East Africa has one of the best business environments in the world considering the region’s dominant tourism industry and wealth of natural resources. However, in recent years, outsourcing is proving to be an industry that offers East African countries the chance to export services to the world, in a way that tourism and natural resources may not have accomplished. According to reports, East Africa’s outsourcing industry is currently worth over $200 billion and has the potential to grow beyond its position.
Outsourcing is when a company sends some of its functions to be performed elsewhere for far less than if it did so itself. In view of the growing outsourcing market in East Africa, the Sunbird Group, a privately owned business is hoping to change the outsourcing market in East Africa by replicating the models of Capita and Carillion used in the 80s to develop the UK’s outsourcing market. So far, the company has created about 500 jobs in less than three years.
Ventures Africa spoke to the Founder and Managing Director of Sunbird Group, Michael Aldridge, in order to know more about Sunbird and how it is changing the outsourcing market in East Africa.
Ventures Africa (VA): Can you tell us more about Sunbird?
Michael Aldridge (MA): Sunbird, as an entity, is wholly focused in the East African region. We are working to successfully provide a number of non-core service activities for companies that are either expanding or entering into that market. Our customer base is multinationals as well as local businesses. We are focused on the private sector, so the majority of our work is coming from US dollars, in terms of market entry strategies. We provide a sort of high level construction support service, meaning that our focus is in service provision centres. We are there to help in the necessary provision of homes, offices and industrial storage or industrial workspaces. We are in Kenya, Mozambique, Tanzania, Zambia and Uganda. We are providing housing for companies like Gemfields in Mozambique. We are building urban housing in Nairobi, we are providing office space for blue chip multinationals such as JP Morgan.
We are also building hotels for the tourist industry on two different sites. One is in Zanzibar for a European Private Equity company for Uzuri hotels, which is a Six Senses Challenger brand ultimately we will be building and providing. Sunbird has also targeted the health and education industries before its first facilities management contracts come online in the next 6 months.
We are also a job creator, with over 500 on-ground staff, many of whom come from local communities around our sites. The demand in the market for Sunbird’s business model has the potential to create highly skilled and sustainable employment in East Africa, just like other reputable UK-based support service companies such as Capita (68,000); Carillion (40,000) and Serco (100,000); facilitating growth and sustainable development in the region.
VA: Can you tell us about outsourcing in the East African market and how that compares to the UK?
MA: The industry for support services is currently in a nascent stage of its development. There are typically three stages of outsourcing demands for any growing business. It is either they don’t know how to do it; they want to do it better; or they want to do it cheaper. Today, we are currently addressing the first stage, as the region is experiencing increasing market entry from renowned multinational businesses as well as companies expanding in the market. There is an increasing requirement for companies that can provide them with services that meet their growth strategies. However, as the region and these companies continue to evolve with greater economic growth and investment, the demand for services increase to providing more complex solutions such as customer and process management. In the 80s, Capita (founded by my Father, Sir Rod Aldridge) addressed enterprise growth in the UK, by introducing models for improving business efficiency. This robust demand in the UK helped grow Capita to the £8.5bn company that it is today.
Thus, we at Sunbird feel that we can bring a proven business model to a market that we know needs it. We can provide secondary infrastructure assets for today’s market and provide more complex solutions to businesses and the market as they continue to grow.
VA: Why did Sunbird choose East Africa first?
MA: There are actually two main reasons why we picked East Africa as the region. From the entrepreneurial point of view, there was a low level of supply in terms of the services we were providing and the point of view of a guy that has started a lot of business before. I know that focus is a very key driver in success so we thought we needed to be focused on a tight a region as possible and East African market is probably the least competitive compared to the South and the West and then the speed of engagement from the primary infrastructure investment as over more than one territory. So just having the sort of activity between Mozambique and Tanzania gave us a fair degree of confidence that we would have business to do from an early stage. Bear in mind that these decisions were made in the period when we hadn’t even started trading. We just sent someone theoretically and now speaking to you with a business that has grown three times in twelve months. So I’m slightly more confident that we wouldn’t have gotten this far in a highly competitive environment because it would have taken us longer to win.
VA: Do you have plans of expanding into other regions in Africa?
MA: Not an immediate plan. We might see some delicate country expansion into the neighbouring markets but we are very focused on what we are doing in the region we are in. Quite frankly there is more than enough work for us to do in those territories. We talk about replicating the Capita business model into this region, bear in mind that capita provides 90 percent of its growth from operating in one country.
VA: So what are the market drivers of Sunbirds business and operations in the region?
MA: I don’t think demand for what we are doing is in question. We, ourselves, are a barometer for economic activity. This is because we now have proof of delivery in multiple locations, in size, in sector, in service proposition. If you took sort of more tangible examples, there are clear housing deficit levels across all the markets. There are roughly 1000 families in Mozambique that have nowhere they can live. I mean there are clear housing deficits from the directly connected to markets and then you also have upgrading of offices as a close second. With the amount of towers you see coming online in Nairobi, the real estate market is a big driver and clearly a primary client for us in terms of the kind of work we can be doing operating markets as well as servicing them. The other demand driver is obviously people, you are seeing much larger return rates form individuals with high education. Not only are more people going through that education, more people are coming back to the country to actually use their skills and you know they want to be part of the workforce. They are naturally entrepreneurial across Kenya, Tanzania and Mozambique. All of these areas want to succeed and want to be part of the world enterprise. So all of these put together mean that by providing a business model which is really based on sector, agnostically, there is no sector that doesn’t need our support meaning that we are very much now a company that is in the right place at the right time and are a part of that evolution as well as provider of necessary non-core activities.
VA: Can you tell us about Sunbird’s growth strategy?
MA: Our growth strategy is to continue to evolve our service capabilities, as the client requires. Our model is more buildings which mean more maintenance, more maintenance means more customers, and more customers mean more services. We do that through a strategy which will build more service lines ourselves, leveraging our own platform and combining that with our service experts in the UK and collaborating with on ground experts that provide our services. So we will eventually bring a whole bunch of services that aren’t really there yet into the market. That could be anything from self-storage, to financial technology or mechanical and electrical kind of value adds services. We have intentions to continue to acquire and replicating Capita models or acquisitions. At the heart of all of this growth comes people, we are believer in Best-in-Class with not only our sophisticate systems and governance but we are building this to be a class provider. We know that we need to combine that, it’s all about collaboration, so we then combine that with really in depth understanding of what is going on ground. Plus international reach through our offices in now London and soon to be Johannesburg, the ambition is to be in other international locations for the purposes of being close to the clients. All part of what we build is part of the strategy that you can build a service to the best and that is actually constant requirement that means that we will not only be way ahead of the market and maintain ourselves with these advantages in the region.
