THE arrival of three international fibre-optic cables in Kenya in the past six months, the most recent this week, has sparked hopes of an information-technology boom. The Kenyan government reckons that business-process outsourcing (BPO) can provide work for the country’s many unemployed graduates. As established outsourcing companies in India take on ever more complex and lucrative work, firms elsewhere spy an opportunity at the lower end of the BPO market, in prosaic jobs such as operating call centres and keying in data. Can Kenya win some of that business?
Four undersea cables will have made landfall in east Africa by the end of the year, enormously increasing the availability and reducing the cost of telecoms links with the rest of the world. Kenya also boasts a decent workforce: educated, hard-working, closer to customers in Europe and America than Asian call-centre workers, and, some say, more comprehensible too. High unemployment should help limit turnover of workers—a big headache for outsourcing firms elsewhere. One of the government’s advisers, Gilda Odera, who runs a school to train call-centre employees, says warm customer service will also give Kenya an edge: “It’s the way Kenyans deal with people, the tone, the manner.”
But a smile and a cable are not enough in the cut-throat BPO business. Margins are slim; customers are fickle. “It’s not plug and play. The operational costs and political risks are significant,” says Andrea Bohnstedt, the editor of Ratio, a Nairobi business journal. “Connectivity is not a source of celebration just yet,” agrees Bobby Varanasi, a consultant in the field.
Would-be investors say Kenya’s tax code is unfriendly and, given the complete lack of public services, poor value. Crime is rife and electricity is patchy. The extra cost of paying for private security and backup generators can upend a business model. Some expect widespread violence in the run-up to elections next year. High costs and jammed roads make Nairobi an expensive place to build a giant call centre. Setting up further away from the capital would be cheaper, but a proposed high-tech city has stalled.
At the moment only 8,000 Kenyans work in BPO. Local banks and insurance companies, which are in growing need of their own call centres, guarantee some growth. But the government is much more ambitious: it reckons it can create 120,000 BPO jobs by 2020. The first step, officials argue, is to encourage consolidation among the country’s many small call centres, with less than 100 seats. The economies of scale of giant centres of 5,000-10,000 seats, it is hoped, will minimise the disadvantages of doing business in the country.
Other African countries have similar ambitions. Ghana has also identified BPO as a pillar of future development. It wants to create 40,000 jobs by 2015, with a longer-term goal of earning $1 billion a year from the industry. It, too, is talking of technology parks across the country. But as in Kenya, many Ghanaians complain that their government’s technocratic talk is not matched by action.
If BPO does blossom in Africa, there could be many positive repercussions. Call centres could train lots of managers, who could then apply their experience to other industries. In this way, say boosters, call centres could serve as incubators of local business talent—provided, of course, that the power stays on.