Outsourcing as a means to curb unemployment!

By Wanambwa M. Rogers

According to Uganda Bureau of Statistics( henceforth called UBOS), the unemployment rate of youths in Uganda is currently standing at over 83%. To put this into perspective, let me explain who a youth is what percentage this group makes up on the population of Uganda. A youth is anyone person between the age of fifteen and thirty five(15-35years). However, the figure above represents those between fifteen and twenty four(15-24years). Youths make up 77% of total population in Uganda with population currently standing at 41.49million(UBOS, last updated September 2018). Then again, according to the same agency, Uganda adds on one million people every year.

The Guardian, UK, on 11th July 2013, said Sub-Saharan Africa had over 300million people between the ages of 15-24 and this number was expected to rise to over 500million by the middle of this century. However this exponential growth has now brought on a big problem of unemployment in all these countries; a problem that is affecting the whole world, it must be noted.

With all the huge numbers of young people and rampant unemployment, the solution(s) to this is/are many, nevertheless, I’ll look at one of them, Outsourcing. Outsourcing according to the dictionary, is the transferring of management and/or day-to-day activities of an entire business function to a third party. Now here comes in the solution to our problem!

For example, China created 13million new jobs in 2017 beating the predicted 11million for the same period(source 15th February 2018, Xinhua.net), we can get only 100,000 of these if we work well with China especially since China is very much interested in Africa nowadays(consider the just concluded Forum of China-Africa Co-operation in September 2018). Again China Daily a prominent news paper in China announced not long ago that China expected to create 30million jobs related to ICT by end of this year 2018. Clearly if we organised ourselves well, we could tap into atleast 2million of these jobs.

The UK has 5.7million small and medium enterprise companies which employ from 100-over 300people each, not mentioning the big companies and co-operations, and other businesses both private and public(source UK Government statistics page). If each of these employed one person from here, this would translate into over 5.7million new jobs.

The US created 201,000 new jobs in just the previous quarter of 2018, if they can outsource even 20,100(10%) of these to Uganda, that’s new jobs for us. (Source 9th September 2018, CNN)

It must be noted that all the countries given as examples above already outsource millions of jobs and so this is not a new phenomenon for them. For example, Apple(an electronics manufacturing company known for its flagship IPhone) outsources most of its work to China. And considering for example Uganda, which has over 100,000 of its citizens working from abroad according to the UBOS statistics, who currently send in hundreds of billions of shillings every year, this is not new to us either. The only change here however for us, is that the businesses on the other side would be hiring our people and they work from here.

The benefits of this are incredible, for example, in India where many US and UK companies outsource their work, the employed people earn over 100% more compared to their counterparts doing the same jobs for local companies; and to add to that, these people lead to indirect employment of upto 20 other people. This is due to the fact that money moves even faster from one hand to another in poorer countries than the developed world. South Africa is also known for its high quality accountants and their skills are always called upon by companies in the US, UK, and China among other countries.

All these companies pay in dollars or pounds(or euros for companies from Europe). This leads to more balancing of the dollar-local currency deficit since more foreign currency is being paid to nationals in the country. Consequently, this leads to less borrowing from international organisations like International Monetary Fund and World Bank and countries like China. Again, the buying/purchasing power of nationals increases and hence a more balanced Balance of Trade(BOT) and Balance of Payment(BOP).

So what is the cost of this to the countries and companies that outsource their work? The Park Place Economist, volume 12, of 2008 published an article titled: “Opinions: The Benefits And Costs of Outsourcing” by George Coontz of Illinois Wesleyan University citing the benefits and costs of outsourcing to companies that did and the nations in which thwy are based. These included, reduced costs, time saving, where by clients are always demanding for faster delivery of products and services at ever decreasing prices. By outsourcing, these companies could keep up with this. However, I cost of all this is the fact that there is losing of jobs for the employees who were doing this work before and even those who would have joined the companies! This has been addressed in other publications that all these people get other jobs which pay upto 96% of their former jobs as seen from data collected from 1999-2007 by US government and private institutions.

In the end, we clearly need to consider outsourcing as one viable solution to unemployment.

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