The European, Middle Eastern and African Outsourcing Industries

European outsourcing industry, Middle Eastern outsourcing industry, African outsourcing industry

With Brexit, the French election and Africa’s continued explosion onto the outsourcing scene, the European, Middle Eastern and African (MENA) outsourcing industries should be on your radar screen to watch.

European outsourcing industry, Middle Eastern outsourcing industry, African outsourcing industryBrexit and the European Outsourcing Industry

The prospect of the United Kingdom exiting the European Union initially generated indecision with senior management in businesses across the continent, causing a bit of a slowdown in the European outsourcing industry.  However, time has passed, and in actuality, due to Brexit, UK businesses will be looking to save money, thus likely leading to more outsourcing deals, especially with a shift to cloud and automation.

The UK will have a big decision to make: Whether or not to participate in the  Transatlantic Trade and Investment Partnership, which will aim to promote trade and multilateral economic growth,  covering equal treatment of overseas parties.

As far as Africa is concerned, Brexit may strengthen Africa’s trade with the UK and the rest of Europe, allowing for a more balanced scale, assuring trade deals that favor all sides. Some have feared that Brexit may have an adverse impact on European economic growth since Europe accounts for one-third of African trade. However, with the prospects of new markets in the UK, all three countries could stand to benefit from the UK leaving the union.

When Brexit actually happens, which could be upwards of two years, trade with the EU and other areas of the globe, will depend on the deals they create.

The French Election

French businesses – big and small – have high hopes the Macron administration will ignite an economic revitalization for the country. During his campaign, Macron promised to make Europe’s financial crisis a priority, saying he would work quickly to revive economic growth and lower France’s high unemployment rate. Macron plans to work toward finding ways to invest more than 15 million euros, putting laid-off workers back on the job.

Vowing to cut employee taxes allowing for an increase in take-home pay, lowering the taxes employers pay that fund France’s social welfare system, reducing the administrative burden on small businesses, and allowing company-level agreements on issues that are currently decided by industrywide labor negotiations, and more.

European outsourcing industry, Middle Eastern outsourcing industry, African outsourcing industry

It is too soon to know if the French election will have a major impact on the country’s business relations with the Middle East. With countless investments in France, the Middle East has good reason to have a vested interest in the country’s politics. Close to 400 companies from the Middle East have operations in France, where they employ more than 25,000 people. In 2016, 70 percent of these investments came from Lebanon, Qatar and United Arab Emirates (UAE).

While major changes are not expected regarding investment ties between France and the Middle East, it promises to be an exciting ride watching the effect the Macron administration will have not just on the French economy, but with the country’s trade relations throughout the globe.

African Outsourcing Industry

A transformed Africa is taking shape. World markets are looking for opportunities in the continent. Whether tech sectors, mining, services, or industrial industries, a great deal of work is happening in Africa, little by little, to increase its added-value supply chain. The outlook is optimistic, especially since Morocco rejoined the African Union. According to the International Monetary Fund, economic growth in sub-Saharan Africa is expected to recover to 2.6 percent in 2017, up from 1.4 percent last year.

One of Africa’s best trade allies is India. Trade between the two has risen five-fold since 2005 (from $11.9 billion in 2005- 2006 to $56.7 billion in a decade later). Expectations have it at $100 billion by 2018. At the same time, India is the fifth largest country investing in Africa. (For a look at the Hot Spot of South Africa, see Issue 26).

The Bottom Line

Looking to the future, outsourcing is expected to develop in new areas of the Middle East, Europe and Africa, creating a solid future for many industries. Businesses will continue to push outsourcing’s boundaries, expanding into new areas and creating new market opportunities for all of these regions.

Kate Tulloch-Hammond

by Kate Tulloch-Hammond, IAOP Director, Media & Communications