Developments on the global stage are prompting operators in Kenya’s business process outsourcing (BPO) industry to consider partnerships with foreign investors in order to enter international markets. TradeInvestAfrica interviewed the managing directors of two major BPO firms on the prospects of the growing industry is improving its prospects.
Munjal Shah is the managing director of Ken-Tech Data, which started operations in 2006 performing non-voice data jobs locally. The firm has since expanded its activities to accommodate international clients and is among the top three BPO/ITES (Information Technology Enabled Service) companies in Kenya.
Gilda Odera is a pioneer in Kenya’s outsourcing industry and the managing director of offshore outsourcing solution providers Skyweb-Evans, established in 2005. Odera also set up the African BPO Academy to promote large-scale talent development for the BPO and call centre industries in Kenya, Tanzania, Uganda, Rwanda and Nigeria. She is the chair of the BPO/ITES working group in the office of Kenya’s prime minister. The working group is comprised of private sector consultants and advises the government on BPO/ITES matters.
Kenya’s BPO sector seems to have two faces - one quite thriving and the other battling. What challenges are operators facing?
Odera: Lack of sufficient and consistent work for the BPOs remains a challenge. The country is slowly getting recognition and as soon as a few big international players set up shop in Kenya, it
will send a positive message out there to others looking to outsource work to new destinations.
Shah: The industry was in its infancy when we started operations and our major challenge was finding qualified staff to handle business from our international clients. Another challenge has been the high cost of bandwidth, which made all our bids uncompetitive in the global market. The fibre cables have now reduced the cost of bandwidth, but we look forward to Internet service providers lowering prices further, because it is still high compared to other competing BPO destinations such as India and Philippines.
Several fibre optic cables have landed in the country. To what extent has this development benefitted BPOs?
Odera: It is a development for the entire ICT industry given that it has reduced Internet bandwidth costs and improved on quality. More people now have access to the Internet although the
figure should be higher.
Shah: Fibre optic cables have resulted in reliable and faster Internet connections. The lowered costs have helped Ken-Tech to compete in the international BPO market. We can only expect the Internet costs to go down further from the current average of $500 per mega byte. It is quite a significant drop from the $5000 per mega byte we used to pay a year ago.
The lack of skills in the industry is a bottleneck for industry operators. The option of in-house training obviously dents bottom-lines. Are the colleges that target the BPO sector regulated enough to produce competent graduates?
Odera: There is a process going on to put in place a proper curriculum. However there are international certifications like BCI certifications for BPO, accounting, contact centre work and technical work in BPOs being offered by the African BPO Academy. BCI is
the world’s largest BPO standards and certifications organisation and the African BPO Academy is the franchise holder in East Africa - BCI is an equivalent of ISO certifications but for BPO. The academy is offering business opportunities to training institutions to offer the BCI certifications in East Africa.
Shah: Lack of skills is definitely a bottleneck for the industry operators. The Kenya ICT Board plans to establish a BPO Centre of Excellence programme, in collaboration with Kenya’s universities in order to provide a curriculum that is appropriate and in line with the current education system. Ken-Tech has high hopes about this development and would like to partner in the initiative.
Do you think the proposed law on data protection will land you clients in the financial sector?
Odera: It definitely helps but is not the only solution to getting clients. It is very important though.
Shah: Definitely. We expect more growth in the industry immediately after the government moves forward in effecting data protection law and impressing on internet service providers the need to lower prices.
(Editor's note: Lack of data protection law to assure players in the financial sector of the safety of their corporate information is one of the major factors that have made banks prefer handling their customer services internally.)
Does the government offer incentives to the BPO sector?
Odera: Not much currently although those setting up in special economic zones can get tax breaks of up to 10 years.
Shah: Other than bandwidth subsidy that was in place before the arrival of fibre cables, there are no major incentives. The industry would however benefit from incentives such as tax holidays and industrial training levy rebates.
How will the developments in the East African Community (the launch of the common market protocol) affect your operations?
Odera: It may open up new opportunities to serve companies within the region as we integrate more.
Shah: Ken-Tech is a group of companies with a presence in 18 African countries. The common market protocol will enable the company to further expand its operations in the East Africa region.
Odera, do you think perceived political risk is undermining foreign direct investment (FDI) into Kenya?
One cannot downplay this fact. Perception is a key determinant to foreign direct investment flows. Often what companies see in the media greatly influences their business decisions even though such reports may not reflect the situation on the ground. The international perception of Kenya has slowed down the growth of the BPO industry. Sadly though, there
is an incorrect perception in many areas regarding the country and there is need for proper marketing to correct negative perception. The few companies that have been brave to ignore unfounded political risk advisories are reaping the rewards.
