India's outsourcing firm to venture into Africa

Intense competition in India's business process outsourcing (BPO) industry has forced technology firm Spanco Ltd to expand to Africa where it expects to earn nearly half of its profits within two years.

Pravin Kumar, chief executive officer of Spanco BPO Services, told Reuters on Tuesday his company sees Africa as a solid opportunity for the firm due to its proximity and almost similar time difference to the firm's major source markets -- Europe and the United States -- compared with India. "We see a turnover of about USD 100 million dollar purely from the BPO business by 2013 from Africa. This year we will do about USD 40 million," said Kumar. "In two years time at least 40% of our profits will come from here (Africa) purely in the BPO business." Spanco will launch operations in six countries including Kenya, Burkina Faso, Tanzania, Chad, Niger and Nigeria, riding on a contract the firm won from India's Bharti Airtel to manage the mobile provider's contact centres. The BPO industry is worth an estimated USD 30 billion in India but competition is intensifying. "The BPO industry is completely saturated in India ... the benefit of expanding in India is not as much as that of Africa," said Kumar. Spanco sees a substantial amount of its profits coming from Africa driven by the untapped potential in the continent's BPO industry. Kumar said by August this year 3,000 people will be working in its African operations. The number is expected to go up to 50,000 by 2013 and Spanco plans to make several acquisitions in the course of its expansion drive. Beside outsourcing, Spanco is also involved in power distribution and e-governance, and Kumar said Africa also offers a good opportunity for its two other subsidiaries. One of the major challenges the Indian firm is facing in its expansion quest is stiff regulatory requirements especially in Middle East, and the group is now thinking twice about the operations in Oman and Qatar, where it could close the units.