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Outsourcing Boom Coming to Kenya.

Outsourcing is the process of an organization or person contracting a company or person to do a particular function that is considered non-core. Outsourcing has emerged as one of the world’s fastest growing business sectors with countries like India leading the pack by having between 5-6% global market share and generating revenues of US$ 10.9 Billion from offshore outsourcing and US$ 30 Billion from IT and total outsourcing in 2008. The success of countries such as India, China and the Philippines in outsourcing has led to many countries, including Kenya, investing substantial resources to develop their outsourcing potential.

Although Kenya already has a growing outsourcing sector with over 50 registered companies operational, a boom is expected from this year. The main reason is that in June 2009, the first of three high-speed undersea fiber-optic cables will become operational in Kenya. The first to go live will be the SEACOM cable, followed by the TEAMS cable later this year and EASSy cable in the second quarter of 2010.

The cables, once operational, will give Kenya significantly faster, more reliable and less expensive telecommunications connectivity to the rest of the world. One report suggests that the Internet costs could drop by as much as 70% which means that a far larger number of Kenyans will be able to go online as it becomes much more affordable. Ultimately, all these factors will make Kenya much more competitive in offering outsourcing services in the global marketplace.

Apart from the much improved telecommunications that the high-speed undersea fiber-optic cables will provide the emerging outsourcing sector, Kenya has an abundant English speaking population who are highly literate and IT skills competent with clear accents that are ideal for call centers. It also has the advantage of a skilled and cost-effective workforce that has over 20,000 young graduates coming into the job market every year.

The Kenyan Government has also introduced a raft of incentives to make investing in outsourcing businesses a very attractive proposition. In fact, Outsourcing is underscored in Kenya’s recently unveiled Vision 2030 initiative as a key pillar and driver of social and economic improvement through job and wealth creation. Some of the key organizations that are driving the Kenya outsourcing agenda include the Kenya ICT Board, Kenya Business Processing and Contact Center Society , Export Processing Zones Authority, Communications Commission of Kenya and the Ministry of Information and Communications.

In the outsourcing sector of the Kenyan economy, the largest amount of attention has been centered on call centers. Companies such as Kencall, Skyweb Evans and Ken-Tech Data are some of the better established and successful call centers in Kenya. Setting up a call center requires large financial resources, technical expertise and international business development. For these reasons, this may not be most ideal of the outsourcing opportunities.

However, there are many low-cost entry points into the outsourcing sector. One of these is by leveraging online marketplaces that enable individuals and businesses alike to bid for outsourced assignments. Some of the largest online outsourcing marketplaces include eLance , RentACoder , and Guru which enable anyone from a software developer to an accountant to create their service profiles and then bid against competing bidders for assignments from practically every corner of the world.

Outsourcing is generally broken down into two distinct focus areas, Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO):

BPO, fundamentally, is the contracting of operations and responsibilities of a specific business function to a third-party service provider. Examples of BPO services include information technology systems management, multimedia and animation, bookkeeping and financial services, business consulting, computer assisted design, call centers, data entry, desktop publishing, typesetting, Handwriting services, human resources services, internet marketing, legal services, medical billing, proofreading, editing, software & technology, transcription, web design and web development, writing and translation.

KPO, on the other hand is outsourcing in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization. Examples of KPO services include knowledge processing services, intellectual property research, animation and simulation services, data research and analytics, litigation services, medical content and services, pharmaceuticals services, writing/content development services and database development services.

This article was written by Moses Kemibaro and published in the April 2009 edition of Adam Magazine.

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17 Comments

  1. Collins Akeyo
    May 26, 2009 at 6:15 am — Reply

    Could you email me the contacts of all the players in this Industry if got any we are working on a write on ICT and their contribution will be appreciated.

    Regards,

    • February 22, 2012 at 12:59 pm — Reply

      Collins, if you made some headway on the write up. Please do get intouch. I am in need of some information in the ICT sector.
      thanks

  2. June 27, 2009 at 12:52 am — Reply

    So is Kenya going for BPO just like what India and Philippines BPO does? It’s very interesting to see more and more countries are getting into the outsourcing business. Mainly because foreign business owners pay their third party outsourcing company with dollars, which has a high value in India and Philippines.

    I believe contact center services are the most popular outsourced service in these countries. Where they train their staff to speak fluently in English in order to deliver quality service to both their clients and their clients’ customers.

  3. July 22, 2009 at 8:12 am — Reply

    It’s good to know that the scope of outsourcing business has widened and reached to a number of countries. This doesn’t only tell about the current situation of a country but also its future. Thanks for the share.

  4. Nyanjui
    November 30, 2009 at 10:35 am — Reply

    This is a step in the right direction. The world is becoming a global market where services can be provided from any place in the world. For Kenyans, this is a good step to provide employment and overcome poverty.

  5. March 2, 2010 at 3:45 am — Reply

    I think this post is brilliant. Thank you for your thoughts; you bring up an interesting point. I believe outsourcing is necessary in today’s business environment to save on cost. It has become necessary to cut the corner every where to remain competitive.

    – Yolanda

  6. Rash M
    March 26, 2010 at 5:45 am — Reply

    I real need to get into this business, is there anybody willing to mentor or give me some more information on how its to go around. this will be great.

  7. May 6, 2010 at 6:56 am — Reply

    Yes, BPO is the business growth strategy for Kenya now and the future. I am already in the business of outsourcing accounting and internal auditing services locally and internationally. BPO not only cross border business but also involves the contracting away of non core business activities like accounting, internal auditing, human resources, security, IT, payroll services,cleaning, marketing, book keeping, debt collection etc. to the BPO Centre or Company locally.

    This helps the outsoucer to remain competitive and therefore, grows faster since all the energies are directed to core business activities only.

    This is the strategy that can enable small businesses to grow to medium businesses and the medium businesses to large companies and large companies to multi-nationals.

  8. violet kathambi
    May 30, 2010 at 5:07 pm — Reply

    Hallo,
    am a student at strathmore university and doing a project on BPO’s in Kenya but am stuck in some areas, mainly about the entry strategy of a BPO and what are the qualifications of a company to have in order to set up one? please help

    • May 31, 2010 at 3:30 am — Reply

      I’d suggest you talk to the Kenya ICT Board. They have done lots of research on BPO in Kenya.

  9. August 17, 2010 at 7:47 pm — Reply

    hi,
    this kind of articles gets my attention knowing that other does BPO too. so does Kenya has a BPO company now. that’s really a good choice for business there, like what my company has today here in the philippines.
    .-= TryBPO´s last blog ..BPO Philippines- Indispensable Business Process Outsourcing Hub =-.

  10. outsource design
    December 6, 2010 at 11:43 pm — Reply

    This is very informative article..This article show that outsourcing is very demand in business. Kenya currently has infrastructure hurdles that stand between it and this industry, the evolution of the industry in Kenya proves we have serious intentions that call for the development of training programmers
    that will facilitate knowledge to support this industry.

  11. Jascinta M
    August 14, 2011 at 9:36 am — Reply

    this is very good stuff.I am writing a research paper on effects of outsourcing on organization performance.please help with I deal articles

    • February 22, 2012 at 12:58 pm — Reply

      Jascinta,
      did you finish the research paper?
      Am looking for statistics on Outsourced services in the country.
      Do get in touch if you do have some data.

  12. Nalink
    February 4, 2012 at 8:29 am — Reply

    I agree with the sentiments posted.BPO is here to stay and to change Kenya towards achieving vision 2030.

  13. April 15, 2012 at 12:34 pm — Reply

    I like this idea its encouraging.Outsourcing will help bring new ideas and sharinf new insgihts and brigge the gap of skilled and unskilled.This is the trend in the world over
    i want to be counted in.KENPRO services Eldoret

  14. wilson
    September 21, 2012 at 5:44 pm — Reply

    Hi Am really interested in the outsourcing business and l want to venture into it, could somebody please mentor me on how to go about it, l would really appreciate.

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