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The offshoring and outsourcing industry in Ghana: a
vehicle towards a modernizing Ghana?
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Master thesis International Development Studies
by Charlotte Isabelle Stephanie Keijser 5948371
Supervisor: dr. N.P.C. Beerepoot
Second supervisor: dr. ir. B. Lambregts
July 12th 2012
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Acknowledgements With due pride, I hereby present my thesis on the economic and symbolic value of the IT/BPO industry in Ghana. Before doing so, I would like to thank a few people who have contributed tremendously during the research process. First, I would like to thank my supervisor dr. Beerepoot for introducing me with the phenomenon offshoring of services. Without his lectures and his expertise on the subject I would not have gotten the opportunity to conduct research on the offshoring of services. His critical engagements with earlier drafts of this paper has encouraged and inspired me to critically rethink ideas and assumptions and to sharpen key results. I would like to express gratitude to my supervisor Professor dr. Asiedu from the University of Ghana in Legon (Accra). He assisted me during the fieldwork by sharing his contacts and by always being available to discuss certain findings from the field. His teacher assistants Yaw and Robbert have been of tremendous help as well. In the first weeks they helped me to get to know the research area and whenever I was unable to find a certain location they would accompany me on my search. Furthermore, Their critical engagement in the design of the survey ensured that certain questions would be appropriate and adapted to local circumstances. Furthermore, I would also like to thank my fellow students Josephine Maasland and Shahrzad Nourozi from the University of Amsterdam, with whom I lived together for three months at the campus of the University of Ghana. I am grateful for the opportunity I had to discuss certain results from the field, which helped me to shape my thoughts and prepare for the next interviews. Most importantly, without their company I would not have had such a wonderful time in Ghana. I would like to give special thanks to the students from the University of Ghana in Legon. They have welcomed me from day one, acted as true friends and made my stay at the campus unforgettable. Because of the numerous hours I spent with some of these students I learned more about the Ghanaian culture and lifestyles. This helped me to understand the research site better and to interact with the respondents according to the Ghanaian customs. Last, I am deeply indebted to the people who participated in this research, including Government officials and employees of the BPO firms I visited. I am thankful for the time they made available, but also for their willingness to help me get in contact with other respondents. This help was crucial since it was very difficult to find certain companies or key informants. This showed me the kindness and friendliness nature of the people in Ghana and made every interview a pleasurable experience. Without their participation this research would not!#$%&!'&&(!)*++,'-&.!!
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List of figures …………………………………………………………………………… 5
List of Tables……………………………………………………………………………. 5
List of Images…………………………………………………………………………… 6
1 Introduction.……………………………………………………….…………... 9
1.1 The case of Ghana.………..………………………………………….……………. 9
1.2 Aim and Relevance of this research.………………………………………………. 10
1.3 Outline Thesis.……………………………………………………….…………….. 11
2 New Wave: The offshoring of Services To Developing Countries….13
2.1 The Global Value Chain for offshoring services……………………........................ 13
2.2 Drivers of the global offshore industry……. ……………………………………… 16
2.3 Geography of the offshore value chain …………………….…………………….... 17
3 Economic and Branding effects of offshoring for
developing countries …………………….……………………........................ 18
3.1 Outsourcing and offshoring: a growth opportunity for developing countries…….. 18
3.2 The potential of domestic outsourcing……………………………………………. 20
3.3 BPO as a strategy to create the image of a knowledge economy ………………… 21
4 ICT-led development agenda and the role of offshoring…………….. 23
4.1 ICT agenda and the global race towards a knowledge economy………………... 23
4.2 Offshore industry as an entry strategy into global knowledge economy ……….. 25
4.3 Summary theoretical framework………………………………………………….. 27
5 Conceptual Research design, Methodologies and Methods…………. 29
5.1 Conceptual Framework …………………..…………..…………………………. 29
5.2 Research questions…………………..…………..…………………………. 31
5.3 Research design…………………..…………………………………………. 33
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5.4 Research epistemology …………………..…………………………………. 33
5.5 Methodology……………………………………………………………………… 34
5.6 Research Methods………………………………………………………………… 34
5.6.1 BPO companies……………………………………………….................. 34
5.6.2 Semi-structured and open interviews with managers and CEO’s..……… 36
5.6.3 Open interviews with Government officials and business associations… 37
5.6.4 Surveys employees (agent-level) ………………………………………. 39
5.6.5 Observations……...………………………………………………………. 40
5.6.6 Content analysis…………………………………………….…………… 40
5.6.7 Reflection on Methods and data collection……...………………………. 41
5.7 Data-analysis……………………………..……………………………………… 42
5.8 Codes of ethics……………………………………………………………………. 42
6 Research Context…………………………………….…..………………….. 44
6.1 General features…………………………………….…..………………………….. 44
6.2 Economic structures…………………………..…………………………………… 45
6.3 Socio-economic challenges for Ghana…………………………………………….. 46
6.4 The need for an ICT-led development agenda…………………………………….. 46
6.5 Ghana’s ICT landscape…….………………………………………………………. 47
6.6 Ghana’s unique case of ‘leapfrogging’ the industrial stage………………………. 49
7 Size and Characteristics of Ghana’s ITES/BPO Industry ………… 51
7.1 Key enablers of Ghana’s ITES/BPO industry…………………………………….. 51
#$%! Gateway to West African market…………………………………………………. 53
7.3 Characteristics of Ghana’s ITES/BPO industry………………………………….. 56
7.3.1 Type of BPO services in Ghana…………………………………………... 58
7.3.2 Geographical orientation of foreign BPO firms in Ghana……………….. 61
7.4 The potential prospects of Ghana’s domestic outsource market……………….. 62
7.5 Restrictions to Ghana’s ITES/BPO industry………………….…………………. 64
7.5.1 Technological readiness………………………………………………… 65
7.5.2 Lack of financial assistance…………………………………………….. 65
7.5.3 Fierce competition from foreign BPO companies……………………… 66
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7.5.4 Lack of local outsourcing…………………………………………………. 67
7.5.5 Lack of human resources……………………………………………….. 68
7.5.6 Global recession………………….………………………………… 68
7.6 Conclusion………………………………………………………………………… 69
8 The Creation of Modern Employment and Human Resource
Development . ………………………………………………………………… 71
8.1 Employment and expectations of the IT/BPO industry…………………………… 71
8.2 Contribution of IT/BPO to employment…………………………………………... 72
8.3 Characteristics of employees in IT/BPO industry………………………………… 72
8.3.1 Gender division…………………………………………………………… 74
8.3.2 Educational background of employees…………………………………. 75
8.4 Popularity of IT/BPO and stimulating human resources development…………. 76
8.5 IT/BPO provides ‘modern’ employment opportunities………………………….. 77
8.6 Conclusion………………………………………………………………………… 80
9 The Symbolic Value of Ghana’s IT/BPO Industry: Strategy into
knowledge economy and the branding effect………………………… 82
9.1 General perceptions of the ICT4AD policy and ITES/BPO industry……………. 82
9.2 ICT4AD objectives far from achieved, but a symbolic value achieved………….. 84
9.3 The perception and promotion of Ghana’s ICT landscape and its IT/BPO industry by
government officials …………………….………………………………………… 86
9.4 The media’s role in shaping Ghana’s image as a knowledge-based economy
through ICTs………………………………………………………………………. 89
9.5 Portrayed image leading to a branding effect…………………………………….. 95
9.6 Conclusion………………………………………………………………………… 96
10 Conclusion: Symbolic value greater than economic value……..….. 98
11 Literature……………………………………………………………. 103
12 Appendices…………………………………………………………………. 111
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12.1 Survey…………………………………………………………………………. 111
List of figures
Figure 1. The offshoring/outsourcing matrix.
Figure 2. The offshore service global value chain
Figure 3. Knowledge embededness of offshoring and outsourcing value chain
Figure 4. Conceptual scheme
Figure 5. The contribution of agriculture, industry and services to Ghana’s gross domestic
product (GDP)
Figure 6. The contribution of Information and Communication services and of the total
services to Ghana’s GDP in the period between 2006-2010
Figure 7. Salaries of a skilled BPO employee in percentages
Figure 8. Number of companies established per year
Figure 9. Offshore Services Value Chain
Figure 10. Educational backgrounds of employees in BPO companies
Figure 11. Knowledge embededness of offshoring and outsourcing value chain
List of Tables
Table 1. Operationalization scheme
Table 2. BPO Firms that are part of the target unit and are included in the research
Table 3. Government officials and business associations
Table 4. Overview of Ghana’s ley telecom parameters of 2008 compared to 2004
Table 5. Overview location and number of contracts hold by domestic and foreign BPO’s
Table 6. Number of jobs created in the IT/ITES-BPO-sector
Table 7. New jobs created in the ICT/ITES sector that is held by women
Table 8. The importance of IT/ICT for the economy promoted in the media
Table 9. IT/ICT training promoted in the media
Table 10. The success of Ghana’s economy promoted in the media
Table 11. Terminology used in articles related to ICT
List of Images
Image 1. Research area
Image 2. Locations of BPO headquarters of a US-based firm
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Image 3. Foreign BPO firm expanding operations in Africa
Image 4. Bill board ICT college NIIT (text reads: “what others will learn tomorrow”)
Image 5. Billboard promoting ICT
Image 6. ICT for domestic growth
Image 7. A passage from the article Commending E-learning
Image 8. Front-page news in the Daily Express
List of textbox
Textbox 1. Getting the basis right domestically before going offshore
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Abstract
In this study, I analyze the economic and symbolic dimensions of offshoring. The contribution of the
present study is twofold. Firstly, because little is known about Ghana’s Information
Technology/Business Process Outsourcing (IT/BPO) industry, this study provides an analysis of the
size and type of activities of the industry and the contribution to the creation of employment
(economic value of the industry). Secondly, whereas previous studies have been limited to these
economic benefits only, this study also provides a qualitative understanding of what kind of message
the presence of such an industry conveys to the general public (branding effect) (i.e the symbolic
value). The main question addressed in this study is what the economic value of the BPO industry is
and, how the way the industry the represents the image of a modernizing Ghana. For the purpose of
this study, research, predominantly qualitative in nature, has been conducted in Ghana’s capital city
Ghana. The main findings of this research include that the industry is rather modest in size and has
experienced stagnating growth over the last years. However, the presence of such an IT/BPO industry
has created alternative employment opportunities for a youth and could signal to the rest of the world
that Ghana is well on its way of transforming into a knowledge-based economy capable of hosting
ICT business activities. This study demonstrates that such a ‘branding effect’ has taken place in Ghana
and concludes that the industry is seen as an indication that Ghana is moving into a knowledge-based
economy (i.e. modernizing the economy).
Keywords: Global offshore value chain, IT/BPO, ICT4AD, generation of employment, knowledge-
economy and branding effect.
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Abbreviations BPO Business Process Outsourcing CRM Customer Relationship Management ECOWAS Economic Community Of West African States ERM Enterprise Resource Management FDI Foreign Direct Investment GASSCOM Ghana Association of Software and IT Services Companies GEPC Ghana Export Promotion Centre GFZB Ghana Free Zone Board GHC New Ghanaian Cedi GIPC Ghana Investment Promotion Council GMIC Ghana Multimedia Centre GMT Greenwich Mean Time GVC Global Value Chain HDI Human Development Index HRM Human Resource Management ICT Information Communication and Technology ICT4AD Information Communication Technology for Accelerated Development ITES IT-enabled services ITO Information Technology Outsourcing KPO Knowledge Process Outsourcing NASSCOM National Association of Software and Services Companies MNC Multinational Company SME Small to Medium Size Enterprise UNECA United Nations Economic Commission for Africa
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1 Introduction
Lower transportation costs and technological advances have made it possible and
advantageous for firms to locate different parts of their production process in different
geographical spaces (Kenney & Dossani, 2006:6). The business act of ‘offshoring’, which is a
term used to describe the transnational relocation of service related activities that were
previously performed in the home country, is not a new phenomenon. The relocation of
manufacturing processes from developed to developing countries has taken place since the
1970s, however, the exchange of services across borders is relatively new (Kenney &
Dossani, 2006:8). Developing countries with cheap pools of educated labour have become
attractive offshore destinations for services (Gereffi et al., 2010:13).
The advancements in information technologies in the last two decades have also led to
renewed interest in information and communication as an icon for modern development
(Tokunbo, 2004:144). Within the ICT Development Discourse it is assumed that Information
and Communication Technologies (ICTs) are crucial in fostering development and building a
knowledge-economy. The offshore industry is seen as a strategy to build a knowledge-based
economy, because it requires educated labourers with ICT competencies and stimulates the
development of a human intellectual capital base to produce (high) value added services
(economic value) (Youngdahl, Ramaswamy and Dash, 2008). Furthermore, an offshore
industry presents developing countries the opportunity to signal to the rest of the world that
they are capable of hosting ICT-related and knowledge-based activities (referred to as
symbolic value) (Sudan, Ayers, Dongier, Muente-Kunigami & Zhen-Wei Qiang, 2010). This
study, for which a fieldwork was undertaken of approximately three months in Ghana, will
highlight both the economic and symbolic value of the offshore industry in Ghana. The main
objectives in terms of data collection for each of these values were to generate information on
the type and size of offshoring/outsourcing activities in Ghana, its contribution to the
generation of employment and the image that the industry represents.
1.1 The case of Ghana
The country of study for this research, Ghana, is considered to fit perfectly in the International
development discourse on ICT as described above. In the early 2000s, the country was
characterized by an under-developing agricultural sector, a narrow industrial base and
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services industry dominated by traditional exports, which has for many years plagued the
country with a trade deficit, high unemployment rates and low incomes (Breisinger, Diao &
Thurlow, 2009). In 2003, the Government of Ghana published the ICT for Accelerated
Development (ICT4AD) policy statement, in which it laid out a development strategy aimed
at addressing a number of the developmental challenges. The deployment of ICTs is
considered necessary for modernizing all sectors and to develop a high-value added services
sector. The ICT-led development agenda is meant to help Ghana shift from an agricultural
based economy towards an information and knowledge-based service economy, which is seen
as leading to a growth path and a modern economy (Government, 2003a:21).
A key component of this ICT4AD vision is the development an IT-enabled Business Process
Outsourcing (ITES-BPO) industry in Ghana. The Government of Ghana foresees great
opportunities in ITES-BPO sector, which makes up the lower segments of the offshore value
chain. It is expected to create wealth, generate employment (particularly to a graduated
youth), and seen as an entry point into a knowledge-based economy (Government, 2003b:2).
1.2 Aim and relevance of this study
A large body of literature exists on the offshore industry in India and the Philippines,
two countries considered to be leading the global offshore industry (see e.g. Dossani &
Kenney 2009; Kirkegaard 2007; Davies 2004). However, little is known about the offshore
industry in Sub-Saharan Africa. This is unfortunate because the continent is emerging as a
host destination for offshoring (A.T. Kearney, 2009). Many African countries with increasing
numbers of graduates, low wages and improving telecommunication industries have become
attractive destinations for firms seeking to outsource parts of their business functions (Kumar
& Joseph 2005:95). South-Africa, Ghana, Senegal and Kenya have been developing a BPO
industry over the last two decades (A.T. Kearney, 2009). In particular, Ghana has received a
great deal of attention, since in 2009 it was perceived as the preferred BPO destination in Sub
Saharan Africa (Sourcingline, 2011). However, little is known about Ghana as a BPO
destination and about the size and impact of the industry on the Ghanaian economy, which
emphasizes the relevance of this research.
Furthermore, within the study domain of International Development Studies, the
African continent is often associated with economic backwardness. This research presented
me the opportunity to explore economic opportunities arising in Ghana. Ghana has been
witnessing rapid growth over the last years and is a unique case of an African country that has
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moved from an agriculture-based economy to a service-based economy, leapfrogging the
industrial stage of development and thereby breaking with the experiences observed in other
developing countries. Thus, while Ghana is faced with development challenges economic
opportunities are also arising.
Currently, the Government of Ghana is implementing the ICT4AD policy to
modernize Ghana’s economy (i.e. achieve a information and knowledge-based economy) and
has identified the BPO industry as a crucial vehicle to achieve this. This offered me the
opportunity to not only provide an overview of the BPO industry in Ghana, but also to study
its wider function within the ICT-led development agenda. Optimism on the BPO-sector is
not only driven by economic rationales, but other incentives for building such an industry
appear to exist, such as creating an image of Ghana as a ‘modern economy’ and a potential
player in the knowledge-based industries. In other words, there is not only an economic value
to be researched (size of the industry and contribution to the generation of employment,
human resource development etc.), but also a symbolic value (how the industry is promoted
and how it represents an image of a modernizing Ghana). In this study I introduced the term
“symbolic value” to refer to the way such an image is shaped through promotion activities
and how this could lead to a branding effect. Unfortunately, in literature on offshoring, little
or no attention is paid to this so-called symbolic value. This is unfortunate because it is of
great importance as it signals that broader development processes are taking place and
because such a symbolic value could trigger economic development process (e.g. attracting of
more BPO firms etc.).
This study is an attempt to bridge the gap in knowledge on offshoring/outsourcing in
Ghana and on the symbolic value of the industry.
In doing so, this study will address the following research question: What is the economic
value (size and contribution to employment generation) of the Information Technology and
Business Process Outsourcing (IT/BPO) sector in Ghana and how is the BPO-sector
presented as a symbol of a modernizing Ghana?
1.3 Outline thesis
In this thesis, the theoretical framework, conceptual scheme and operationalization derived
from theory, the methodology and methods, and the research context will be discussed. The
theoretical framework is divided in three chapters: First, the phenomenon of offshoring is
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introduced by drawing upon Gereffi’s (2005) Global Value Chain analysis, and the drivers of
the offshoring industry will be discussed. The second theoretical chapter discusses the
economic benefits of the industry for developing countries, and argues that there is a branding
effect (i.e. symbolic value) hidden. The final theoretical chapter argues how the offshore
industry fits within the International ICT Development Discourse, and argues how it allows
developing countries to enter into the knowledge economy. Then, the following three chapters
(seven, eight & nine) present the data retrieved during fieldwork. This data will be elaborated
upon and linked to the theoretical framework. The first data chapter will look at the enablers
of the BPO industry in Ghana and what the industry looks like in terms of size and type of
activities. Data chapter eight discusses the contribution of the industry to employment
creation, the perception of employees towards the BPO industry and argues that it is has
proven to be a stimulus for human resource development. Data chapter nine elaborates on the
hidden effect of the industry, i.e. the symbolic value. This chapter explores in what way the
promotional activities and the perception of the BPO industry represent a modernizing Ghana,
as pursued in the ICT4AD policy. The concluding chapter will answer the research questions.
In addition, the need for future studies on Ghana as a host nation for offshoring activities are
stressed.
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Theoretical framework
2 New Wave: The Offshoring of Services To Developing Countries
The phenomenon of offshoring is introduced in this theoretical framework by drawing upon
Gereffi’s work on the global value chain analysis. A solid body of literature exists on the
benefits that the act of offshoring has brought and can be expected to bring to advanced
economies, such as cost effectiveness and efficiency (see e.g. Farell, 2004; Farell, 2005;
Trefler, Rodrik & Antras, 2005). This chapter stresses the opportunity it presents for
developing countries, namely, the global value chain of offshoring has allowed them to
become platforms for the export of services. To illustrate this point, the main drivers of the
offshore industry are given, which illustrate that developing nations are potential host
countries for offshore services.
2.1 The Global Value Chain for offshoring services
The globalization of production and trade are important features of the contemporary
economy (Gereffi, Humphrey & Sturgeon, 2005:13). Through international trade world
markets are integrating rapidly while at the same time global production is disintegrating.
Advancements in information and telecommunication technologies (ICTs) have increased the
tradability of services, which means that services no longer have to be provided and
consumed at one site, rather, information can be more easily transmitted from one location to
another (remote) location (Kenney & Dossani, 2006:6). This physical separation of parts of a
production process, referred to by Gereffi (1995) with the term fragmentation, produces a
chain of activities divided among multiple firms in different geographical locations (Global
value Chains (GvC). The act of offshoring is not new, in fact, outsourcing of manufacturing
or production processes has been a common way of producing goods, as most companies are
not sufficiently vertically integrated to perform all tasks in the production process. What is
new is the outsourcing or offshoring of services. Gereffi’s work on Global Value Chain
Analysis is predominantly concerned with the analysis of production processes. However,
since 2010 Gereffi and Fernandez-Stark have made such an analysis on the global value chain
of services, and in particular on the offshore services value chain, which forms the basis of
this theoretical framework.
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The term offshoring is often interchangeably used with the term outsourcing.
Although offshoring and outsourcing are related processes, there is a distinct difference.
Services can be produced internally, sourced domestically or sourced offshore. The term
outsourcing is used to refer to a firm’s decision to not undertake all of their business function
internally but to ‘outsource’ (to assign) tasks to another firm, whereas offshoring differs from
outsourcing in that it involves a transfer of business activities that had been previously
performed in the home country to another country. In doing so, business functions can be
performed within the same firm (captive or subsidiary offshoring) or by an independent
service provider. In the latter case, when a firm assigns parts of their business tasks to another
company in another location, the term ‘offshore outsourcing’ is used (Massini and Miozzo,
2010:3). These different concepts and terms are illustrated in figure one.
Figure 1 The offshoring/outsourcing matrix.
Outsourcing
No Yes
Offshoring
No
Yes
Internal domestic provision Domestic outsourcing
Captive/foreign subsidiary offshoring
Offshore outsourcing
Source: Massini and Miozzo, 2010
The offshoring value chain of services has in a sense developed in similar ways as the
value chain for manufacturing. However, the global offshore industry has resulted in a new
type of international division of labour, as it is no longer only manufacturing or assembly
activities that are being relocated to low-cost locations, but also various forms of services
ranging from low skilled to knowledge-intensive services. This new wave of outsourcing of
services particularly concerns the outsourcing of IT services and business process services
(Palugod, 2011:13). Figure two shows that within the offshore service industry three main
segments can be identified. First, the segment Information Technology Outsourcing (ITO)
refers to a situation where information and technology (IT) services are undertaken by a third
party. This segment constitutes low, middle and high valued activities of the offshore value
chain. For instance, low-end services include the coding, testing and maintenance of software
and higher valued services range from Software development and system integration.
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Secondly, the Business Process Outsourcing (BPO) constitutes lower value-added services,
such as human resource management and customer relationship management. Typical
examples of the BPO segment include call centre operations, payroll processing and data
processing activities. Thirdly, the Knowledge Process Outsourcing (KPO) is a form of
outsourcing that entails high-end knowledge work, such as consulting practices and marketing
research, which makes up the highest segment of the global value chain. Each segment
requires different levels of human capital. For instance, low value-added services in the BPO
value chain require fewer years of formal education than KPO-related activities (Gereffi et al.,
2010:14).
The global offshore industry is in literature often referred to as the IT/ITES-BPO
industry, because global trends illustrate that the most frequent way for countries to enter the
global offshore services value chain is through establishing a BPO industry and from there
move into the delivering outsourcing solutions for IT functions (Gereffi et al., 2010:13). The
BPO industry is often referred to as the IT-enabling/BPO industry (ITES/BPO), to stress the
fact that information technology is the mayor-enabling factor for these BPO services.
Figure 2 The offshore service global value chain
Source: Gereffi and Fernandez-Stark, 2010.
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2.2 Services outsourcing and offshoring drivers
Below it will be discussed why companies feed into the fragmentation process of production
and consumption of services across industries and across borders. In other words, the main
drivers of the offshoring value chain will be discussed.
First, technology advances have been a central factor to offshoring. Developments in
ICTs have played an important role in facilitating cheaper and more efficient communication,
which has enabled the transportation of services between producers and consumers (Dossani
et al., 2007:774). In addition, it has made it possible for firms to standardize parts of their
services to increase the transferability of these services to remote areas. The revolution in
ICTs of the 1990’s has allowed developing economies to act as platforms for the export of
services, thereby participating in the global services industry (Fernandez-Stark, 2010:6).
In order for a country to attract outsourcing contracts it will need to invest in its
telecommunications infrastructure to improve its overall investment climate (Bunyaratavej et
al., 2010:77).
Secondly, the changing global economic landscape produces competitive pressures
leading to changes in the supply chains of global corporations. As a result, firms, particularly
those in the more advanced nations, have increasingly embraced global outsourcing and
offshoring, due to considerations of transaction cost and production cost efficiencies
(Ramachandran, 2004: 51). It allows them to focus on their core competencies and shift out
their low-value activities, thereby freeing up capital and human resources for higher-value
activities. In addition to efficiency rationales, the search for reducing production costs,
encourages companies to assign parts of their business functions to locations where skilled
labour is cheap (Dossani & Kenney, 2007:777). There is overall consensus in the growing
body of literature on offshoring that cost savings have been the key strategic driver for firms
to offshore parts of their business functions (see e.g. Dossani & Kenney (2007); Gianfranchi,
Rossotto & Burtin (2005)). The largest proportion of cost savings derives from wage
differentials between developing countries and developed countries (Dossani & Kenney,
2007:777).
Thirdly, while Cost arbitrage has initially been the key strategic driver for investors to
offshore services to low-wage countries, other research (see e.g. Bunyaratavej, Hahn, and
Massini, 2010; Gereffi and Fernandez-Stark, 2010) suggests that access to qualified personnel
plays an even bigger role in a firm’s offshoring decision. Fernandez-Stark, Bamber & Gereffi
(2010:17) found that a nation’s potential to host offshoring activities depends on the available
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human resources. The existence of a trained and qualified workforce becomes even more
important in the case of higher value-adding activities (Gereffi et al., 2010:17). Investments in
higher education in a number of developing countries, in combination with little employment
opportunities in these countries, have created a relative abundance of skilled labour available
at a low wage. This has fuelled the offshoring industry (Bunyaratavej et al., 2010: 75).
Finally, the flow of services is not only determined by cost arbitrage and human
resource capabilities in ICTs, but also by other factors such as language competencies and
cultural nearness (Bryson, 2007: 38). The next paragraph argues that all of these drivers have
given rise to a global offshoring industry that is geographically dispersed.
2.3 Geography of the offshore value chain
Gereffi (2005:9) argues that offshoring operations have given rise to global value chains,
which have created a new type of labour division. National labour markets are no longer tied
to a specific location, but rather to the demand for jobs. This cutting across borders has given
rise to integrated global labour markets. The development of global value chains in offshoring
is increasingly associated with the growing integration of developing countries. It is primarily
firms in the United States and Europe that outsources their non-core business functions to
service providers in developing countries (Gereffi et al., 2010:13).
While scholars such as Massini (2010) and Zallinger (2011) claim that India and the
Philippines will continue to be the prominent offshore destinations, they also recognize that
the offshoring industry will witness geographical diversification with new countries becoming
competitive. Companies seeking to outsource, are exploring opportunities in new emerging
outsourcing destinations to reduce concentration risk, take advantage of lower cost and of new
markets. As a result, outsourcing and offshoring activities are encouraged and developed in
new offshore locations such as Middle and Eastern Europe, and Sub-Saharan African
countries (Palugod, 2011:16).
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3 Economic and Branding effects of offshoring for developing countries
There has been widespread negative media coverage in developed countries about the
relocation of service sector jobs, both blue- and white-collar jobs to low-wage countries. This
has resulted in anxiety about jobs loss and negative impacts on national industries in advanced
countries (Crino, 2008:216). Such negative attention is also given to the effects of offshoring
in the case of developing nations. Offshoring has triggered a debate about the costs for
developing countries. Some scholars argue that phenomena of outsourcing and offshoring
have led only to a “race to the bottom,” as developing countries compete with one another to
offer transnational firms the lowest operating costs (see e.g. Kaplinsky, 2000; Yimprasert &
Hveem, 2005). There are also advocates who stress that the offshore industry holds economic
growth opportunities for developing countries (see e.g. Russel, 2010; Fernandez-Stark,
Bamber & Gereffi, 2010). A number of these economic opportunities will be discussed in the
next section. Furthermore, the thereafter-following sections will discuss the potential of the
domestic outsourcing market, and the non-economic benefits that have received little attention
in the literature on offshoring.
3.1 Outsourcing and offshoring: a growth opportunity for developing countries
Although the possible benefits that offshoring presents for developing economies are wide-
ranging, for the purpose of this study the following benefits are identified: diversifying of
traditional export base; direct and indirect employment generation; provision of knowledge-
intensive job; stimulus for human capital development, and fuelling the domestic services
market.
First, from the global value chain perspective, firms from the advanced countries are
linked with networks of suppliers and workers across the world (Gereffi, 2005:9). For
developing countries with capable workforces, the global value chain of services offers
employment and entrepreneurial opportunities to societies that often lack such opportunities
(Dossani and Kenny, 2004:773). In line herewith is the argument made by Gereffi (2005:17),
who argues that in many developing economies the offshore service industry is the fastest
growing industry in terms of job creation. A study on offshoring by McKinsey Global
Institute (2009) reveals that approximately 160 million jobs can be performed remotely. By
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2008, only 4.1 million jobs in offshore services were created, indicating that the vast majority
of its potential remains untapped.
Secondly, there is not only a significant potential of direct employment creation in the
industry, but it is also estimated that for every job created in the ITES/BPO industry four
indirect jobs are created in other sectors of the economy, such as employment in
housekeeping, transportation, telecom and real estate etc. (Hewitt Associates, 2006). By way
of illustration, Hanna (2010:189) argues that the IT-enabled services sector creates to 50-100
per cent more indirect jobs than comparable services jobs.
! Thirdly, according to Fernandez-Stark et al., (2010:14), a country’s involvement in the
offshore services industry is far from a race to the bottom, rather it presents low and middle-
income employment opportunities with prospect on career development for graduates, and
employment to groups of people that often experience high unemployment rates (youth and
women). Generally, the call centre industry requires employees with a tertiary education,
which implies that it has opened up a new avenue of employment for people with low socio-
economic backgrounds, and is thus, capable of employing a large mass of people (ECLAC,
2008). As Dayton & Johnson (2009) point out, the availability of job opportunities for an
educated workforce in developing countries is often limited, thereby obstructing development
processes to take place. In this sense, the offshore industry holds the potential of generating
employment, and most importantly, the type of employment, namely (highly) skilled jobs,
which is often missing or insufficiently available in developing countries (Dayton-Johnson,
2009:150).
Fourthly, beyond employment opportunities, benefits of offshoring include the
opportunity to improve a developing country’s trade balance. While developed countries
remain the main exporters of services and developing countries the main importers of these
services, trends indicate that developing countries are progressively becoming offshore
destinations, which has increased their market share of global exports in services (World
Trade Organization 2011:83). By increasing their market share in global exports of services,
developing countries with a heavily reliance on commodity exports, are provided with the
opportunity to lessen this dependency (Gianfranchi et al., 2006:140). Further, producing and
exporting services has the potential of boosting the domestic market for services, which
further reduces the dependency on advanced economies for the import of services, thereby
benefitting the balance of trade (Gianfranchi et al., 2006:141).
There is also a downside of the offshoring industry to host nations as they could
potentially damage their economies, for instance by keeping labour wages down and by
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dismantling the formation of labour unions. These negative effects are for the purpose of this
research not further discussed (for the downside of offshoring for emerging economies see
(see Gianfranchi et al., (2005:135); Kaplinsky, (2000); (2001)).
3.2 The potential of domestic outsourcing
It is remarkable how the body of literature on offshoring and outsourcing operations is
dominated by studies on the benefits of offshoring, while little attention is paid to the
importance of domestic outsourcing. Hanna (2010) has made an attempt to fill this gap by
stressing the importance and potential of the domestic outsourcing market in developing
economies (see also Sugata, Lei, Xinpeng, 2009). A focus on the domestic market for
outsourcing is needed to create a more healthy and sustainable IT sector and to increase the
overall competitiveness of the economy (Hanna, 2010: 194). Unfortunately, policymakers and
firms in emerging economies have been mainly focused on the offshoring industry and are
often found to be reluctant to seek for domestic outsourcing contracts or to stimulate a
domestic market for outsourcing, because greater margins can be earned from the global
offshoring market (Hanna, 2010: 196). India is a case in point, where the focus of IT firms
lies exclusively on the export of IT services and where the domestic market for outsourcing is
neglected, while prospects for a domestic IT market is claimed to be substantial and
possibilities for near-shoring1 for other Asian countries exist. Not only are there promising
segments in the domestic outsourcing market that remain untapped in developing countries,
the author also argues that neglecting these domestic markets could present future risks for
economies. In the case of India, government efforts and other marketing efforts and incentives
are geared towards boosting the export market for ICTs at the expense of promoting and
encouraging domestic developments, thereby hampering non-export oriented enterprises to
address the needs of local clients (Hanna, 2010:194). Moreover, focusing exclusively on
international markets could increase risks and dependency due to overreliance on the
successes of external markets. Finally, by focusing on export markets, ICT developments
could lag behind domestically and could become confined to urban areas (Hanna, 2010:195).
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 Near-shore refers to the practice of outsourcing services performed by firms in neighboring countries rather than by firms in their own country (Carmel, 2007).
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3.3 BPO as a strategy to create the image of a knowledge economy
In contrast to the economic opportunities of an IT/BPO industry, little is known about the
non-economic benefits of the offshoring services value chain. As Zallinger (2011:21) points
out, many developing economies are increasingly plagued with image problems, due to the
economical and political instability in many of these nations. These negative images and
stereotypes could adversely affect their reputation among potential (foreign) investors,
resulting in little or no investment activities (Zallinger, 2011:21). In other words, Zallinger
(2011:23) argues that among the majority of developing nations there is a need for branding
or image building that links their economies with the presence of an IT industry, such as an
offshoring market, to position their economy in a positive manner in the international
markets.
Drawing upon the case of India, Kumar and Joseph (2005), highlight how the
offshoring value chain of services creates a brand value for India in knowledge-based
industries. Despite India’s growing pool of skilled labourers and successful experiences in the
IT industry (and increased attention to India as an emerging economy “shining India”), India
has nevertheless suffered from an image in the world of being a poor and underdeveloped
economy that only has a comparative advantage in low technology and low-skill industries. In
this context, India’s increasing share in the ITES-BPO sector and its recent upgrade to
outsourcing knowledge-intensive services (KPO), has contributed to a changing public
perception of India as an economy that is a potential player in the knowledge-based industries
(Kumar & Joseph 2005:96).
As the case of the Indian offshore industry illustrates, the success of the IT and services
industry depends to a great extent on marketing and branding efforts. NASSCOM, the Indian
Software and Communication association in charge of promoting the ITES/BPO industry in
India, has a mandate to strengthen the brand that is associated with software and IT services
that are offered by Indian firms. This is done to enhance the overall image of the Indian IT
services industry. These branding efforts have contributed to an image of India being the
world’s leading destination for both low- and high-end business processes outsourcing and
offshore operations. In turn, it has assisted in attracting multinationals such as Hewlett-
Packard (HP), General Electric (GE) and other global brands to the nation (Sudan, Ayers,
Dongier, Muente-Kunigami & Zhen-Wei Qiang, 2010).
Vashistha & Vashistha (2006:9) also point to the branding effect by arguing that the exposure
of multinational companies in a particular country help to improve the brand of that country,
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as it is perceived to be capable of attracting and hosting these heavyweights. It aids in
building loyalty and trust among other service providers, thereby fuelling the growth of the
industry.
Masani (2008:11) also highlights the ‘branding’ effect that is accompanied with an
offshoring industry based on IT service. IT services and BPO industry are great tools for a
country to reposition its image in the global economy. Masani (2008) also refers to India as a
good example to illustrate this branding effect. The presence of an IT industry illustrates that
India is no longer fulfilling old stereotypes of being a country with low levels of skills and a
dominant manufacturing industry, but points out that it also has a knowledge-intensive sector,
which requires educated people. There is a psychological effect involved, namely the IT
industry has given the rest of the world the idea that every Indian has knowledge in the IT
field and is capable of fixing their computers. This psychological effect has in turn positive
outcomes on India’s business environment, as entrepreneurs are given more credibility, which
enables them to attract more Foreign Direct Investments (FDI) (Masani, 2008).
In short, the presence of an IT/BPO industry and the presence of global companies
have a branding effect. Therefore, the offshoring and outsourcing industry is not only of
economic importance to a developing country, but also holds a so-called symbolic value.
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4 ICT-led development agenda and the role of offshoring
This chapter discusses the dominant International ICT Development Discourse, which
assumes that an ICT-led development agenda is crucial in fostering economic development
and particularly in building a knowledge-economy. Studies are presented that show that the
offshoring industry presents developing countries an entry point into this global knowledge
economy. It is argued that the use of modern ICTs in the offshore industry produces value-
added services and requires high levels of human capital (i.e. an educated workforce), which
are fundamental pillars of a knowledge economy.
4.1 ICT agenda and the global race towards a knowledge economy
In the most advanced nations, economies are progressively driven by knowledge-based and
technology-driven services. Coetzee and Bester (2008) point out to this paradigm shift from
the ‘economics of things’ to the ‘economics of information’, leading to an information or
knowledge-based economy. They argue that although information has been used in economic
activities for centuries, the use of modern ICTs in economies have changed the way
information and knowledge is used and produced and have led to the creation of knowledge
economies. Although a variety of definitions of a knowledge economy exists (see e.g. Power
& Snellman, 2004; Smith, 2000,2002; David & Foray, 2002). According to Coetzee et al.
(2008) a society needs to have four pillars in place in order to meet the demands of a global
knowledge economy. These pillars are: 1) ICTs and connectivity; 2) access to usable and
relevant information; 3) infrastructure and deliverability and 4) human intellectual capability
(Coetzee et al., 2008). In an economy of information, human capital is considered the prime
input to processes of production and innovation. Increased competition and open markets, due
to processes of globalization and advanced capitalism, have made it imperative for societies to
invest in processes of innovation and the production of knowledge. For instance, through
investing in higher education and Research and Development. A sophisticated physical
infrastructure is needed to support and facilitate this creation of a knowledge economy.
It is increasingly emphasized that technological revolutions have given rise to the information
and knowledge age in which economies are increasingly moving away from an industrial
based economy towards an information and knowledge-based economy (see e.g. Heeks
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(2008); Power & Snellman (2004), Dongier & Sudan (2008)). The international ICT and
Development Discourse illustrate this notion of development. In the ICT Discourse,
information and knowledge, terms that are used interchangeably, are often seen in relation
with the availability and access to technology (Wilson, 2003:1). However, access to
technology in itself does not automatically guarantee that one has access to the information
provided as it depends on factors such as required education, skills and financial resources to
make use of the technology (Wilson, 2003:5). As Frempong (2010:20) indicates, ICT is
knowledge-intensive and the effective use of ICT services therefore requires a certain level of
literacy and numeracy. Educated people with ICT skilss is an important precondition for a
country that wishes to build a knowledge-based economy through the use of ICTs (Frempong,
2010:21). This is in line with Coetzee’s & Bester’s (2008) definition of a knowledge society
as a society that is connected to the global economy via modern ICTs, which in turn allows it
access to information.
Within the ICT Discourse the assumption is made that societies and economies that are
not partaking in the knowledge revolution, are left behind and lose out (Wilson, 2003:7). It is
assumed that partaking in the global race towards a knowledge society will automatically
tackle other development issues. The underlying notion is that a lack of development is
caused by an information deficit. Therefore, in order to take part in this global knowledge
economy, a society needs to have the ability to access, absorb and generate knowledge and to
use information and ICTs effectively (Wilson, 2003:9). Even though the developing world is
commonly associated with an image of facing an information deficit or digital divide, the ICT
discourse does however stress the advantage that developing economies have in terms of
‘leapfrogging’ stages of development that most developed countries have already completed
(Wilson, 2003:7) (see e.g. Thompson. 2004). In line with this assumption is the strong belief
that an information and communication infrastructure is crucial in fostering socio-economic
development particularly in Sub-Sahara Africa. In an earlier World Bank report on the role of
ICT in fostering economic development in Sub-Saharan Africa, the World Bank stated the
following: “If African countries cannot take advantage of the information revolution and surf
this great wave of technological change, they may be crushed by it. In that case, they are
likely to be even more marginalized and economically stagnant in the future than they are
today” (Loader, 1998:52).
Such a notion of development that highlights the urgency of ‘leapfrogging’ and
‘catching-up’ in the case of developing economies that lag behind in the global ICT economy,
has been widely criticized by many scholars (see e.g. Avgerou, 2003:12; Tokunbo, 2004:147,
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Schech (2002:14)) for being too simplistic and for assuming that every nation goes through a
similar development path. However, the notion that emerging economies need to harness
information through ICTs to stimulate development has been recurring in the current debates
about ICT and development (see e.g. Wilson, 2003; Thompson, 2004; Moodley, 2005).
4.2 Offshore industry as an entry strategy into global knowledge economy
Hanna (2010) argues that the IT-enabled BPO services have served as an entry point for a
number of countries into the knowledge economy. The author explains this by describing how
countries, such as Ireland and India have strategically chosen and engaged themselves in
certain niches of the Global ICT industry, where they signalled an advantage and from there
moved up the value chain towards higher value added activities and more profitable niches
(Hanna, 2010:190). For instance, India has entered the global ICT industry with low skill
programming jobs (such as call centre operations) towards offshore services that are valued
higher along the value chain and rely more heavily on specialized skills (Hanna, 2010:191).
In line with the argument made above on offshore operations as an entry point into the
knowledge economy and upgrading opportunities within the value chain of services, is the
work on the evolution of offshore industries by Youngdahl, Ramaswamy and Dash (2008).
They introduced a model that divides offshore operations in different stages, illustrating how
each tier of activities has their own required level of knowledge embededness. The model (see
figure 3) shows that the evolution in offshore service operations is accompanied with an
increase in the required level of knowledge. For instance, call centre operations; payroll
processing or other back office-related operations are considered the least knowledge-
intensive activities within the offshoring industry, because there are often of routinized nature
and because certain standards and strict rules are to be followed. General trends show that
within the offshoring industry these low-skilled back office and customer care services evolve
towards the provision of more knowledge intensive operations such as offering complex
business solutions and will eventually (stage 2 in model) move towards the final stage where
a high level of knowledge is required to undertake business process functions (Youngdahl,
2008:804).
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Figure 3. knowledge embededness of offshoring and outsourcing value chain
Source: Youngdahl, Ramaswamy and Dash (2008)
The pace of this transition from routinized work and simple transactions to more knowledge
intensive jobs and more advanced services, depends on a number of factors, such as the
availability of ICT infrastructure and availability and level of human resources. In general,
more knowledge intensive activities are undertaken when the first stage is matured, when a
certain level of confidence among customers in terms of quality and delivery capacity is
achieved and when there is an available pool of labourers with skills capable of producing
higher value-added functions.
Investments in creating a large pool of educated labourers are therefore fundamental in
the creation of a knowledge economy (Audenhove, 1999:391). The characteristics of the
workforce, in terms of level of skills, qualifications and ability to meet global service
standards, determine the entry and upgrading potential for a host country within the global
offshore value chain (Fernandez-Stark et al., 2010:4). In all cases, particularly if a developing
country desires to enter into the offshore industry and in a later stage upgrade within the
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global value chain, there is a need for workforce development. This implies that the majority
of the labourers need training in ICTs and other fields in addition to their basic skills obtained
in secondary schooling, to ensure that they meet the required standards to become competitive
and serve the global market. This has the potential to stimulate enrolment in education and
training programs (Fernandez-Stark, 2010:8). The offshoring industry is thus considered to be
a tool for the expansion of human capital in developing countries (Fernandez-Stark (2010:16).
4.3 Summary theoretical framework
The ICT revolution has allowed for the fragmentation of production and consumption of
services, which have given rise to a global value chain for offshoring. This has allowed
developing economies to act as platforms for the export of services, thereby participating in
the global services industry. Generally, developing countries enter the value chain through
establishing low-value added activities. Once they develop the human resource capabilities
needed to meet global market demands, and improve their physical infrastructure and
business environment, they can upgrade within the offshore chain towards higher-end
operations.
The offshoring industry presents potential benefits for developing countries. These
benefits include direct and indirect job creation, the provision of knowledge-based
employment (that has often been missing in developing countries), the opportunity to boost
the domestic market for services, and the diversification of a country’s export base. The
offshoring industry also presents non-economic effects i.e. the opportunity to create an image
leading to a branding effect. The presence of an offshoring industry holds the potential of
repositioning a country’s image by signalling to the rest of the world that the country is
capable of hosting ICT activities. This branding effect is referred to in this study as a
symbolic value, which could in turn boost the economic value by attracting more offshoring
activities.
Finally, the offshore industry presents developing countries an entry point into this
global knowledge economy. This is because the offshoring industry produces value-added
services, ranging from low-end to high-valued services. The level of knowledge required for
offshore activities increases when countries move along the value chain from low-skilled
services towards high-end services. These services require an educated workforce with ICT
skills and other competencies. The offshoring industry, therefore, encourages host countries to
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improve not only their ICT infrastructure but also to stimulate enrolment in higher education
and in ICT training programs. Access and the use of modern ICT technologies, and human
capital input are key components of a knowledge economy. The presence of an offshore
industry indicates that these pillars are partly put in place and forms a stimulant to further
meet the demands of a knowledge-economy.
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5 Conceptual Research design, Methodologies and Methods
The theoretical framework presented above is in this chapter conceptualized and
operationalized. The first section illustrates how certain concepts are defined and measured in
the field, and how these concepts relate to each other, which form the basis of the research
questions. The second part of this chapter will present the methodologies and methods that
have been used in the fieldwork and that are central in this research.
5.1 Conceptual Framework
The main concepts derived from the theoretical framework (economic and symbolic value of
the ICT and IT/BPO industry, and ICT-led development agenda (ICT4AD) are conceptualized
in a scheme (see figure four). These concepts have been divided into dimensions (economic
and symbolic) and have been further divided into variables (for instance, main characteristics,
employment, image creation etc.). The arrows represent the possible relations of these
concepts that have been explored in the field, with the digits referring to the sub-question that
have been thereby addressed.
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Figure 4. Conceptual scheme
!!!!!!!!
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(5b) Branding
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(3b) (5a)
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Catalysing effect!
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5.2 Research questions
The main research question is formulated as follows:
What is the economic value (size and contribution to employment generation) of the
Information Technology and Business Process Outsourcing (IT/BPO) sector in Ghana and
how is the BPO-sector presented as a symbol of a modernizing Ghana?
The following sub-questions were used to answer this question:
1. What are the main characteristics of Ghana’s IT/BPO sector?
2. What were the critical factors that led to the formation of the sector in Ghana?
3a. What is the contribution of the IT/BPO sector to employment generation and human
resource development,
3b. Who has access to these types of jobs and how do they perceive their job and the BPO
industry?
4. How does the IT/BPO industry fit within the ICT for Accelerated Development policy
(ICT4AD)?
5. How is the BPO sector promoted by the Government of Ghana and presented in the
media (5a) and in what way does this represent the image of a modernizing Ghana (5b)?
The main research question entails the relation between the two main concepts: The IT/BPO
industry and the ICT4AD vision (i.e vision for a modernizing Ghana). These concepts are
further explained in the operationalization table (see table one). This scheme shows how the
concepts are defined (by identifying dimension and variables) and how these concepts are
eventually measured in the field (through indicators).
!Table 1. Operationalization scheme !
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Concept
Dimension
Variables
Indicators
(IT/BPO
industry)
Economic value
Main characteristics -Number of companies -Type of companies -Level of value added services -Type of BPO firms (domestic/foreign) -Type of market (onshore/offshore) -Opportunities and challenges in industry
Direct employment creation
-Number of jobs -Type of jobs -Difference foreign/domestic BPO -Characteristics of employees (age, gender educational background)
Human Capital (development)
-Level of education of employees -Required level of skills in BPO industry -Post-recruitment training -Learning potential within company -What policies undertaken to increase number of educated and skilled people
ICT market and BPO industry
Symbolic value
Experience of employment in BPO as perceived by employees
-Satisfaction in terms of salary, function, - Motivation to work in BPO company, -Status of BPO job -Job mobility - Image of a BPO job - Popularity BPO job among population
Image of ICT and BPO industry as perceived by employees
-Expectations, opportunities and challenges of the BPO industry -What kind of reputation the ICT/BPO industry has. What message it sends out the rest of the people - Influence of an ICT/BPO industry on the image of Ghana’s business climate
Image of ICT/BPO industry perceived and promoted by Government
-Expectations of ICT and BPO industry -What promotion activities undertaken to promote BPO -What Government promotion organs exist? -How the ICT and BPO industry are promoted through Government organizations? -What is achieved according to Government officials? -How does the industry contribute to the image of the country
Image of ICT/BPO industry perceived and promoted by Media
-Content of news articles -Number of ICT-BPO related articles -Terminology used in articles -Strengths and opportunities of Ghana’s ICT/BPO market -Image that is portrayed of Ghana in terms of business climate, availability human resource, ICT market
Branding effect -What is the affect of the created image of the industry on Ghana’s economy (attraction of more BPO activities, attraction FDI, stimulus human resource development, stimulus working in ICT industry) -How does the image of the industry affects people’s perception on Ghana’s economy
Economic Modernizing Ghana (transform economy into knowledge-based economy)
-What is meant with a modernizing Ghana, i.e a knowledge economy? - How does BPO relate to this development strategy? What are the expectations and achievements of ICT/BPO industry in build knowledge- economy, in terms of: - Establishment of a high value added services - Human resource development - Knowledge-based employment creation - Use of modern technologies (ICTs)
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5.3 Research design
This study is referred to as a case study, which is most appropriate as it allows for the
employment of both quantitative and qualitative research methods (Bryman, 2008:53). While
the case study design offers such an advantage, it should be noted that it is also concerned
with external validity issues. The findings derived from a case study cannot be applied more
generally to other cases (Bryman, 2008:55). However, the intention of this research is not to
statistically generalize findings to other cases or to populations beyond the case, rather it is to
provide a detailed and in-depth examination of one particular case, that is the BPO sector in
Ghana, and how this single case engages in a theoretical analysis.
5.4 Research epistemology
As Bryman (2008) points out, the nature of the study, and with that the ontological and
epistemological standpoint of the researcher is of great importance for determining what
research methods are most appropriate. The aim of this research is not to test theoretical
assumptions; rather it is about discovering and formulating theories about the subject being
studied. Therefore, this study is predominantly concerned with an inductive relation between
data and theory. A constructivist ontological position throughout this study was maintained
and the epistemology that is central in this research is that of interpretivism. Both will be
elaborated upon in this section.
The emphasis is placed on generating new data on the main characteristics, economic
and the symbolic value of the offshoring/outsourcing industry in the context of Ghana. The
latter concept, the symbolical value of the industry, in particular, cannot be captured by
viewing the reality as an objective and external reality, but is likely based on multiple realities
ICT4AD policy
Symbolic
Vision: Information and knowledge based status
What is meant with this vision and how does the Government expect the IT/BPO industry to contribute to this vision? -What Image is created by employees, Government officials and Media of Ghana in term of its capability of hosting ICT activities? -What image is given by the employees, government officials and Media to Ghana’s human competencies in ICT and employment creation in ICT? -To what extent do feel employees that with their job they are part of an information-knowledge economy? -To what extent do employees, government officials and Media recognize Ghana as a country participating in knowledge economy?
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and context specific. This research will thus depart from a constructivism ontological
position, because the findings will have constructionists rather than objectivist elements
(Bryman, 2008:18). Furthermore, the study is concerned with understanding the
developments that have taken place in the offshoring outsourcing industry, which is subject to
different interpretations by different individuals. The view on social reality can therefore be
best captured by an interpretivism epistemology (Bryman, 2008:16).
5.5 Methodology
Following from these ontological and epistemological positions, I employed mixed methods,
because the research is of quantitative and predominantly of qualitative nature. It should be
noted that while there appears to be a division between a qualitative and quantitative approach
to undertaking research on the subject, the division is not that stark. For instance, even though
for sub question one and three (size and characteristics of the industry and contribution to
employment) factual data has been mostly obtained, it does not have all the features of
quantitative research, such as testing of theory. Rather, data has been gathered to describe
characteristics of the BPO industry, which are complemented with attitudes and opinions
towards these characteristics, thereby including interpretivist overtones of qualitative
research.
5.6 Research methods
As mentioned, qualitative methods are dominant in this research as it allows for an intensive
detailed examination of the BPO-sector, but will be supported with quantitative methods. This
section discusses the type of methods used, which include: semi-structured interviews, open-
interviews, structured interviews, observations and content analysis. The sampling method
used to select the BPO companies and the respondents will be also discussed.
5.6.1 BPO companies
As Nichols (1995:55) indicates, the larger the sample size, the more accurately it reflects the
target population. However, a larger sample size should not be at the expense of the quality of
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the interviews (Nichols, 1995:55). Therefore, I included only 10 BPO firms out of
approximately 30 BPO firms located in Accra.
To get an overview of the first target ‘unit’, the BPO-sector, a registration list was used that
gives an overview of the BPO firms operating in Ghana. While this administrative list2
contains information on the BPO firms in Accra, it appeared to be incomplete and incorrect.
A high number of companies were no longer in operation; companies changed names, were
fused with another company or were simply not able to be found. This contributed to the
difficulty of finding BPO firms, which demanded for a snowballing approach. Snowballing
was only done through BPO firms and not through Government officials to avoid the risk of
only including the successful companies. From there, BPO companies were purposively
selected. However purposively selecting BPO firms provided me the advantage to ensure that
a comparison between local outsourcing and offshoring and domestic versus foreign owned
companies could be made. This distinction is relevant as there appeared to be a large market
for domestic outsourcing as well as offshoring in Ghana. Furthermore, after the first interview
with an employee from a domestic company it appeared that there also exists a significant
difference in terms of functioning and challenges firms face, between domestic BPO
companies and foreign-driven BPO companies. The need to bring this tension to the fore
required a sample that included these different types of companies.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!$ Ghana outsource directory, available at: http://www.offshorexperts.com/index.cfm/fa/buyer.outsourcing_country_directory/co/137!
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5.6.2 Semi-structured and open interviews with managers and CEO’s
Table 2. BPO Firms that are part of the target unit and are included in the research
Companies Type of company/market
Activities company
Number of interviews
Function of person interviewed
Type of interview
eServices Ghana
Domestic BPO company serves local market
CC 1 Manager
Semi-structured interview
1 CEO Open interview InCharge Global Ghana
Domestic BPO company serves local market
CC- DP-P-E 2 Director Semi structured & open interview
1 Manager Open interview 4Sight Micro-systems
Domestic BPO company serves local market
CC, 1 Manager Open interview
Rising Data Solutions
Domestic BPO company (bankrupt) served international market
CC-MT 1 CEO Open interview
Datcom
Domestic BPO company serves local market
S 1 Manager Open interview
Edutech
Domestic BPO training centre
TR 1 CEO Open interview
IPMC
Domestic BPO and ICT training Centre
TR 1 Director operator Open interview
eProcess
Foreign BPO company serves international market
S-IT 1 CEO Open interview
Teletech
Foreign BPO company serves local market
CC 1 Manager Semi-structured interview
1 Manager Open interview
1 Human resources Open interview
ACS-BPS
Foreign BPO company serves international market
$%!
1 Manager/director operator
Semi-structured
1 Manager Survey
Tech Mahindra
foreign BPO company serves local and west-African market
CC-DP 1 Manager 2 (dep. Human resources)
Semi-structured
1 Temporary employee from India
Open interview
Manager Survey per mail
Infonaligy Ltd. Foreign BPO company serves international, local and West-African market
S- SI-HS-P
1 Assistant Semi-structured
1 Manager Open interview
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DP= Data processing; DC = Data capturing; CC= Call Center; E = Electronic payments; S= Software development; TR = Training; SI = System Integration; HS = hard and software Sales & Maintenance; IS = Infrastructure service; MT = Medical Transcription; IC = Insurance Claims; IT = IT related aspects; P = Payroll processing
Semi-structured interviews were held at managerial level to gain information on the
company’s main activities, number of employees and type of jobs, the company’s
functioning, opportunities they identify in the BPO market and possible challenge the
companies faces. This kind of information was gathered to eventually get a better
understanding of the size and general characteristics of Ghana’s ITES/BPO industry (sub
question one). Questions related to employment creation within the company and wider
industry, in terms of job mobility, popularity among the youth to work in a BPO company and
general trends of the youth in ICT, were posed to complement data provided by the surveys
that were distributed among employees obtaining lower functions. All interviews with
employees of these firms lasted approximately 60 minutes and were held in English.
Open interviews were held with CEO’s and employees at a high function, (see table 1)
to get a grasp on how they perceive the image of the BPO-sector and how this represents a
modernizing Ghana (sub question five). To be more precise, questions were posed to learn
what image that particular BPO firm has and how that firm and its activities is represented
and promoted. Questions were also posed to capture the general perception towards the BPO
industry in terms of its contribution to the economy and what kind of message such an
industry sends out to the population.
Employees at managerial level and directory level of firms and other staff members of
firms that were of interest to interview have been purposively selected. The selection of this
group of employees depended on the organizational structure of a company and the
willingness of people to participate in this research. Table one shows the number of people
interviewed per company and their function within the company.
5.6.3 Open interviews with Government officials and business associations
Open interviews were also conducted with government officials and business associations to
learn more about their perception on the BPO-sector in terms of expectations, opportunities,
challenges and how these officials and associations represent and promote the BPO-sector
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through their activities (sub question 4a). Furthermore, open interviews with these officials
were held to gain more knowledge on the Government’s ICT-led development strategy
(ICT4AD) and what role the BPO industry plays in this development strategy (sub question
4). The final aim of these open interviews was to understand if and how the image of the
BPO-sector represents the image of a modernizing Ghana as pursued in the ICT4AD vision
(sub question 5b).
The government officials and business associations were purposively selected based
on the premises that they promote or hold information either on the ICT4AD policy or the
ITES/BPO industry in Ghana (see table two). For instance, the World Bank as a financial
supporter of the eGhana project has been of great importance to learn about the rationales
behind supporting the ICT and BPO initiative, but also to learn more about Accra as a
research site in terms of its wider socio-economic developments. Table two gives an overview
of the organizations that have been included in this research, and for each organization the
number of employees that have been interviewed. All interviews lasted between 45-90
minutes and were held in English.
Table 3. Government officials and business associations
Government official and
Business organization
Number of
interviews
Relation with ICT4AD or ITES/BPO
industry ITES Secretariat of the Ministry of
Communications of Ghana
2 Creating an enabling environment for private sector BPO activities in Ghana, and to increase exposure of improving ICT landscape and IT-BPO-sector
Ghana Multimedia Centre (GMIC) 1 Responsible for promoting the human resources of
Ghana and building and upgrading the human
resources through training programs in ICT/BPO
Ghana Investment Promotion Council 3 In charge of promoting Ghana as an attractive FDI
destination
Ghana Export Promotion Council 1 Responsible for carrying out the national strategy
for the promotion of non-traditional exports, such
as ICT/BPO services.
Ghana Association of Software and IT
services Companies (GASSCOM)
1 An association of BPO and ICT related service
providers that promotes Ghana’s BPO industry
The Brand Ghana Office 1 Giving Ghana a brand
IPMC 1 ICT/BPO training centre
Edutech 1 ICT/BPO training centre
The World Bank 2 Financing eGhana project to support ICT4AD
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MASDAR 2 British company monitoring eGhana project
Busy Lap 1 Platform ICT companies ! !"#$%&! '()&#%&*)+,%)-!Ghana Free Zone Board 1 Enclave zone for foreign BPO companies
Ghana’s Registrar’s Department 1 Data on ICT-related businesses ! !"#$%&! '()&#%&*)+,%)-!Ghana’s Statistical Serivces 1 Data on ICT services
5.6.4 Surveys employees (agent-level)
The contribution of the BPO sector to employment generation is mostly concerned with
obtaining factual data on the number employees and the characteristics of these employees.
Therefore, this section stressed the need for the quantification in the collection and analysis of
data. Data collection through these survey questionnaires is most appropriate, as this method
allowed me to include a large group of employees, (80 respondents) which would (due to a
lack of time) not have been possible if I were to conduct open interviews with a large number
of employees.
After having conducted a number of semi-structured and open-interviews, a survey
was designed to gather data on employment and characteristics of employees to address sub
question 3a and 3b. This survey has been undertaking in cooperation with Shahrzad Nourozi,
a fellow Master student in IDS who during the same period undertook a study on the rise of
the new Middleclass, which she linked to the ITES/BPO industry. As a result, a joint survey
was designed which included a set of questions directed at gathering data on the social and
cultural characteristics of the people working at the BPO firms (used in Shahrzad Nourozi’s
research) and a set of questions that has been designed for the purpose of this study. The set
of questions used for this research was aimed at gathering general information about the
employees, to get a better understanding of who has access to BPO jobs (sub question three)
and the characteristics of these employees (in terms of age, gender, educational background)
(see appendix). The survey also contained questions that were used to gain a better
understanding of how they experience working in the BPO industry, what opportunities and
challenges they identify in the industry and how they perceive the BPO industry i.e. what
message the presence of such a industry sends out to the population. These questions were
asked to get an idea of the symbolic value of the industry. Although it is difficult to capture
attitudes, experiences and perceptions through quantitative methods, interview techniques
such as the likert-scale and answer lists, were used and offered a solution (Nichols, 1995:39).
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Approximately 15 employees at six different companies were randomly selected.
Every other employee present in the office was asked to participate, which means that all
employees had an equal chance of being selected (Nichols, 1995:56). This sampling method
was used to avoid any bias, and to ensure that no employees were favoured more than others,
thereby increasing the likelihood of representing the target population accurately (Nichols,
1995:56). Even though we were given access to the companies to conduct the surveys in
person, we were given limited time to do so, which forced us to distribute the surveys among
the employees. However, Shahrzad Nourozi and I were present to answer questions and to
ensure that the employees were filling out the survey themselves.
5.6.5 Observations
Observations have proven to be an important method to gain a better understanding of the
research site, and provided valuable data on the concepts. For instance, observations revealed
that the employees of BPO firms are formally dressed at the offices, which appeared to play a
significant role in their perception of having a high status job. Observations have also proven
to be a useful method in capturing how the ICT industry and BPO industry is promoted in
Accra. For instance, billboards that read: “Ghana is in an ICT age”, were signalled in various
forms, revealing important data on the symbolic value of the ICT/BPO industry.
5.6.6 Content analysis
Content analysis has been employed as a research method to analyse how business
associations and government officials promote the outsourcing industry, mostly through their
websites and other promotion channels. Policy documents from the Government and
organizations such as the World Bank have also been analysed to get an understanding of how
the ICT4AD and IT/BPO industry is perceived and promoted. For the purpose of getting an
idea of how the sector is promoted in the media, to eventually comment on the symbolic value
of the industry, I analysed the content of the Daily Graphic during three months and Ghana
Business News. Furthermore, at the research site I accessed the archive of the Daily Graphic
to analyse earlier articles written on the BPO-sector or ICT-related articles. It should be noted
that while such an archive exists not all newspapers were present (nor to be found on the
Internet) and due to time considerations only a number of newspapers have been randomly
reviewed.
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5.6.7 Reflection on Methods and data collection
Overall, the sampling of employees and government officials was based on a non-probability
selection. A disadvantage of non-probability sampling is that findings that are derived from
the respondents cannot be statistically generalized to larger populations (Bryman, 2008:55).
However, variation in the sample, for instance through including different types of companies
in the research was ensured, to address the issue of external validity (Smaling, 1992). Further,
checking procedures, such as triangulation, have been an important element throughout the
entire process of data collection to reduce the uncertainty that is accompanied with the open
character of qualitative research. Combining data of objective nature and subjective meanings
have proven to be useful to look for similarities, tensions and especially to explain the quantitative
data. This has resulted in a detailed understanding of both the characteristics and the
experiences in the offshoring/outsourcing industry.
The semi-structured interviews and open interviews were conducted successfully,
however, the way the survey was distributed at first turned out to be a learning experience. At
first, surveys were handed out and collected afterwards. Experience showed that this
increased non-response and surveys were not filled out properly. As a result, the surveys had
to be distributed among the respondents with the presence of Shahrzad Nourozi and me. This
has proven to be time consuming, which allowed for fewer time to conduct follow up
interviews with these respondents. Although follow up interviews with a number of these
employees would have been desirable, there has been ample opportunity to address certain
tensions or statements given by employees during the semi-structured and open interviews
with employees at a managerial level, and also through informal conversations with the
employees after they had filled out the survey.
Content analysis has proven to be very useful not only to collect data to answer the
research questions, but also to gain a better understanding of the research site and general
socio-economic trends in the country. This background knowledge of the research site has in
turn helped me a great deal in preparing for interviews and understanding and contextualizing
the collected data.
Although the methods mentioned above provided the basis of this study, these techniques did
not in all cases provide sufficient data. The majority of the Government officials and
Statistical departments had no general data on the offshoring/outsourcing industry in Ghana,
not even in terms of number of companies and employees. The difficulty of getting basic
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information on the number of BPO firms and addresses of these firms led to a delay in
mapping the research area. Despite numerous attempts to get an up-to date list of BPO
companies and general information on the ITES/BPO industry from Government officials,
such a list was only made available in the last week of the fieldwork and appeared to be
incomplete. Particularly information on the BPO firms present in Accra and their location
would have been desirable to obtain earlier in the fieldwork, so that more time could have
been devoted to interviewing a larger sample, rather than searching for firms.
5.7 Data-analysis
The qualitative data gathered in the field through open-interviews and qualitative data from
policy reports and secondary data, were analysed with the use of the software program Atlas-
ti. Each audio-recorded interview has been transcribed and Atlas-ti was used to code findings
in a consistent manner. The quantitative data derived from the field and from secondary data
has been analysed with the use of analytical software programs such as Microsoft Excel and
SPSS.
A qualitative analysis concerns the unfolding of secondary data and material derived from the
field and the search for patters in the material (Peters et al., 2006:637). During the analysis, I
made connections between the material derived from the field and the conceptual frame to
eventually answer the research questions. A method used to make such connections is the
process of coding, which implies that codes have been assigned to parts of the transcribed
texts so that concepts would be discovered. I then looked for patterns of codes and see how
they relate to one another. This last phase formed the basis for answering research questions.
5.8 Codes of ethics
Throughout the entire research codes of ethics have been taken into account. The research is
based on informed consent, implying that the participants of this study have agreed to
participate in the research on the basis of information given to them. Furthermore, efforts
were made to ensure that the participants wouldn’t be harmed in any way, which means that
their privacy is not to be invaded, that their information will be kept anonymous if desired,
and that they won’t be deceived about the aim of the research (Flick, 2009:37). Therefore, I
deliberately kept the names of the respondents and of the BPO firms and the names of the
Government officials anonymous. Furthermore, as a researcher I needed to be aware not only
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of the possible impact my involvement with the respondents could have on the data but also
on the lives of the respondents and other community members of the research site. My
involvement with the respondents and the research as a whole should not negatively affect the
local inhabitants of the research site (Bryman, 2008:113).
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