, post-recruitment and on-the-job training remains necessary and is therefore an

additional cost challenge. The scarcity of highly skilled personnel negatively affects Ghana’s

competitiveness in attracting higher-valued offshoring activities and moving upwards along

the global offshoring value chain.

7.5.6 Global recession

In addition to the challenges listed above, the current global crisis also forms a constraint to

the development of a viable BPO market. Some of Ghana’s major BPO customers remain in

the United States and Europe. Because of the economic crisis that has affected these

continents, customers have less work to outsource or have become, for political reasons,

sensitive to offshore its work to other countries.

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7.6 Conclusion

In the last decade, Ghana’s increased liberalized markets, improved ICT infrastructure,

English speaking population, political stability and its function as gateway to the rest of

Africa allowed the country to become a destination for offshoring and outsourcing activities.

Currently, Ghana’s offshoring/outsourcing industry is predominantly based on low to middle

value added services in the ITO and BPO segments. Since the year 2000, the IT/BPO industry

has grown rapidly and by 2009 Ghana was considered the preferred destination of Sub Sahara

Africa. However, since 2008 the industry has experienced stagnating growth. A number of

restrictions, such as a lag in technological readiness, the scarcity of highly skilled personnel

and the global recession have caused the rapid growth to stagnate. Therefore, to boost foreign

investments and encourage the development of a local BPO-sector, the Government of Ghana

must work on overcoming infrastructure bottlenecks, notably in telecommunications, continue

their efforts in assisting domestic BPOs to develop, and improve awareness for its BPO

industry to encourage and promote local outsourcing. In order for the industry to upgrade

from low-valued activities towards high-end business functions, efforts need to be made to

increase the number of highly skilled workers. According to the employees there lies an

important role for the Government of Ghana to meet these demands.

In its efforts to promote the BPO industry, the Government stresses the importance of

attracting foreign companies to settle in Ghana. However, the interviews revealed the

importance of a domestic BPO services market. Although the foreign companies are

contributing to the generation of employment and revenue, and are a stimulus for human

resource development, it is essential that the domestic market is stimulated for the same

reasons. If the domestic market gets the support needed by the Government, it would enhance

the competitiveness on the international market and reduce the reliance on offshore markets.

Furthermore, in the last decade, other sectors such as the telecommunication and banking

sector have also developed and increased the demand for outsourcing activities, emphasizing

the need for and potential prospect of a domestic market. If a domestic market were available

these sectors and BPO companies could vice versa profit from each other. A viable local BPO

industry induces other companies to outsource part of their tasks, and enables and encourages

local SME’s to start operations, thereby boosting the domestic service market. According to

most interviewees the domestic market, however, has thus far been overlooked by the

Government of Ghana.

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Remarkable is that while the industry is still modest in size and nearly all respondents of both

foreign and Ghanaian companies argued that they are faced with challenges, the majority

considers the IT/BPO industry to be of great importance. It is expected that the sector will

grow in the next decade and will contribute to the economy in terms of the creation of

employment and revenue. Besides economic benefits, the industry is also embraced because it

is seen as a sign that Ghana is no longer depending on traditional sectors, such as the

agricultural and industrial sector, but it is slowly becoming competitive in the more “modern”

and knowledge-based sectors. The next chapter will discuss the actual contribution to the

creation of jobs and will explore why the IT/BPO industry is highly valued among the

population.

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8 The Creation of Modern Employment and Human Resource

Development

This chapter discusses the lack of human resources and pays attention to the actual

contribution of the IT/BPO industry in terms of creation of employment. It is interesting to

explore which groups of people benefit from employment in the IT/BPO industry, how they

look at their jobs and perceive the potential of this industry in Ghana. The vast majority of the

employees interviewed indicated that the BPO industry is faced with many challenges and

they believe that the objectives of the ICT4AD policy are far from established. They,

however, expressed some sweeping statements on the non-economic benefit from the ITES-

BPO industry, which leads to believe that a non-economic value is involved. This symbolic

value will be briefly touched upon in this chapter and more elaborately discussed in chapter

nine.

8.1 Employment and expectations of the IT/BPO industry

In 2003, the Government stated that it is committed to implementing strategies to ensure that

within the next two or three decades Ghana’s working population is either directly or

indirectly involved in information and communication related services (Government of

Ghana, 2003b). The creation of employment by developing an ICT industry is considered to

hold great potential of employing a mass of people and providing quality (knowledge-

intensive) jobs, which will in turn assist in the generation of wealth and revenue for the

country (Government of Ghana, 2003). Through the IT/BPO industry the government wants

to turn a youthful population into a skilled human resource asset that will assist in the

development of the country. In line with Frempong’s (2010) argument, the creation of

knowledge-intensive employment, which requires the input of human capital is of great value

and seen as a precondition to achieve a knowledge-based economy.

The government acknowledged that the country in 2003 was challenged by a limited

human resource capacity, characterized by low professional, technical and managerial

manpower base. Therefore, the Government identified the building of human resource

capacity in ICTs as one of its priorities within the ICT4AD policy. In 2008 the Government

implemented an education reform, which introduced ICT as a core subject in all senior high

schools to develop requisite skills and knowledge needed to be active participants in and

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benefit from the global knowledge economy and society (Government of Ghana, 2003).

However, as stated by Fernandez-Stark, Bamber and Gereffi (2010), there is often a gap

between the skills learned in education and those required by the global services industry.

This is also true in the case of Ghana where there is a need for additional training to develop

competencies in fields such as IT and Communications to bridge this gap. In Ghana, primarily

in Accra, a number of private sector-led training centers have been established in the last

decade to equip the population with skills in ICTs.

As part of the development objective “human resource development” of the ICT4AD

policy the government has also set up the Ghana Multimedia Center (GMIC). The underlying

notion of assisting in the growth of businesses in ICT is to promote entrepreneurship in the

ICT sector and boost job creation. GMIC also hosts a BPO training facility to further

stimulate the development of the required labour pool for the outsourcing industry. This

centre is set up in 2005 to equip the youth with the skills necessary to either become Call

Centre Operators, Data Entry Clerks and Medical Transcriptionists. The overall aim of the

GMIC department is to create a pool of skilled workers in order to attract multinational

companies to outsource part of their businesses to Ghana. Efforts are clearly made in

developing the needed human capital base to build a knowledge economy and society.

However, as a report of MASDAR (2011) reveals, there continues to be a lack of skilled

labour, which hampers the further growth of the industry. Although in 2010, 14 of the 15

biggest training centers in Ghana claimed that they were addressing the human resource

constraints, the majority of the ICT/ITES-BPO companies that were surveyed in 2010 by

MASDAR, expressed dissatisfaction towards the availability of adequate human resources.

The lack of adequate schooling has also become evident in the survey conducted for the

purpose of this research. Post-recruitment training or on-the-job training in house or at an

external institution was required in all companies surveyed to bring the level of the employees

up to the required competence level.

8.2 Contribution of IT/BPO to employment

In 2005, the Government of Ghana requested a feasibility study of Ghana’s ICT/ITES market

potential, which estimated that, under a high growth scenario, the sector could create 37,000

jobs by 2011. As table six shows, these expectations have not been met; rather, the creation of

employment has been modest and has shown a stagnant or even downward trend in the last

three years.

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Table 6. Number of jobs created in the IT/ITES-BPO-sector 9

2008 2010 2011

Total10 3145 3372 3551

Thereof ITES/BPO proper 2633 2811 2535

Call Centres + Data Processing companies 2161 2160 1800

Software Developing Companies 168 243 269

Source: Info from MASDAR (2011) completed with data from the field

Since 2008 the industry increased in number of companies, however this is not coupled with a

rise in employees, rather there has been a slight decline in the number of jobs in the IT/ITES-

BPO industry, due to economic downturn. Noticeable is the decline in employment in call

centres and data processing companies. Firms that serve the offshore market are generally

occupied with these low-segmented BPO services, which have been affected most by the

global economic recession.

Further explanation of the lower number of jobs than expected, is that estimations in

terms of job creation were made under a high growth scenario. However, the BPO industry

has not been growing at the same pace it did in the period between 1998 and 2005. Instead, it

witnessed a stagnated growth since 2007/2008, when the global recession started having its

effect worldwide. A domestic BPO company, which employed over 1000 people, went out of

business in 2008. Furthermore, another few hundred employees lost their jobs over the last

three years when other BPO companies had less business, due to a lower supply of work

outsourced. Three new companies did emerge in Ghana since 2008, but their contribution to

employment generation is not compensating for the loss of jobs.

An official of GMIC argued that in terms of numbers, the creation of jobs in the

ITES/BPO industry might not seem impressive, at least not compared to BPO destinations

such as India, which created approximately 2.3 million jobs in the IT-BPO industry.

However, successes of India’s IT/BPO industry in terms of the creation of employment

cannot be compared to the number of jobs created in Ghana. In the case of India efforts to

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!9 Number of employees is based on 43 companies participating in the survey of MASDAR; 5 companies did not reveal their numbers of employees. I added statistics on number of employees of three companies, which were not included in MASDAR’s survey. 10 These numbers include employees of BPO training centres, but exclude employment indirectly created through the sector.

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realize the potential of outsourcing and offshoring in the global markets had been initiated as

early as 1991 (NASSCOM, 2004). Whereas in the case of Ghana efforts, effort to encourage

the building of an IT/BPO industry have been started only with the ICT4AD policy in 2003.

Furthermore, the high employment in the Indian IT/BPO industry should be put in

perspective, taking into account that India has a population of over 1.21 billion people (2011

census) and a working population of over 782 million people, whereas Ghana population

reached approximately 25 million people and a working population of approximately 15

million in the year 2011 (CIA Fact book, 2012). However, India’s share in the global IT-BPO

industry remains largest (Sourcingline, 2011).

Nevertheless Ghana’s BPO industry is considered an important avenue for job

creation, for a number of reasons. First, the government workers as well as most respondents

from the BPO companies, expressed to have faith that the industry will grow in the upcoming

years, once the residual effects of the global recession have passed. Secondly it is estimated

that every job created in the IT/ITES sector has resulted in the creation of four additional jobs

in ancillary sectors, such as transport, training, and catering (Sourcingline, 2011). Thirdly, the

type of jobs that are produced, appear to be of greater importance than the actual numbers of

jobs. The IT/BPO industry is creating employment opportunities, especially for a graduated

youth that is faced with high unemployment rates due to a lack of jobs, especially skilled jobs

in the services industry. The presence of an IT/BPO industry in Ghana offers such

employment, but is also of great value because it is seen as a signal that the country is

exploring and expanding alternative employment opportunities, and moving in the direction

of a knowledge based services economy.

8.3 Characteristics of employees in IT/BPO industry

The next section gives an overview of the type of people working in the IT/BPO industry to

identify for what groups of people the IT/BPO industry has created employment

opportunities. This section also deals with the discrepancy between the opinion of the

employees who believe that with their educational background they deserve better

employment opportunities while at the same time they point out the popularity of employment

in the IT/BPO industry among graduates. The last section sheds light on this popularity and

argues that the IT/BPO industry has a wider effect than just creating employment, namely, the

socio-economic benefits accompanied with the type of employment.

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8.3.1 Gender division

As Fernandez-Stark et al. (2010) and Dayton-Johnson (2009) point out, the jobs created in the

offshore industry offer employment opportunities to the more marginalized groups in society,

such as the young and women. Both the survey as well as secondary data, reveal that women,

although to a lesser extent than men, are indeed employed in the industry. However, since

2008 the number of women employed in the IT/BPO industry has declined (see table seven).

Table 7. New jobs created in the IT/BPO sector that is held by women

2008 2010 2011

Percentage of jobs held

by women

65 %

(N =3145)11

50 %

(N= 3172)

36.8 %

(N= 2951)

Source: MASDAR, 2011

The sharp drop in female employment (from 65 % to 36.8 %) can be partly attributed to the

fact that women are mostly employed in companies with call center operations and other

customer care related activities. Particular these types of companies have been most affected

in the last years, forcing them to lay off a number of employees. According to MASDAR

(2011), women suffered more in terms of jobs loss from the downward trend in the last two to

three year than men from deployment of staff in ITES/BPO companies, thereby putting

women at a disadvantage.

Looking at the managerial staff category of 2008, the ratio between female versus male staff

was: 1: 2,3. This ratio shows that there is an unfavourable ratio for women at managerial

levels, however, in call centre operations the majority of positions at a managerial level are in

fact held by women, namely about 90 %, thereby making managerial functions within call

centre operations by far a female dominated area of work (MASDAR, 2011). These findings

have also been confirmed by the findings of the survey designed for this research. The survey

reveals that the higher functions such as supervisor, manager, director etc. are predominantly

held by man whereas women generally occupy lower functions at the agent level. Even

though the survey showed that women are indeed at a disadvantage when it comes to

obtaining high functions compared to men, it is not impossible for women in the BPO

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11 These numbers are based on 31 firms instead of 34, due to a lack of data in three companies, hence resulting in a different N compared to table six.

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industry to obtain a high position. In fact, from the sample one domestic BPO company has a

female CEO.

8.3.2 Educational background of employees

Of all employees, nearly three third of the employees (73 %) are of the age between 25 and 30

years old. The average age of the employees is 28 years old, illustrating that the offshore and

outsourcing industry does in fact provide employment to a youthful population as argued by

Fernandez-Stark et al. (2010). As far as educational qualification of the employees are

concerned they are senior secondary degree holders, graduates (tertiary level degree) and a

few are postgraduates (master degree holders) (see figure 10). The vast majority of the

employees, both among men and women, have finished a degree at tertiary level before they

started to work in the BPO industry. While for approximately half of the employees this

degree is the highest degree obtained, at least 35 % is still in school or is planning to continue

their studies or to obtain (another) degree at post-graduate level. For these workers, their job

in the BPO industry is merely a part time job.

Figure 10 Educational backgrounds of employees in BPO companies

Source: survey respondents based on six BPO companies

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8.4 Popularity of IT/BPO and stimulating human resources development

Interestingly, the majority of the respondents are of the opinion that with their educational

background they deserve a better job (in terms of function and salary), while they also

indicated that their job is popular among the youth. Below, explanations are given for this

discrepancy.

Employees expressed their concern that jobs that are better-paid and higher in function

are absent, because the job market offers few employment opportunities, especially to the

graduated population. There is no real industrial base or a sector that can employ a mass of

people. A manager at the human resources department of a foreign BPO company indicated

that due to limited employment opportunities, only one graduate out of approximately six

graduates finds a job that matches his or her degree. He claimed that students who have just

finished University are happy to work in a call centre, because of the difficulty of finding a

job in a higher function.

Furthermore, while their current job might not match their degree or ambitions, it is

seen as a way into a company from which they can eventually switch to another job. The

survey reveals that there is also job mobility in most of the BPO companies, which some

indicated as a reason why they started to become an agent, so they can get experience in the

sector, upgrade their skills and work their way up to a higher function within the company or

industry. The majority of the employees find it relatively easy to move to a higher function or

better-paid function within the BPO-sector. Managers and CEO’s of the companies

interviewed, confirmed that there is job mobility within their company, which is mostly found

in firms with a large number of employees where they can move from agents (call centre

agents, or agents to process data) to higher positions such as team leaders, supervisors and

other functions at a managerial level. A manager of a domestic BPO company explained:

My self I am a classic example. I came in as an agent, I became a backup supervisor,

then a quality assurance assistance executive, continued as a training and development

manager and now I’m the contact centre manager” (04-03-2012).

Finally, others who indicated that they do not want to continue working in the BPO-sector,

would nevertheless like to work in the ICT-related services sector. The skills and experience

that they get from working in a BPO company are valuable and needed to enhance the

likelihood of finding another job in the ICT services sector.

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A government official stated the following: “In the BPO business you can qualify yourself to

increase your chances of getting a job in the IT market. The Universities don’t prepare you

well enough to start working in the IT right away, almost all the time you need a certain

training and experience, which you will get in most BPO companies”. (03-19-2012).

The IT/BPO industry has thus opened up an alternative avenue for the creation of

employment that produces jobs that are more in line with the wishes of Ghana’s youth. The

opportunity to gain skills in ICT and other competencies through their employment in the

IT/BPO industry is a clear example of the argument made by Fernandez-Stark et al (2010)

that the offshoring industry requires human resources, but also provides stimulus for the

further development of human capabilities. According to Britz, Lor, Coetzee and Bester

(2006), this in turn is a fundamental condition that a society needs to meet in order to build a

knowledge economy. Thus, in the case of Ghana, the offshore and outsource industry is not

only a vehicle that integrates people in the formal economy, but also stimulates the

development of human resources capabilities in ICTs.

8.5 IT/BPO provides ‘modern’ employment opportunities

There is a consensus among the employees that working in the BPO-sector carries a

modern image. Not only did the majority (65%) indicate to rather work in the service sector

than in the agricultural or industrial sector, but the vast majority (87%) also feels that working

in the BPO-sector gives them a higher status. This popularity is not related to the salary

employees earn. The average wage per employee per year is 6900 USD (MASDAR, 2011). In

fact, several employees argued that such a salary is not high and that more money can be

earned in other industries. The BPO companies nevertheless receive a high number of

applications (an average of 20 applications per week). Most students graduating from

University are eager to work in the more advanced and formal sectors, such as in the banking

and telecommunication sector, because it gives them a feeling of being part of a corporate

society.

An employee at a BPO company stated the following: “Working in the services sector means

that you have an office job. You get to dress up nicely in a suit and get to go to an office. So

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even though the type of work might not be matching people’s degree, it is still considered a

nice job or at least more attractive than working on a farm in an isolated area” (04-27-2012).

Within the financial industry, there is particular interest in working in formal

organizations based on ICT, like telecom companies, because it is believed that in these

companies a high salary can be earned. Reference was often made to other countries where

ICT has registered great successes. The BPO industry is seen as an easy way to enter this ICT

industry, from where they can acquire the skills and experience needed to upgrade to a higher

function and better-paid job within the industry.

Furthermore, the use of modern technologies such as ICTs is what makes a BPO job

also popular among the youth. The use of computers, software programs, Internet, telephones

etc. has become part of their daily life. By way of illustration, all of the respondents from the

BPO companies are active users of social media, such as Facebook, Linked-in, and all stated

to use these channels of communication on a daily basis. Employees also referred to the

continuous process of acquiring skills in ICTs and putting their knowledge into practice. As a

result, most of the employees feel that with their job they are part of an information-based

knowledge economy. Especially the employees of BPO companies that are engaged in higher

skilled activities, such as the development of software applications, emphasized the set of IT

skills that they have acquired within the company and stress the process of adding value to

services that takes place.

The following statement made by a manager of a domestic BPO company illustrates this:

“We don’t just deliver products, there is a process of knowledge creation in the delivering of

each service, thereby adding value to these services and to the lives of our employees” (04-

03-2012).

Employees occupying lower skilled activities (call centre agents), expressed similar

statements by stating that they wish to continue working in the BPO or IT related industry,

because of the learning potential it offers, i.e. the opportunity to acquire experience in the

telecommunication industry and to improve their communication skills. Both employees and

government officials stated that the growing service industry encourages people to finish

school and get trained in knowledge intensive areas, such as IT, to find employment and

become part of this so-called “knowledge economy”.

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The majority of the respondents (65 %) argued that the BPO-sector in Ghana enhances the

image of the nation as a competitive business climate in ICT, and thirdly, 62 % of the

employees are of the opinion that the presence of the BPO industry in Ghana modernizes the

nation’s economy. When asked whether the respondents consider Ghana as a player in the

global industry for IT-enabled services, the vast majority said that indeed they do see

themselves as a player in the global landscape rather than as outsiders. The mere fact that a

part of the employees are interacting with customers in the United States, has according to

them, given them a feeling of being connected to the rest of the world. Arguments were also

made that the development of the ICT sector in general is an indicator that the country is

becoming competitive in new areas and integrated in a global economy, not based on its

traditional exports, but a services industry. The expansion of a services industry, based on

ICTs, has according to the majority of the employees, the effect of enhancing the country’s

image in the world economy.

8.6 Conclusion

While efforts are made to address human resource constraints, there remains a gap between

secondary schooling and the required skill level of high value added services in the offshore

industry, hence explaining why Ghana is still dominated by low-segmented activities. The

Government of Ghana recognizes this need and has implemented a number of strategies to

bridge this gap and build the human resources needed to meet the demands of a higher value

added services sector, thereby achieving a knowledge based economy. Despite measures such

as educational reform that integrates ICT in secondary schooling, and the creation of training

centres in ICT, the human resources constraint have not yet been solved. This is problematic

as it hampers the development of a high value added services industry, including the IT/BPO

industry. The contribution of the industry to the creation of employment is modest, however,

there is more to it than just the actual numbers of jobs created. Employment in the IT/BPO

industry offeres employment opportunities to a graduated youth, including women. The type

of jobs (“office jobs”) created has proven to be popular among the Ghanaian youth. There is a

desire to work in the services sector, particularly in the ICT industry, not only because the

youthful population has become increasingly reluctant to work in the agricultural or industrial

sector, but also because of the careers prospects and learning potential involved in the ICT

industry. The level of knowledge in Information Communication and Technology skills that is

obtained in a BPO company, used to add value to services, particularly in IT firms, explained

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why the employees feel to be part of information and knowledge based economy. The

popularity of BPO jobs also stems from the fact that working in the IT/BPO industry is

associated with working in the more advanced and formal sectors, which gives them a feeling

of being part of a corporate society and having a modern and high-status job. Furthermore,

working in a BPO company is seen as an entry point into the ICT industry, where they can

acquire the skills and experience needed to move to a better paid job in a higher function

within the ICT industry.