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ERI-2008-2-B-0306
E v e r e s t R e s e a r c h I n s t i t u t e w ww. e v e r e s t r e s e a r c h i n s t i t u t e . c om 1
GLOBAL LOCATION INSIGHTS
November 20082008
The Offshoring Industry in Morocco
In recent years, Morocco has emerged as a destination of interest for multiple buyers andsuppliers. Morocco’s ICT market has grown rapidly from US$400 million in 2001 to US$700million in 2007. The industry employs more than 41,000 personnel, and is starting to emergeas a competitive alternative for service delivery to Europe and the Middle East.
View of the Moroccan offshoring industry
Offshoring is an emerging segment in Morocco, with the country attempting to become aleading offshore center for the French and Spanish markets. Call center offshoring, inparticular, has grown rapidly in recent years, with more than 185 call centers supporting~17,000 jobs. More than 95 percent of these call centers are located along the Rabat-Casablanca axis. Other cities such as Marrakech, Fes, and Tangier are also fast emerging ascall center destinations.
Several major international customer relations organizations have established centers inMorocco including large global players such as Client Logic, Sitel, and Teletech. Many othershave set up centers in partnership with local operators such as Transcom with CBI and, ArvatoServices with Phone Assistance.
Other global players that have set up their operations in major offshoring zones include AtosOrigin, TCS, Capgemini, and Accenture. In addition, French majors such as GFI Informatiqueand BNP Paribas have set up subsidiaries specializing in the development and maintenance ofcomputer applications, mainframe, and ERP systems.
Factors supporting growth
Morocco’s growth story has been driven by both intrinsic characteristics as well as significantsupport from the government to provide the supporting environment to attract investors. Thekey factors that have supported Morocco’s growth are:
� PPrrooxxiimmiittyy ttoo EEuurrooppee aanndd FFrreenncchh llaanngguuaaggee sskkiillllss. The geographical proximity and strongcultural ties to Europe make Morocco a preferred destination for the Francophone (France,Belgium and Switzerland) and Spanish markets. French, which remains Morocco’s unofficialsecond language, is taught universally and serves as the primary language of commerceand economics. In addition, Morocco has an annual pool of ~62,000 fresh graduates,almost all of whom are conversant in French.
� LLoowweerr ccoossttss tthhaann ddeessttiinnaattiioonnss iinn EEaasstteerrnn EEuurrooppee.. Morocco provides a less expensive optionthan other locations in Eastern Europe, which makes it attractive as an alternative for theselocations. Everest Research Institute’s analysis indicates that costs in Morocco are ~25 percent lower than Eastern European locations. In addition, increasing cost pressuresin Eastern Europe are driving leading players with service delivery centers in Eastern Europeto look for alternative locations that provide lower cost and language skills.
� GGoovveerrnnmmeenntt pprrooggrraammss ttoo iinncceennttiivviizzee iinnvveessttoorrss.. Government has established incentiveschemes to attract investors such as zero tax rates for the first five years, reduced custom taxrate and VAT exemption for exports, and a training subsidy of up to US$7,000 per
ERI-2008-2-B-0306
E v e r e s t R e s e a r c h I n s t i t u t e w w w. e v e r e s t r e s e a r c h i n s t i t u t e . c om 2
GLOBAL LOCATION INSIGHTS
November 20082008
Moroccan hire. Further, the government has committed to a public-private agreement andstrategy for expanding the country’s ICT sector.
Implications for players and potential evolution scenarios
Outsourcing adoption has been growing rapidly in Continental Europe (especially in theFrancophone countries), with the market growing at more than 30 percent annually. Inaddition, offshoring adoption has been increasing as well. Both of these factors create acompelling set of opportunities for Morocco to continue to target and thus grow its offshoringindustry.
However, as players make plans to enter this market, there are some limitations that they needto consider. Time to market will be higher compared to other locations, as training anddeveloping relevant skills will require both time and investment. In addition, there are someconcerns around the business climate in Morocco, with bureaucracy and red-tape perceived assignificant concerns.
One of the key factors for Morocco’s success will be the government’s ability to ensure thatthese concerns are appropriately addressed and managed. In addition, the government willneed to continue the thrust on improving the investment climate to attract new investors andincentivize existing players to expand their operations.
Morocco provides a less
expensive option for call
center services than other
locations in Eastern Europe
E X H I B I T 1
ERI-2008-2-B-0306
E v e r e s t R e s e a r c h I n s t i t u t e w w w. e v e r e s t r e s e a r c h i n s t i t u t e . c om 3
GLOBAL LOCATION INSIGHTS
November 2008
Overview of Location Optimization (LO)
Everest Research Institute provides actionable insight and visionary research on a wide range ofoffshoring issues through its LO practice. Our LO research covers multiple regions and issuesrelating to offshoring locations, with a focus on helping companies assess the trade-offs ofchoosing between alternative locations. Our LO team combines deep subject matter expertisewith broad analytical skills and insight into the global sourcing market, all of which are basedon years of experience working in the offshoring industry.
LLOO ccaann hheellpp yyoouu::
� Evaluate, prioritize and select different locations for offshore delivery centers as well asthird-party outsourcing suppliers based upon the trade-offs between relative costs and risks
� Develop a location strategy to meet your specific objectives relative to labor poolavailability, languages, cost, and risks
KKeeyy hhiigghhlliigghhttss ooff tthhee LLOO pprraaccttiiccee iinncclluuddee::
� A team of eight analysts currently tracking 125 cities globally
� Deep experience advising Fortune 500 companies and outsourcing service providers onlocation decisions
FFoorr mmoorree iinnffoorrmmaattiioonn aabboouutt EEvveerreesstt RReesseeaarrcchh IInnssttiittuuttee,, pplleeaassee ccoonnttaacctt::Everest Research [email protected]
FFoorr mmoorree iinnffoorrmmaattiioonn aabboouutt tthhiiss ttooppiicc pplleeaassee ccoonnttaacctt tthhee aauutthhoorr((ss))::
Anand Ramesh, Research [email protected]
Geetha Tedakapalli, Senior Research [email protected]
Arshmeet Ahluwalia, Research Analyst [email protected]
2008
