Project Background
ICTs are transforming world economies with an increasing number of countries, especially in the developing world, identifying the ICT industry as a key sector for achieving rapid economic growth. In particular, the business process outsourcing (BPO) sub-sector, worth over $130 billion worldwide, provides one of the greatest economic opportunities for wealth generation and employment creation. For example, India, usually the first stop for western companies looking to increase profits by outsourcing some of their business processes, earned $39.6 billion, employs over 1.5 million people and contributed 5.2% of national GDP in the last financial year from call centers, back-office operations and software development. Philippines on the other hand, earned $3.26 billion in the same year.
With these outstanding results, many developing countries such as Mauritius, Ghana, Costa Rica, Kenya and Rwanda, among others, are seeking to follow suit. These countries are at varying stages of developing a business process outsourcing industry. Kenya, impeded in the BPO industry to-date by poor and expensive communication links to the rest of the world, is hoping that the first fibre-optic cable in East Africa (TEAMS) to be laid by mid-2008 will boost its status as the region’s top economy. Kenya hopes that this, plus cheap labour, clear accents and customer fatigue with Indian call centers could help it hook into this multi-billion dollar industry.
To this end, Kenya has developed a policy framework and defined some strategic directions (Kenya ICT Strategy 2006), one of which explicitly focuses on BPO as a key opportunity for realizing the country’s ICT objectives. A “Kenyan BPO and Contact Centre Society” has been formed to set standards and provide for self-regulation while a newly enacted Institution - Kenya ICT Board - takes the lead in marketing Kenya abroad as a BPO destination of choice. To address the bandwidth issue in this sector, Kenya has taken a stop-gap measure of subsidizing bandwidth costs through a grant from the World Bank while the country awaits the impending under-sea cable along the East African coast.
Kenya’s ICT Strategy 2006 explicitly focuses on BPO in chapter 5 as a key opportunity for realizing the ICT strategy. The strategy points out that Kenya’s large number of unemployed graduates combined with an English-speaking population and a reasonable number of ICT-skilled employees make it an attractive potential BPO destination.
The formal Business Process Outsourcing industry in Kenya is a fairly recent development with a lifespan of less than three years. Two medium-sized companies: Kencall and Skyweb have dominated the market engaging in Contact Centre and Data Entry types of business. Several other small companies have more recently developed notably Preciss and Oriak companies. A very recent development is the formation of an association of Contact Centre and Business Process Outsourcing stakeholders currently with about two hundred members. There is growing interest in the business in Kenya with the main barrier to the business perceived as the high cost of bandwidth. A short term measure being taken is the subsidy of bandwidth funded by the World Bank as a stop gap measure while the country awaits the completion of one of two possible submarine optical fibre cables scheduled for completion in 2008: EASSY and TEAMS.
It has also come to the attention of the research team that there are informal BPO operations taking place in various sectors including design work and architectural drafting. These usually consist of Kenyans in the diaspora sending work to associates in Kenya using ICTs. At the moment it is impossible to measure the extent of such assignments, or their economic value.
The BPO training industry is also growing with various external stakeholders such as AITEC, Rod Jones and Marcus Evans holding training events, as well as local companies such as ICT Village. Several companies are also poised to expand their hardware assembly businesses in anticipation of an increased demand for ICT hardware in the wake of an expanding BPO sector. This includes a Ministry of Information and Communication-sponsored initiative involving two public universities, a private university and a parastatal telecommunications college in hardware assembly.