COUNTRY PROFILE: Fertile Territory for Outsourcing in Mauritius

Mauritius, an island nation in the Indian Ocean, is known to many for its luxury tourist resorts. However, country has also become a choice destination for organizations requiring a strategic location to deliver business process outsourcing (BPO), with distinctive strengths in finance and accounting, as well as IT application development and maintenance (ADM) support.

The reasons are compelling. Mauritius, with a multi-lingual and educated population of 1.2 million, is a politically stable nation in a time zone that allows for real time interactions with Europe and also ‘follow-the-sun’ processing in conjunction with the Americas and Asia Pacific regions.

The country, which geographically belongs to Africa, is now reaping the benefits of a strong commitment to education that began in the late 1970s. The result is a well-schooled workforce equally fluent in English and French. Many Mauritians also speak a third international language. Examples include Hindi, Mandarin, Urdu, as well as a range of European languages. This is a young workforce: according to Mauritius’ Board of Investment over 29 percent of the working population is under 30.

The stats tell the story

• A harmonized low tax regime of 15%, applicable to both individuals and corporations. Dividends are tax-free.
• Ranked 19th in the world and first in Africa for ease of doing business (World Bank Doing Business Survey, 2013).
• Three year ICT sector growth averaging 9.2 percent per annum (Capfor Group).
• Eighth in the world, and first in Africa, in terms of economic freedom (Fraser Institute Economic Freedom of the World Survey, 2012).
• According to the 2012 – 2013 Global Competitiveness report, Mauritius is the second highest ranked country in Africa after South Africa. It also has the highest adult literacy rate in Africa.

People First

Mauritius’ disciplined labor pool is one reason why businesses, both local and foreign, are making long term commitments. Large establishment ICT employment is now over 13,000, and demand isn’t slowing: a 2012 ICT remuneration survey conducted by Capfor Group found that 81 percent of respondent organizations in Mauritius were experiencing labor shortages, and that last year (2013) 80 percent of respondents intended to recruit between 1 to 50 employees, for a total number of 790.

The employment demand in ICT reflects Mauritius’ heavy emphasis on BPO. Capfor’s ICT survey found that 52 percent of employees fit in this category, followed by almost 35 percent in computing technology, with the remainder divided among positions in administration, communications, sales and marketing, finance, and human resources. This is a solid workforce from an educational perspective: the 2012 survey found that more than 35 percent of workers in the sector are degree holders (i.e. holder of a Bachelor’s Degree, Master’s Degree, ACCA or equivalent or a Doctorate).

This reflects the country’s long-term and ongoing commitment to education – in the 2010 survey, for example, the proportion of degree holders was 30 percent, five percent lower than in 2012. Today, almost three quarters of the degree holders are holding down technology jobs in ICT, whereas the BPO workforce has a degree level of approximately ten percent. Top positions mentioned by those organizations intending to hire were in software development at junior, senior, team lead and managerial levels.

ICT, BPO & Economics of Growth

Economic diversification is a foundation Mauritius’ economic strategy, with the country looking beyond tourism and sugar processing to build capabilities in important areas such as manufacturing, which accounts for over 18 percent of the nation’s GDP. This is more than textiles, and includes high-tech activities such as precision engineering in the field of medical devices, original equipment manufacturing and instrumentation, and pharmaceuticals.

Relative to diversification, Mauritius is well aware of the importance of ICT-BPO to its economic health. The sector is one of the fastest growing in the country, contributing to seven percent of GDP. It is represented by large companies like Accenture, which established a delivery center in 2001 with a single location in the capital and largest city, Port Louis. Other big players include Orange Business Services, Huawei, CSS Corporation, Ceridian and Infosys, with the trend now being toward higher value-added services including research and development, software application development (including multi-media and animation), high-tier technical support, financial outsourcing, and business continuity services.

“Accenture now operates in two locations in the Ebène Cybercity,” says John Malepa, managing director, Accenture Technology Delivery Center in Mauritius. “We deliver both Accenture Operations and Accenture Technology services to outsourcing clients across Europe.”

Over the past decade, Accenture’s growing presence has resulted in it being one of the biggest ICT and outsourcing employers in Mauritius, with several hundreds of professionals across Accenture Operations and Accenture Technology. The Accenture team can deliver in English, French, German, Italian and Spanish, and can do so as part the company’s Global Delivery Network, which includes mature centers in India, the Philippines, China, Eastern and Central Europe, Africa and the Americas.

“The two centers in Mauritius are truly delivering services at the intersection of business and technology,” says Malepa. “Our clients have direct access to our top talent, deep industry knowledge, industrialized breadth of capabilities, certifications and more.”

Business is additionally aided by exemptions from customs duty on equipment, an allowance for complete foreign ownership, no capital gains tax, and free repatriation of profits, dividends and capital. There are also policies in place to refund 60 percent to 75 percent on training costs, and to reduce electricity rates by 50 percent.

Stability Counts

One of the great advantages offered by Mauritius is its political and economic stability. The country is a parliamentary republic, having attained independence from the United Kingdom in 1968, and becoming a republic in 1992. According to the Economist Intelligence Unit, Mauritius is the only African country that can be considered a full democracy, ranking 24th globally.

“Mauritius has a highly stable economic and political environment, conducive for business,” says Malepa. “Foreign investment incentives, infrastructure improvement and telecom deregulation are clear signs of the local government’s commitment to ICT.”

That stability and economic openness has resulted in total GDP of over US$20 billion, which is about US15,500 per person. The government promotes the fact that any foreign investor can set up a business and be operational in just three working days, with occupation permits delivered in five working days. There is a harmonized low tax regime of 15 percent, which is applicable to both individuals and corporations. As well, there is no exchange control, and export-oriented activities benefit from both duty-free input and duty-exempted equipment.

“It’s is an attractive location from which to provide outsourcing because Mauritius is cost competitive, has qualified workforce, and a sound infrastructure,” says Malepa from Accenture. “Given Accenture’s global size and scale, it allows us to tailor our engagement model in a manner that best fits our clients’ needs and preferences.”

Accenture – which has offices and operations in more than 200 cities in 56 countries, including more than 50 deliver centers – is a major presence in Mauritius, but by no means the only one. With regard to ICT-BPO there are about 500 companies active in the country, employing close to 20,000 people.

All of these are able to leverage the country’s state-of-the-art terrestrial infrastructure – which includes reliable support services in terms of public transport, airport and port logistics facilities – as well as undersea fiber optic cables. The undersea network connects to the SAFE-SAT-3-WASC and the Lower Indian Ocean Network (LION) fiber optic cables, which then enable high bandwidth connectivity with Europe, South-East Asia, and Africa. Having the two undersea cable systems (LION was launched in 2012) ensures that Mauritius has additional redundancy, route diversity, and the capacity to drive international connectivity requirements.

“Mauritius allows Accenture to give our clients a breadth of options in terms of time zone, risk diversification, costs, language and culture,” says Malepa. “Then, depending on their business needs and preferences, our clients can leverage our global size and scale for any combination of local, regional or global resources.”

All of these factors position Mauritius well to compete with other offshoring services locations, and to increase its slice of the world BPO market. Research firm Gartner expects that the global BPO market will reach US$250 billion by 2015, forecasting the five-year compound annual growth rate through 2017 to be 5.9 percent. Given that Gartner has also identified Mauritius as one of the top thirty locations in the world for offshore IT services, it is expected that the country’s ICT sectorwill in time surpass tourism’s contribution of 8.7 percent of GDP. For Mauritius, that meansthe sun will continue to shine on higher value-add,industry-specific platforms – such as health administration and financial services – and support growth for years to come.

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