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OUTSOURCING & CONTACT CENTRE 2008: Africa Agenda: Outsourcing to Africa: Dream or Realistic Aspiration?

09/12/2008 +0000 GMT

User Comment(s)  | By Selorm Adadevoh

African ICT news

On 4 and 5 November 2008, at the two-day East Africa Outsourcing & Contact Center Conference held in Nairobi, Kenya, by AITEC, I was honored to share my views about Africa’s position in the global outsourcing space. I also had the opportunity to meet several CEOs, managing directors, entrepreneurs and government officials in the outsourcing and overall ICT industry and observed firsthand the optimism about Africa’s potential to be a global outsourcing force. However, under the rich silky covering of the optimism lay a conundrum – Is Africa’s hope of a viable outsourcing industry just a dream or a realistic aspiration?

Africa’s outsourcing industry is very young but continues to grow slowly and gradually begins to attract global attention and consideration in key research papers, publications and business meetings. The conference gave me a good opportunity to learn a lot from the current big shots in the Kenya outsourcing industry on the drivers for this new trend and what Kenya’s immediate and potential contribution in the global outsourcing industry is. Personalities such as Nicholas Nesbitt, CEO of Kencall, Kenya’s largest outsourcing company and Dave Stewart, Managing Director of Horizon Contact Center, a new state of the art outsourcing business looking to launch in early 2009 and become Kenya’s second largest outsourcing business, all spoke positively about Kenya’s outsourcing potential. This bodes well for the budding trend of exporting Kenyan talent in a country that has for decades relied on tourism and exports of horticultural and other agricultural products. Could outsourcing be Kenya’s next big industry?

Three main issues struck me: Firstly, it was obvious that in Kenya, a lot has been done from a government perspective to boost the outsourcing industry. Several discussions have been had and the ICT Board and Kenya Outsourcing Board, headed by Paul Kukubo and Gilda Odera respectively, have been instrumental in encouraging more growth in the outsourcing industry through subsidies, tax gifts, marketing etc. While these initiatives are all necessary, the overarching plans for Kenya as a country seemed unclear to me. For instance, where does Kenya as a country hope to be in the next 5 years – 200 outsourcing businesses from 60+ today? What number of seats need to be available and how does that translate into Kenya’s success in outsourcing? Should multiple 20-seat enterprises be encouraged or should internal consolidation and partnerships be explored? While these are unclear to me, they are not trivial questions to answer. It is my hope that Kenya is already answering most of these questions and has a plan in place to answer the rest soon.   

The second thing I considered was the basic question of scale. According to a recent study, India is half a million agents short of meeting the global demand for BPO services. With a population of almost one billion people compared to forty million for Kenya, one cannot help but ask what niche or specific offering Kenya hopes to capture that will make it attractive and scalable within that core area, enough that Kenya can be considered more frequently in executive meetings as a potential option for outsourcing.

If countries do not have specific specializations, can African countries then provide the level of scale required to meet the growing global demand for outsourcing? India currently employs close to one million personnel in BPO and with a big shift up the value chain into more value-add areas such as engineering, knowledge process outsourcing (KPO) etc., India’s shortfall has resulted in high demand for the limited experience available elsewhere and this has consequently led to a rising labor cost and high attrition in the outsourcing space. All these factors are compelling for new entrants, but the most attractive are those that can actually solve the issue long-term and not just provide a temporary fix only to present the same issue in a few years. Scale is a huge issue and has seen China and Eastern European countries grow recently as attractive outsourcing alternatives to India. Personally, I think while there is a limitation to how much scale Kenya can achieve, there is no reason why the current approximately 40% unemployed cannot be tapped into as a source of talent for supporting a growing outsourcing nation. Also, if niche plays are followed as per my earlier thought, the level of scale will be unique and probably at levels that the available potential talent can support with the adequate education and training programs.

Lastly, one of the points I raised in my presentation was the possibility of supporting local businesses, i.e. large African corporates. This strategy for growing Africa’s outsourcing industry was one that I personally lean to. It was no surprise to me when two of the speakers, Mahesh Punia, CEO of LiveBean Consulting, and Eric Nesbitt, COO of Kencall, both suggested the same strategy. Should Kenya be in competition with India at all? Is near-shoring a more compelling strategy for Kenya and African outsourcing businesses overall? While this appears to be a sound strategy, the economics still need to play out. It was interesting to learn at the conference that companies such as Safaricom – to date the largest mobile phone company in Kenya – actually considered local outsourcing companies for handling Safaricom’s customer services but the economics and quality provision made it more compelling for them to do it themselves. To pursue the point further, expanding economies like Nigeria and Ghana are also creating larger organisations that created demand for near-shore outsourcing opportunities that will offer great value and savings to businesses and expand the outsourcing industry in these countries.  

Overall, the conference was a positive one that highlighted how far Kenya has come since identifying outsourcing as one of its six pillars of economic development and how much more there is in terms of potential. My personal view is that African countries need to focus on being attractive for near-shoring opportunities and focus less on competing with India and China at this point because there is a huge variance in the value propositions and a large need for outsourcing within the continent itself. It begs the question, why look elsewhere?

As published in Ratio Magazine http://www.ratio-magazine.com/

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