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Outsource magazine: thought-leadership and outsourcing strategy | October 23, 2014

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Interesting times...

Interesting times…
Gilda Odera
  • On September 6, 2010
  • http://www.skywebevans.co.ke

These are indeed interesting times! For one, whoever thought I would be writing a column for Outsource magazine- me, a Kenyan who only got into the outsourcing space five years ago? Hmm: interesting times!

Even more interesting is how much interest the global arena is now taking in Kenya – and for many reasons too. Yes, I know the Obama factor created much interest amongst those who never quite look outside their own “compound” to find out what the neighbour is up to, but that is only one factor.

What is great is that so much is going on here in Kenya that even we are having a problem keeping up with the good news every week. Suddenly there is so much hustle and bustle and so many delegations of visitors flying in and out to explore the opportunities they have heard of about our beloved country, even if only for one night.

Interesting too is the fact that the outsourcing giant nation India is now looking for favourable partners in Africa since their growth is now surpassing their human resource capacity for specific tasks – and Kenya is topping the list to “help out” in some work.

And it may work out well for the brave lot who come in first and secure their place.
A great misconception of Africa has been that it is more or less like one country – yet it is so diverse that if one hits the wrong button in the wrong place, one may come to very erroneous conclusions about doing business here.

The outsourcing industry in Kenya is about six years old now. Like many other countries, Kenya started off with call centres. One of the greatest challenges during the first five years – for all the operators – was the high cost of internet bandwidth. At the time, Kenya was still receiving internet bandwidth via satellite. Not only was this very expensive but it also was disastrous to call centres due to lines “chopping” in the middle of conversations.

But this is now a thing of the past. Kenya now has a total of three fibre optic cables landing into the country, namely:
-     TEAMS (The East African Marine System), an initiative spearheaded by the government of Kenya to link the country to the rest of the world through a submarine fibre optic cable. It was first proposed as an alternative to EASSy, the East African Submarine Cable System, and went live before EASSy.
-    SEACOM, the first cable to provide broadband to countries in East Africa. Within Africa, South Africa, Mozambique, Tanzania and Kenya are inter-connected via a protected ring structure. Additionally, a second express fibre pair is provided from South Africa to Kenya. These two fibre pairs have a combined capacity of 1.28Tbs. Express fibre pairs are also provided from Kenya to France into a PoP in Marseilles, and from Tanzania to India into the PoP in Mumbai. SEACOM has procured fibre capacity from Marseilles to London as part the SEACOM network.
-     EASSy, a 10,000km submarine fibre-optic cable system deployed along the east and south coast of Africa to service the voice, data, video and internet needs of the region. It links South Africa with Sudan via landing points in Mozambique, Madagascar, the Comoros, Tanzania, Kenya, Somalia and Djibouti. The cable incorporates the latest developments in submarine fibre-optic technology, making it economical to connect the eastern and southern coast of Africa into the high-speed global telecommunications network. The system is owned and operated by a group of 16 African (92%) and international (8%) telecommunications operators and service providers.

It is well known that the outsourcing industry requires reliable and affordable communication infrastructure and with the landing of the three fibre optic cables, Kenya has “lit up” in the truest sense.

The cost of internet bandwidth is now down to (US)$500 per MB, all the way down from the $6,000 per MB that operators were coughing up a couple of years ago. It is no wonder the industry took rather a long while to pick up…

The entrance of two other mobile phone operators into the market has also been a great boost to the industry and other businesses at large. Mobile calling costs are now down by 60% to $0.025cts per minute, making the population now cheaply connected.

With such affordable communication, outsourcing companies can now thrive in Kenya.

Remarkably interesting too is the real estate market. Generally, Kenya has always had a robust real estate sector that responds quickly to the market’s demands. The large number of first-class business parks coming up is a real boost to the industry.
This is absolutely necessary for growth. Most companies I have seen coming in for due diligence recently say they expect to scale up to around 5,000 seats within three years. There has been a mushrooming of several call centres and other BPOs creating a natural cluster along the main highway from the airport to Nairobi. This is ideal for visitors coming in and out of BPO centres.

The domestic industry has grown too, with several companies setting up in-house call centres, something that was not as prevalent four years ago. As a result, there are more experienced people coming up in the industry. The industry is now has an estimated 10,500 seats, with at least another confirmed 5,000 jobs to come in from early next year from companies setting up in Kenya.

Given the unique nature of the people of Kenya, it is clearly emerging that its outsourcing industry is taking route in three niche areas: call centers; financial and accounting; and Legal Process Outsourcing.

One attractive thing for the industry is that the government is keen on bringing in efficiency into all their systems. This means lots of digitisation work for BPO companies. There is great potential here for joint ventures with Kenyan entrepreneurs to tap into such opportunities. Indeed some well-known global names (which I cannot mention here) are already in the process of putting together shared services for all government ministries. I have seen a 200-seat centre coming up for judicial services, and there is another of a similar size for company registrations.

There is an awakening of interest in Legal Process Outsourcing and F&A outsourcing here in Kenya. This is not surprising, considering that these are the strongest sectors nationally.

Several law firms and outsourcing firms are enlisting to attend the LPO conference scheduled to take place in India in November, all aiming at possible joint ventures or business opportunities. Many are already offering services both locally and internationally. There is also a sudden interest over the past three months from Legal Process Outsourcing firms in India looking to set up bases in Nairobi to spread their tentacles as well as tap into the labour force in this market.

With a data base of at least 1,200 law graduates each year (not counting para-legal personnel) the industry has the potential to thrive. Our Commonwealth-based law also puts the country in a good position to handle work from countries like the UK and India.

The legal sector is governed by the Law Society of Kenya, which is established by an Act of Parliament. This provides for a secure avenue of ensuring that all those involved in legal work are checked by the Society itself. Does this mean Kenya will be better known for Legal Process Outsourcing? I do believe so: only time will tell, but watch out for this.

The F&A sector is very strong, and governed by the Institute of Certified Public Accountants of Kenya (ICPAK)as well as the Association of Chartered Certified Accountants (ACCA) which has very strong presence in Kenya. ICPAK is a statutory body established under the Accountants Act, 2008, for the regulation of the profession of accountancy in Kenya. The Institute has achieved recognition as a professional body for its contribution in the fields of education, professional development, maintenance of high accounting, auditing and ethical standards.

There is such keen interest and development in the outsourcing arena by accountants in Kenya that next year, during the first quarter, ACCA plans to hold an international conference in Kenya with emphasis on outsourcing.  Already, various accounting firms provide services both locally and internationally.  Kenya’s strong workforce in the financial and accounting sector of both accountants and accounting technicians provides a good pool for the industry. With over 4,000 graduating as certified accountants and as accounting technicians each year, the industry is on a growth path.

Things are really shaping up in Kenya: I am sure that in one year’s time, Kenya will be having a number of “big” names doing business here. It has only just begun.



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