After seven years of incubating IT projects, reforming the higher education sector and implementing tax breaks for the BPO industry, Ghana has reaped the benefits, according to a study by AT Kearney.

The report, titled "The 2009 AT Kearney Global Services Location Index," ranked countries for their ability to handle business process outsourcing, using a weighted combination of scores on 43 measurements grouped under three main criteria: financial attractiveness; people skills and availability; and business environment.

While India led the rankings globally, Ghana had the top overall ranking in sub-Saharan Africa, though in terms of actual BPO revenue, South Africa is still the continent's leader. Ghana's rank was boosted by financial issues.

"Ghana scored the highest (followed closely by India) out of the 50 countries ranked on financial attractiveness, which measures compensation cost, infrastructure cost, tax and regulatory cost. Ghana (3.26) scored considerably higher than South Africa (2.28)," said Yaw Owusu, managing director of Gateway Innovations, part of a venture to promote BPO in Ghana.

While other countries have engaged in endless conferences and market surveys, the West African nation has worked on political stability and a strong police force to protect civilians and private property.

Ghana's commitment to attracting offshore investors started seven years ago when the government set up an incubation facility for IT startup firms; embarked on a review of the higher education system to incorporate skills required to compete for global outsourcing tenders; and set up a special secretariat for IT enabled services and BPO, with a mandate to market Ghana abroad as a competitive destination for offshore outsourcing. Meanwhile the private sector set up the Ghana Association of Software and IT Services Companies (GASSCOM).

According to the Kearney report, the island nation of Mauritius ranks favorably at 25th overall, thanks to strong people skills and a favorable business environment.

With a population of 1.2 million, Mauritius is in the process of joining the OECD, a symbolic entry into the club of advanced economies. Mauritius' main strengths are in the high-value-added area, which has boosted business from IT software and services companies such as Oracle and human-resource outsourcing company Ceridian. Ceridian has several hundred positions serving the francophone market in the CyberTower, the government-sponsored technology park. Accenture and Infosys also use Mauritius for their global delivery functions.

Though Ghana ranked high in the Kearney survey for BPO desirability, South Africa actually remains the largest offshore destination in Africa by far, operating a successful contact-center cluster in Cape Town along with several research and development operations around its aerospace hub in Pretoria. This year, South Africa dropped to 39th place in the desirability rankings after it lost points in all three categories; the deterioration in infrastructure was the most striking drop among individual metrics.

The government of Ghana has created a free zone area right outside Accra and other areas in different parts of the country, where companies specializing in offshore ventures can set up operations.

But the best incentive is the condition that companies in the free zone area pay zero taxes for 10 years from the date of commencement of operations, and only 8 percent tax after the 10-year period.

The laws in Ghana were further enacted to allow 100 percent exemptions on customs duty for equipment and goods imported for research and development, which has allowed the country to succeed where other African countries failed.

"The government has also embarked on strengthening and enforcement of copyright and patent legislations through creation of a dedicated tribunal for dealing with disputes on these issues," said Owusu.

Africa's education system has been labeled as outdated and unresponsive to global market trends as colleges and universities fail to invest in research and development of modern technology.

"In Kenya, we have an industry that is always complaining that the universities are not producing appropriate graduates; yet when we invite them to discuss and sponsor aspects of our programs they are not willing," said Timothy Waema, associate professor at the School of Computing and Informatics at the University of Nairobi.

Outsourcing in Africa has been viewed as a foreign agenda where companies strive to attract business from Europe and the U.S. without focusing on local outsourcing.

"IT and BPO firms should put as much efforts in attracting outsourcing opportunities right here in Africa; firms such as Ecobank, Zain, MTN, Tigo, are a potential source [of] BPO ventures," said Owusu.