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Mauritius as major outsourcing destination: interview

AvantiKumar | Aug. 26, 2013
The Mauritius government recently held an invitation-only conference to attract more international companies to the volcanic island nation in the Indian Ocean, says Malaysia-based IAOP Global Ambassador Bobby Varanasi.

 

IAOP Global Ambassador Bobby Varanasi in Mauritius modified 

Photo - Bobby Varanasi, Global Ambassador, IAOP, in Mauritius


What challenges does Mauritius face and how does this compare with other outsourcing destinations in this region?

There are a few limitations as below:

  • It is a small island nation with a little over 1.3 million people as its population. This limits pursuit and sustenance of volume-centric low-end services like call centres, or entry-level IT and BP services.
  • Distance to the established (and nearest) growth markets is large. Traditionally the country has leveraged a lot of support from India, and its robust financial services industry has been a big contributor to the gross domestic product [GDP] owing to the various double-taxation avoidance agreements (DATTs) Mauritius has with other nations, resulting in the nation being a host of more than 900,000 institutional investment funds who route their investments via Mauritius for its low tax rates coupled with the DATTs.


This market is now not as attractive since many nations are reconsidering revoking DATTs with Mauritius in lieu of their own economic transitions, notably India. Hence the nation has a significant need to create sectors that are resilient, people-centric and sustainable over the longer term.

In comparison to other nations, the nation fares extremely well in various assessment indices (AT Kearney, Gartner, World Bank) but that's not the point really. Its environmental and business readiness is unparalleled both from a regulatory and industry standpoint across the entire Sub-Saharan African region.

This in turn puts Mauritius square in the middle to take the leadership role and transform itself as a Regional Hub for Africa. For a fast-growing marketplace that is Africa (West, East, South) the opportunities are limitless, supported by well over 45 percent of the population classified as 'young adults.'

As a regional hub, despite larger markets like South Africa, Kenya, Nigeria and Senegal aspiring to be regional hubs, Mauritius emerges as a clear leader for now. Consequently Mauritius is fast becoming a regional HQ for most companies looking to expand and gain a foothold in larger African markets. Such models are not slave to volume-centric jobs, but incumbent on business readiness, structural integrity, strong regulations, and transparent governance, all of which Mauritius displays extremely well.


What clear advantages do you feel Mauritius has to secure a place as a 'substantial' outsourcing services provider?

The nation will always remain on the fringe as a provider of outsourcing services, owing to its structural limitations and nascent industry sectors.

Its opportunity is not in direct competition with other larger nations - mature or otherwise. Instead the opportunity is in differentiation through regional hubbing where provisioning of a conducive ecosystem is not incumbent on a number of people, but the structural strengths accorded by a positive combination of regulations, readiness, infrastructure, governance and market access. All of these are available in Mauritius thereby making it a defacto leader.

In terms of metrics, how does it compare in 'potential' to Malaysia, India, China, Philippines etc? Should these other outsourcing destinations be concerned: what lies ahead in the next 10 years?

There aren't any direct comparisons to make given the distinctive nature of these markets. Using just one benchmark - national positioning of the market as a net supplier, or net consumer of outsourcing services - I would position these countries (at the current moment thus)

  • Mauritius - net supplier
  • Malaysia - net buyer and unproven regional provider (cost-centric)
  • India - coexistence of small buyer (domestic) and large supplier (global) markets
  • China - coexistence of small buyer (domestic) and large supplier (global) markets
  • Philippines -net supplier for global markets

 

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