In 2013 Mauritius saw its online industries contribute seven per cent of GDP and hire 18,000 employees. Pacific Island governments can replicate that success, writes Natasha Beschorner.
Pacific Island countries are known for their remoteness, a diverse group of nations with picturesque beaches and friendly cultures, making them popular among holidaymakers. But, while this remoteness can be an advantage for the tourism industry, it can also be perceived as an obstacle for many investors and companies working across major international markets.
Today, though, global connectivity through broadband Internet by submarine cables and satellite services means these once isolated islands offer unique opportunities to the growing global outsourcing industry.
In 2014, Fiji received the European Outsourcing Association’s Offshoring Destination of the Year Award, acknowledging the island state’s successful service to the United Kingdom and other European outsourcing markets.
Two companies – Mindpearl and ANZ Pacific Operations – have already set up offshore operations in Fiji, with offices in the Kalabu Tax Free Zone operated and administered by the Fiji Trade and Investment Bureau (Investment Fiji).
A new World Bank report offers guidance for Pacific Island governments and businesses to mimic the outsourcing success of Mauritius, the Indian Ocean island nation that saw its online and offshore service industries contribute almost seven per cent of GDP and hire 18,000 direct employees in 2013.
So how can Pacific governments mimic this success? Our report for the World Bank – Information and Communication Technologies (ICT) for jobs in the Pacific – looked at Fiji, Tonga and Samoa to see if those countries could develop as internationally-competitive services destinations for companies to outsource their information technology (IT) and business processes such as customer services, data entry and website design.
What we found highlights the potential for Pacific Island countries to participate in the global outsourcing services market such as accounting, content development, programming, data processing and 24/7 call centres.
Managing money in the Pacific | Tobias Haque.
In particular, our study found several advantages offered by countries of the region. Firstly, the region has a young and qualified labour pool. More than half of all Pacific Islanders are under the age of 24, meaning the number of working-age people is set to increase significantly. Overall, Pacific Islanders from Fiji, Tonga and Samoa are relatively well educated, have a high level of English fluency, are reasonably computer literate and can undertake business process outsourcing (BPO) tasks.
Secondly, all three countries are progressing with their internet infrastructure through submarine cables, satellite services and government reforms that improve connectivity in terms of speed, quality and cost. Fiji stands out due to its undersea fiber optic cable connection to Australia, with landing hubs going to Samoa and Vanuatu to make it an ICT hub for the region.
On top of this, there are increasing levels of political support. The Fiji Trade and Investment Bureau (Investment Fiji) has already implemented a number of favorable policies and incentives, including duty concessions, investment allowances, tax exemption, and tax free zones.
Finally, the research highlighted the ease of doing business in the region. The three countries rank higher than leading global outsourcing services players such as India and the Philippines in the World Bank Group’s Doing Business survey.
Pacific Island countries represent a potentially attractive option for Australian and New Zealand companies looking to outsource business and online tasks because they are in located nearby with similar social and business cultures.
To fully realise such market opportunities, though, requires Pacific Island governments and businesses to increase investments and encourage skills training, industry promotion and further improvements to the enabling institutional, policy and regulatory environment.
Already, the government of Fiji established the Kalabu Tax Free Zone and plans to create ICT parks. In Tonga, Internet prices have gone down significantly with the arrival in 2013 of its submarine cable.
Due to their relatively smaller population sizes, Fiji, Samoa and Tonga are better suited to service small (less than $10 million revenue) or emerging ($10 million to $100 million revenue) clients.
Developing the region’s outsourcing industry will require a phased approach that starts with pilot programs in Fiji. Operated on a trial-and-error basis, these pilot programs on nearshoring and offshoring activities would provide a practical analytical foundation for longer-term industry development efforts in the country and region.
The world’s technological advances mean Pacific Island countries long connected to global commerce only by trade winds now offer development and growth opportunities that can benefit their people. Now governments, policymakers and business need to pull together to help make that happen.
This article is published in collaboration with the Devpolicy Blog, a platform for the best in aid and development analysis, research and policy comment, with a focus on Australia, Papua New Guinea and the Pacific.