INTRODUCTION TO THE VISION AND STATUS OF NEARSHORING IN MOROCCO

With European businesses bent on reducing their cost base, Morocco is becoming a

leading provider of nearshore services and a preferred destination for the francophone

and Spanish markets. It is betting on nearshore services to spur growth and job

creation. The kingdom has devised a strategy dubbed the “Moroccan offer”, which aims

at sharpening its competitive edge in this sector, providing world class infrastructure and

training as well as offering a set of unique incentives. The group CAISSE DE DEPOT ET

DE GESTION (CDG) has been entrusted with the mission to accompany this strategy

and develop infrastructure and specialist know-how for offshore services.

MOVING OFFSHORE : Offshoring services is a growing trend of relocating entire

business functions to either self-owned or third-party service providers, typically in low-

cost locations.

STRATEGY : A central plank of its “Emergence” programme, Morocco’s ‘Offshoring’

strategy aims at strengthening the kingdom’s attractiveness by establishing an

environment conducive to this activity, with a view to boosting investment and job

creation. The programme forecasts that Offshoring could create some 91 000 direct

jobs and contribute around Dh15bn ($1.7bn) to GDP by 2015.

With long term political stability and a business-friendly government, a good telecoms

and ICT environment, plenty of well trained multi lingual graduates, and both

geographical and cultural proximity to Europe, Morocco is well positioned to secure a

large share of the European nearshoring market. The kingdom has therefore devised an

aggressive action plan based on three pillars: state-of-the-art infrastructure and services,

skilled and widely available human resources and an attractive fiscal and incentive

scheme.

INFRASTRUCTURE : Morocco is creating dedicated zones in four main cities, with

infrastructure up to the best standards of quality and cost as well as tailor-made

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services. This “ready for output” office space will come with air-conditioning, eco-

friendly design pre-cabling and Internet connections, as well as world class telecoms

offers leveraging the competition between the local and international operators.

In December 2005, His Majesty King Mohammed VI launched the construction of the

Casablanca Nearshore Park, CASANEARSHORE, the 1st business area dedicated to

offshore services and outsourcing, which is developed and managed by the CDG group.

The offshoring parc is being built on a 53-hectare at the outskirts of Casablanca, and the

Mohammed-V airport. The first phase, which will make 50 000 sq m of office and

services available, was already operational starting from December 2007. Globally, more

than 300 000 sq m will be delivered over the next 4 years. The government hopes that

CASANEARSHORE will ultimately contribute some Dh5bn ($550m) of revenues and

create 26 000 direct jobs, and about as many indirect jobs.

The next step was the launch of Technopolis, also thru the CDG, which will target in

priority offshore ICT services and business processes, due to the presence in the capital

of a number of large and prestigious engineering schools. The objective here is to create

12 000-15 000 jobs in the engineering and R&D space. Technopolis is a platform

dedicated to the creation, incubation and promotion of innovant and high potential

projects. Next in line are Fès Shore and Marrakech Shore.

HUMAN RESOURCES : Morocco boasts a large pool of human resources at a

competitive cost. The kingdom is developing a training strategy to ensure a proportion

is well-suited to offshoring jobs. A complementary and specific training for up to 22 000

recruits will be undertaken by 2009, covering low-level administrative functions,

technicians, engineers and managers. Plans are already underway to boost this by

producing 10 000 by 2010, a key condition to maintain an abundant supply of labour,

and to prevent wage inflation.

Turning ideas into action, His Majesty the King inaugurated in early 2006 a training

centre for offshore services jobs and information technologies, based within the

Casablanca Nearshore Park. The project, to cost Dh47m ($5.2m), has a hosting capacity

of 3000 students.

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Morocco will also offer training assistance and subsidies for companies wishing to train

newly hired staff in the offshoring zones.

INCENTIVES : Acknowledging that the development of the sector will require

Morocco to benefit from transfers of competencies and know-how, the authorities have

put in place the required breaks to attracting foreign investment and the right

partnerships, and announced a specific scheme for companies established within

dedicated zones. This encompasses an effective overall 20% income tax rate, in addition

to the corporate tax relieves already included in the investment charter for FDI (0

Corporate tax during first 5 years and 50% break afterwards, VAT exemption for

exports, ~2.5% customs etc), and a subsidy for training purposes to the tune of ~

€5,800 per Moroccan recruit over the first 3 years of hire.

While these incentives were designed for CASANEARSHORE, it seems likely they will

be replicated to other dedicated zones as these come on stream.

BOOSTING ADDED VALUE : With less than 10% of the French-speaking

offshoring business having moved offshore as of 2004, there is little doubt that the

offshoring sector still has a lot of growth potential, and not only for call centres and

BPO. Indeed, Morocco could also develop knowledge process outsourcing (KPO)

activities, which generate far more added value.

Another example of value-added activity is the establishment of design agencies such as

Teuchos in the aeronautics sector, and Matra Engineering in the automotive sector.

OUTLOOK : Morocco has made great strides in developing an attractive

environment for offshore services, and engaged in a long-term strategy aimed at

ensuring the sound development of the sector. It now has to regulate the sector

effectively and to establish the country’s mounting reputation. It will keep looking for

options to further enhance the industry and tie up partnerships with key international

players and anchors names of the offshoring and nearshoring arena.

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Targeted ITO & BPO segments

o Financial services o Banking & insurance back-office o Hi-Tech R&D & engineering

o Medical transcriptions

Industry specific

processes

o Human resources administration

o Accounting and finance

o End-customer relationship management (In/Out)

o

Functional processes

o Colocation, hosting & infogérance

o Support & help desk o Applications development & maintenance

IT related processes

Parks in progress

Upcomming parks

Rabat

Casablanca

Fez

Marrakech

Parks Network

Casanearshore (~530 000 Sqm) Technopolis (~ 3 millions Sqm)

Fès Shore (~ 200 000 Sqm)

Marrakech Shore (~ 400 000

Sqm)

2007 2008

2009

2010

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o Project : A tertiary sector business park dedicated to software development,

infrastructure management, banking & insurance back office, customer relationship management companies …

o Geographic positionning : Casablanca

o Surface : ~ 530 000 Sqm

o Offices & services : more than 300 000 Sqm

Total investment : more than 3,4 MAD mrds – Starting date : 2007

Casablanca Nearshore Park

Total investment : 3,3 MAD milliards – Starting date : 2007

Technopolis o Project : A platform dedicated to the creation, incubation and promotion of innovant

and high potential projects.

o Geographic positionning : Sala Al Jadida

o Surface : ~ 1 million Sqm 3 millions forward

o Offices and services (1st phase) : ~ 300 000 Sqm

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Total investment : 1 MAD milliard – Starting date : 2009

Fès Shore o Project : Integrated park dedicated to IT services, data

processing and business process activities.

o Geographic positionning : Fez

o Surface : ~ 200 000 Sqm

o Offices & services : more than 130 000 Sqm

A non lucrative association created on March 2007, with a public utility foundation status by the Government (Industry department, CNRST), Universities (AUI , USMB (Fez), UMI (Meknès)) and institutions (Académie Hassan II des Sciences et

Techniques, CDG)

MAVRIT : Middle Atlas Valley Research and Innovation Triangle initiated by AUI INANOTECH project : (Institute of Nanomaterials and Nanotechnology)

Knowledge & Development project : that associate nanomaterials and micromechanics

Value and employment driver by integrating research and development towards market vision in several fields trough a Technology Development Centre

Creation of MAScIR

MAScIR : Moroccan Association for Scientific Innovation and Research

Status

Mission

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