Ratio Blog: Kenya Needs a Better Formula for Outsourcing Industry

Tuesday, 17 November 2009

Outsourcing often gets people in charge of economic policy rather hot and bothered. But there seems to be a disconnect between ambitions and how to turn them into reality. Andrea Bohnstedt’s weekly column for the (Nairobi) Star. What for? Why?’ muttered my software company CEO friend under his breath with slight irritation. He was sitting next to me at the AITEC outsourcing conference, having strolled in just in time for lunch, and at that moment, he did not feel as if he had missed much. We were listening to a speaker from a Southern African government institution talking about developing standards for the ICT industry. Now, this friend is not someone who has problems with standards — but he said that in the three years that he had marketed his company’s services to international clients, this simply had not been relevant. No client had ever asked him about standards. As the conference progressed, there were more of these moments of a disconnect between what governments said and did, and what companies expected — and what the industry experts thought about both. Outsourcing often gets people in charge of economic policy rather hot and bothered. Infinitely more legal than a pyramid scheme, it nevertheless comes with almost the same get-rich-quick appeal, only marginally less attractive than a massive oil find. But whereas many developing countries have made a bit of a meal out of their oil sector (Niger Delta anyone?), India had grabbed outsourcing and effectively become a global benchmark for the industry. For many African countries, India is an enticing example. A fellow poor country that has managed to move on from the traditional reliance on the primary sector to build a powerful services and technology industry that also creates a lot of employment, especially for young people. Kenya has exactly those ambitions. The ICT Board - the parastatal charged with developing this sector - aims to turn Kenya into a top 10 global outsourcing destination. With the fibre optic cables, a key part of the necessary infrastructure is finally in place. But this is merely the infrastructure, not the formula for the industry’s success. In the industry, there had been some raised eyebrows that the ICT Board team spend a lot of time (and money) on ‘study tours’ when it is ironically ICT itself that puts global knowledge at the fingertips of anyone who can use Google, email and Skype. A strategy for the BPO industry had been acquired from an international consulting firm at the rates typical for such international consulting firms, i.e. hefty ones, and had not impressed much either. “Most of that I could have told them for free, had they bothered to ask me,” said one industry professional. On the sidelines of the conference, another argued that the concept was not adapted to the current state of the industry in Kenya and so ended up being the usual generic blueprint, never mind that the engagement stopped at the delivery of the report.  Conference speakers Jerry Durant and Bobby Varanasi, both experienced professionals in developing the outsourcing sector, were very specific: Being competitive is no longer just about costs. There will always be a cheaper next-door neighbour. Kenyan companies need to focus and specialise. What the government can and should do is a delicate balance. Setting standards that the industry does not need may turn out a waste of time, as may be extensive study tourism. Bobby even went as far as arguing that Kenya should market KenCall, just market KenCall. If one punchy player can turn Kenya into a credible outsourcing destination, then clients and other large operators will follow. It does not help the credibility of Kenya’s BPO sector if its image is shaped by a gaggle of small and low-skill operators. Global markets have changed rapidly. How India became successful when it started is unlikely to still be the recipe for success. The industry has become wildly more competitive, and wildly more sophisticated as technology developed. It is not only Kenya that eagerly seeks to emulate the industry pioneer, a large number of other countries are looking at exactly the same opportunities. What Kenya currently emphasises as its key advantages, e.g. a time zone close to the European market, and an English speaking, well trained labour force, are hardly unique to Kenya. Ghana, for example, sits exactly in the same time zone as the UK, also has an English speaking, enthusiastic young labour force — and managed to hold its last elections without resorting to the use of rocks, pangas and ethnic cleansing. Not an insignificant factor when trying to convince investors and clients to the domestic industry to part with some serious cash. Republished with permission from the (Nairobi) Star. Share this article with others: Comments (0) Subscribe to this comment's feed Write comment Show/Hide comment form Name Email Title Comment smaller | bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Add Comment