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4.2.4. Other factors

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There are a variety of secondary aspects of offshore outsourcing that may not be prominent if taken in isolation. These generally serve to support the assessment once a company has been convicted that by going offshore, it will save costs without compromising quality.

For any company making the decision of moving certain work to an offshore environment, local atmosphere must be a key consideration. More often than not, it is a primary reason not to offshore. Infrastructure and government policies were identified as significant factors in influencing where to locate projects and are viewed as an aspect of risk management.

Infrastructure represents a mixture of aspects, ranging from something as direct as the presence of Internet service providers to something as indirect as the existence of available housing in the country of operation. In general my respondents cite infrastructure elements as presenting serious facilitation to growth despite not being a major factor in their offshore decision.

Firm3 pointed out the relatively good telecoms and IT environment and foresees Morocco in a well position to secure a large share of the Francophone and Spanish offshoring market. The national telecommunications network offers a range of services including Internet, fixed and mobile telephony, video conferencing and satellite-based technologies. The several telecom operators provide quick set up and high quality service for a price that is relatively economical.

Firm1 also praised communications and transportation networks in Morocco. As a part of their organization, they have regular internet video and audio conferences between teams in Rabat and management in Paris; and they are satisfied with the bandwidth and the quality of communications and digital transfers. They also have occasional flights to Morocco to meet with the development teams for specific discussion to control resource allocations or to fix any difficulty; geographical proximity, good air connectivity and travel cost make these journeys reasonably convenient and affordable for the company. In addition, construction of Technoparks with modern, flexible office spaces that are suitable for IT services offshorers has offered the necessary comfort for their teams to work in good conditions and An excellent quality of life. These Technoparks have been proposed to give comprehensive support to new firms. Commercial real estate agents and other intermediaries are simplifying processes related to space and infrastructure provision.

Furthermore, the kingdom is politically stable and has a track record of excellence in key sectors, a stable exchange rate and macroeconomic stability. It also has free trade agreements with the EU and the US, providing investors with a geographically well-positioned launch pad into these markets. Moreover, government programs and incentives at the national and local levels have created the environment for foreign companies to offshore to Morocco. Recent widespread economic reforms have included improvements to the banking system, corporate laws and the labour code. The strategy has been to focus on legislative change, macroeconomic stability and anti-corruption measures. The adoption of an investment charter that is non-discriminatory to foreign investors and provisions for cutting investment costs and simplifying administrative procedures opened up most sectors to foreign investment and ownership. In 2004, Morocco accounted for more than 40% of FDI inflows to the MEDA region (FDI Magazine, 2005). In addition, the liberalisation of foreign trade and exchange control, the modernisation of the legal framework and the withdrawal of state involvement in certain sectors of the economy, has boosted private sector development.

Offshoring is one of the pillars of the “Emergence strategy” which is the new Moroccan industrial policy for the coming 10 years. The programme focuses on region by region according to its potentials and specificities in order to develop its infrastructures. The government announced a specific tax scheme for offshoring activities within some dedicated zones. Firm3 took advantage of theses tax breaks, this encompasses a flat rate of 20% on income tax, in addition to the corporate tax relief already included in the investment charter for companies reinvesting part of their profits in the kingdom. Firm3 was also aware of the support being offered by government for the IT industry and praised it. They stated that there have been considerable simplifications of tax laws in recent years, but the total tax burden from local sources remains high Interest, advertising, and training are not deductible expenses for tax purposes. Firm2 also attested that Morocco has made great strides in developing an attractive environment for offshore services, the government offered them training assistance and subsidies to train newly hired staff.

Furthermore, the professional associations and their federations are other potentially important players in Morocco. Associations of companies involved in offshore software development or in Moroccan IT sector in general has been instrumental in lobbying the Moroccan government for favourable tax and regulatory changes. They also undertook campaigns to promote Morocco throughout the world. They provided a presence at many IT and outsourcing conventions and trade fairs and other events for raising awareness and creating a positive view of the Moroccan offshore outsourcing industry. Most importantly for the clients of these member firms, they organized an industry effort to improve software development quality and business processes in Morocco.

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