Description
Kenya is preparing itself to enter into the global and vibrant Business Process Outsourcing (BPO) and IT Enabled Services (ITES) market. It however lacks empirical evidence and tailored research to guide its policy decisions and investment options. There is demand and specific requests from the government and key stakeholders in the sector for this type of information.
Development of a Business Process Outsourcing Industry in
Kenya: Critical Success Factors
IDRC Grant o! "#$$%%&##"
Policy Brief
'y
Prof! (imot)y *! +aema
,Principal Investigator-
Gilda Odera
Cat)erine !.! .deya&+eya
Peres +ere
/up)rait) *ut)oni *asinde
C)ristop)er C)ep0en
/unice Kariu0i
Peter Kenduiy1o
.ugust 2##3
This report is presented as received by IDRC from project recipient(s). It has not been subjected to peer review or other review processes.
This work is used with the permission of Timothy M. Waema.
© 2009, Timothy M. Waema, Gilda Odera, Catherine N.A. Adeya-Weya, Peres Were, Euphraith Muthoni Masinde, Christopher
Chepken, Eunice Kariuki, Peter Kenduiywo.
/4ecutive Summary
Kenya is preparing itself to enter into the global and vibrant Business Process Outsourcing (BPO) and
IT Enabled Services (ITES) maret! It ho"ever lacs empirical evidence and tailored research to guide
its policy decisions and investment options! There is demand and specific re#uests from the
government and ey staeholders in the sector for this type of information! This policy brief is a
synthesis of a study "hose aim "as to provide evidence and a deeper understanding of the imperatives
for success in this industry to better inform Kenya$s policy decisions and investment choices! It "as
carried out through a case study method to establish the critical success factors in four vendor countries
(India% South &frica% 'auritius and Kenya) "ith relation to the policy% legal% regulatory and
institutional frame"ors( human resource issues( youth and gender issues( and various forms of
incentives! The study also researched on the outsourcing issues in t"o client countries ()K and )S&)!
The research found that in the three countries (e*cluding Kenya)% the BPO+ITES industry is given a
high priority% there is strong and appropriate legal frame"or and the industry associations are strong
and are ey in driving the BPO+ITES industry% "hile in South &frica the national and regional
associations receive state funding! On human resources% the study found that India introduces children
to science and technology at a very early age and it has a ,ational Sills -egistry and that in 'auritius%
the national association "as "oring "ith the government to create an I.T academy to train for the
industry! The research found that countries had differing measures for gender e#uity% participation of
youth in employment% and incentives in the BPO+ITES industry! It "as particularly noted that South
&frica did not have ta* incentives but had a variety of investment and training and sills support
incentives% "hile 'auritius had abolished all the ta* incentives e*cept for a /01 corporate ta*!
The study found that the ey drivers in out+sourcing and off+shoring in both )S& and )K "ere
similarity in "or culture and #uality! The ma2or industries "here most of the outsourced "or is
derived "ere found to be in baning( investment management( insurance( legal( supply chain% logistics%
transportation( healthcare( ne"s% media 3 entertainment( energy and utilities( agriculture4food(
pharmaceutical4biotech( government 3 public agencies( and manufacturing! It emerged that no &frican
country featured in the top /5 preferred outsourcing destinations in the )S& "hile in the )K% only
Egypt in &frica "as in the top three perceived best three destinations!
6or Kenya% the research found a "idespread perception that it laced an effective and focused
mareting as a BPO destination! It also emerged that Kenya (and &frica in general) is vie"ed as a
country (and continent) "ith challenged infrastructure% poor "or culture4ethics and constraining socio+
economic environment! 7o"ever% individuals4organi8ations that have had a chance to visit4interact
"ith Kenya(ns) have a different testimony( Kenya has a high chance of being a favorable outsourcing
destination if correct measures are put in place! The study contends that Kenya has ey strengths%
including a highly silled and competitive pool of labour% neutral English accent% strategic location as a
regional hub for communication and finance% and production of over 95%555 and over :05%555
university high school graduates annually% respectively! In addition% Kenyans generally have a "arm
and "elcoming culture4attitude% due to the predominance of the tourism and hospitality industries in the
economy!
;hen the above strengths are considered% the provision of call centre/customer services an ideal niche
for the country to carve for itself in the BPO space! Kenya can also capitali8e on its large pool of high
school and diploma graduates to provide back office services such as transcription% digiti8ation% data
entry and various other data processing services! In addition% Kenya can use its e*cellent education
:
system to create a niche in BPO-ITES training for the region!
The ey policy recommendations are<
? ) =evelopment of a BPO sector policy as pledged in the medium term plan of >ision :595!
? ) In order to address the lac of a strategy and a "ea '3E frame"or% combine the results of
this study "ith those of 'cKinsey3.ompany and create an informed strategy for the BPO
sector in Kenya and strengthen the '3E functions of the KI.TB and >ision :595 Secretariat!
? ) .reate a single I.T+BPO sector and mainstream it into the national planning and operational
frame"ors!
? ) In order to address the "ea legal frame"or% strengthen e*isting la"s to provide an enabling
legal frame"or for I.T+BPO in the short+term% "hile in the medium+ to long+term% develop
separate legislations critical for I.T+BPO sector and compliant "ith relevant international la"s!
6or youth and gender% amend the Employment &ct% :55? to e*plicitly regulate "oring hours
for employees and to re#uire employers to facilitate safe commuting at night!
? ) =evelop a BPO incentives frame"or as an integral part of the la" that "ill transform EP@s
into SE@s! In addition% provide ta*% training and set+up incentives for a specific time period to
encourage BPO industry gro"th% especially in the rural areas!
? ) In order to address the lac of standards% develop BPO standards% benchmared to international
standards and ensure all ey BPO firms adopt these standards!
? ) 6or institutional frame"or% change the mandates of an e*isting body to coordinate all the
institutions that deal "ith BPO in the short+term% "hile in the in the medium+ to long+term%
create a ne" entity (body corporate "ith po"er and a po"erful champion) to coordinate I.T+
BPO activities across all ministries and public enterprises that have a role to play in I.T+BPO!
In addition% strengthen KBPO..S to be the ey BPO industry association and create a strong
I.T association!
? ) In order to address the lac of updated sills database% establish frame"or for collection and
updating of I.T sills data and tas the national body responsible for I.T+BPO coordination to
be established as recommended under institutional frame"or "ith this responsibility!
? ) 6ast+trac implementation of integration of I.T into education as defined in Sessional Paper
,o! / of :550 on Policy 6rame"or for Education% Training and -esearch and the ,ational
Strategy for Education and Training
55A)!
? ) In order to address BPO sills sets% create a policy and strategy on I.T+BPO sills re#uirements
and mainstream into relevant ministries for implementation!
? ) =evelop and implement a mareting% branding and positioning strategy for Kenya!
"! Introduction
The study "as conducted by the School of .omputing and Informatics% )niversity of ,airobi% in
collaboration "ith the Kenya BPO 3 .ontact .entre Society (KBPO..S) and the Kenya I.T Board
and it "as funded by the International =evelopment -esearch .entre (I=-.)!
Pro'lem
Building on the Indian Success story% "here I.T has gro"n from a negligible industry over 95 years
ago to an industry that produces a significant portion of B=P% many developing countries such as
Philippines% 'auritius% Kenya% Bhana% -"anda and .osta -ica among others have identified I.T as a
ey sector for achieving rapid economic gro"th! In particular% the Business Process Outsourcing and
IT Enabled Services industry% "here commercial and industrial corporations in rich countries outsource
9
their non+critical operations to developing countries "here costs are much lo"er and at the same or
higher #uality% has been identified as an opportunity! &s Kenya is preparing itself to enter into the
global and vibrant BPO+ITES maret% it ho"ever lacs empirical evidence and tailored research to
guide its policy decisions and investment options! This study on "hich this policy brief is based "as
aimed at addressing this challenge!
O'5ective
The overall ob2ective of the study "as to undertae comprehensive research in the business process
outsourcing (BPO) sub+sector in pioneer% emerging and mature marets to provide evidence and a
deeper understanding of the imperatives for success in this industry to better inform Kenya$s policy
decisions and investment choices!
Researc) *et)odology
The researchers used the case study approach% "hich involved a revie" of e*isting documents! These
documents included national policies and strategies% la"s governing the BPO sector4industry in a
country% publicly available documents on the BPO firms and associations chosen to be part of the case
studies! 6urther% the case study involved ey informant intervie"s "ith the ey national officials and
persons involved in the BPO firms and associations! These people "ere identified through contacts the
researchers had% contacts from other intervie"ees and search through the "ebsites of the chosen BPO
firms and associations! In one or t"o cases% the researchers used the Embassies of the case study
countries to obtain contacts!
6inally% structured #uestionnaires "ere administered for the various sources of information% namely
"ith BPO vendor managers% BPO client managers% BPO consultants% and youth and "omen "oring in
the BPO companies! These #uestionnaires "ere piloted "ith one BPO vendor in Kenya and the final
instruments compiled ready for data collection!
Seven countries% e*cluding Kenya% "ere chosen for the study! These countries "ere South &frica%
Egypt and Bhana as emerging BPO destinations "ith great promise( India and 'auritius as mature
BPO destinations( and )K and )S& representing the countries "ith the highest outsourcing "or! =ata
"as not collected from Bhana and Egypt as planned because of budget constraints!
One of the ey ob2ectives of the research "as to increase the level of a"areness and input among ey
staeholders through interactive dialogue on ey BPO issues "ithin the Kenyan conte*t! Therefore% the
researchers organi8ed a half+day "orshop to sensiti8e the staeholders about the study and discuss the
methodology to be used especially the #uestions to be ased! ¬her staeholder "orshop "as held
half "ay through the research to report on interim findings! The total findings "ere also discussed in
the Kenya &ction I.T net"or (KI.T&,ET) online forum! 6inally% there "as staeholders$ "orshop
to discuss the policy options and implications!
This policy brief presents the overvie" of findings% focusing on the critical success factors! It also
presents the critical issues for Kenya and the policy recommendations!
2! Overvie1 of Findings 6 Critical Success Factors
The researchers looed at the critical success factors (.S6s) "ith relation to the policy% legal%
regulatory and institutional frame"ors( human resource issues( youth and gender issues( and various
C
forms of incentives in the four vendor countries! The researchers also studied outsourcing issues in
client countries ()K and )S&)! This section outlines the critical success factors along these issues!
Policy frame1or0
The critical success factors in India "ere that policy priority is given to IT+BPO sector in Special
Economic @ones to spur gro"th and that there is cyber security training and a"areness policy! In
'auritius% the .S6s "ere that the BPO4ITES industry is an integral part of national development vision
(the 0th pillar of national development) and that this industry$s vision and strategy is driven from the
top of Bovernment! The BPO and Outsourcing sector in South &frica is of the top three priority sectors
to stimulate gro"th! South &frica has a comprehensive incentive frame"or to attract investors and an
aggressive mareting as a BPO destination! 6inally% in Kenya% "hich is very young in BPO% the only
critical issue at policy level "as the support the Bovernment had accorded to the BPO and I.T sectors%
especially the prominent role of BPO and the I.T infrastructure pro2ects that the Bovernment had
initiated (TE&'S undersea cable and national fibre bacbone infrastructure pro2ects)!
7egal and regulatory frame1or0
In all the vendor countries% there is a legal4regulatory frame"or to support the I.T+BPO sector! 6or
e*ample% India has a strong legal system and compliance "ith international la"s e!g! labour la"s%
international relationship% etc! and has adopted International standards! South &frica has IP- and data
protection la"s to provide confidence to investors and has comprehensive BPO+specific Duality
&ssurance 6rame"or (standards) benchmared to global best practice! In Kenya% there is the Kenya
the .ommunications (&mendment) &ct :55E "hich has provided for e+transactions including e+
signatures!
Institutional frame1or0
There is concern that there is no institutional cohesion for the BPO industry in Kenya! There is the
Kenya I.T Board% Kenya BPO and .ontact .entre Society and E*port Promotion council "ho all offer
support to the BPO sector in various "ays! This is different from India "hich has one umbrella
institution ,&SS.O' "hich has a close "oring relationship "ith government and academia! In
'auritius( there is a dynamic and effective Board of Investment ("hich offers a One Stop Shop (OSS)
for BPO investors)% and there is effective advocacy by Outsourcing Telecommunication &ssociation of
'auritius (OT&')! In South &frica there are active BPeS& and regional BPO associations% "ith
Bovernment funding! In 'auritius% one of the critical success factors has been the Board of Investment!
This Board is very effective and dynamic and effectively interfaces investors "ith the total government
for licenses% registration% etc! through its one stop shop facility! This is yet to happen in Kenya!
8uman resource issues
The human resources issue is one of the critical success factors! & case in point is that India produces /
million graduates per annum% compared to Kenya$s 2ust over 95%555! In addition% children in India are
introduced to science and technology right from nursery school! Their ey success factor% ho"ever% is
their ,ational Sills -egistry to ensure that individuals employed by organi8ations have their
bacground and #ualifications verified% thereby preventing% if not eliminating% the menace of fae
resumes! 'auritius has the advantage of having a dual international language speaing population
(6rench and English) combined "ith the fact that they are in the process of developing an I.T
&cademy to train people post School .ertificate! They also have e*change or travel visits for those in
the industry to visit similar institutions overseas! South &frica has a very specific FTraining and Sills
Support Brant$ for company specific training!
0
;hat does all this mean for KenyaG Kenyans generally have a neutral accent and English is the official
language% this is a huge advantage over countries lie India! &part from the university graduates%
:A5%555 graduate from high school annually and they could also contribute to the BPO "orforce! One
dra"bac is that despite the fact that the Employment &ct :55? is employee friendly( the BPO
standards for career progression opportunities are not yet developed!
9out) and gender issues
The researchers found that "omen in India and 'auritius are more e*cluded from ey positions in the
BPO industry unlie in Kenya and South &frica! In India% this is being addressed "ith a focused
H;omen in Ieadership+IT InitiativeJ by ,&SS.O'! India also has an elaborate FE#ual -emuneration
&ct% /E?A (&ct :0 of /E?A amended by &ct CE of /EK?)$ for ensuring e#ual remuneration for both
genders and a strong legal system and compliance "ith international la"s% including labour la"s!
'auritius gives privileges to "omen to absent themselves from "or during pregnancy and prohibits
employment of female employees in industrial undertaings bet"een /5 pm and 0 am! In addition% I.T
Iiteracy% I.9 and I.T &"areness courses is provided to "omen in different regions of 'auritius by
the ,ational .omputer Board! South &frica has a po"erful Office on the Status of ;omen (OS
!
This office has developed policy on "omen empo"erment and gender e#uality% "ith section on HI.T
and "omenJ! South also has a provision for 6amily -esponsibility Ieave but has no gender affirmative
action! In Kenya% there are "omen friendly labour la"s that provide for 9 months maternity leave% :/
days annual leave and : "ees paternity leave! Kenya is also trying to open up the opportunities for the
youth by ensuring there is a specific 'inistry for Louth! Kenya% South &frica and India also encourage
youth employment unlie in 'auritius "here youth are not allo"ed to "or in industrial undertaings
bet"een A pm and A am and not for more 9A hours in a "ee!
(a4 incentives
<hough not e*haustive by any means% India has /551 ta* holiday for the first 0 years and 051 for
ne*t 0 yrs compared to Kenya "hich offers a /5 year corporate income ta* holiday for EP@ companies!
In India also% E51 profits of soft"are e*ports is e*empted from ta*! 'auritius interestingly abolished
all ta* incentives e*cept a /01 corporate ta*% one the lo"est globally! South &frica does not offer any
ta* incentives!
Infrastructure incentives
The infrastructural incentives are many but also varied in all countries! India has 90 government o"ned
and :0 privately o"ned soft"are development plants! It also has the "orld$s lo"est telecommunication
tariffs and largest domestic satellite system! 'auritius has a .yber .ity and Incubation centre for I.T
services! South &frica has the most modern telecommunication system in &frica% over /5 international
airports and an e*cellent road net"or! ;here does this leave KenyaG The government has set aside
Ksh! E55m for developing business pars% the TE&'s fibre optic cable has landed and band"idth
prices are e*pected to go do"n% and there "as band"idth subsidy from ;orld Ban for the established
BPO operators! In essence% there are a lot of plans that 2ust have to be translated into implementation!
Ot)er incentives
There are other useful incentives "hich cannot be easily categori8ed! 6or India% these include
liberali8ed norms for investments of up to /551 foreign e#uity "ith full repatriation benefits% fast trac
clearance of goods imported by manufacturers of electronic goods% and additional resources from the
government for technical manpo"er development! In 'auritius% there is free repatriation of capital and
profits "ithout any prior .entral Ban approval% dividends from companies resident in 'auritius and
from holders of -egional =evelopment .ertificates are ta*+free% and a M;or 3 Iive in 'auritiusM
A
department "hich has been set up "ithin the Board Of Investment (BOI) as a single+facing service
counter to e*pedite formalities for individuals and investors setting up in 'auritius! In South &frica%
there is e*port 'aret and Investment &ssistance% encouragement of the gro"th of offshore
outsourcing% through mareting the services of those e*porting services! Soft"are development and the
private sector associations in South &frica also receive funding (an incentive) from the government! On
the other hand% Kenya has the Kenya I.T Board to maret of Kenya as a competitive destination for
BPO!
+)at are t)e drivers for outsourcing in client countries:
In both )S& and )K% critical driver for outsourcing is similarity in "or culture and #uality (client+
centric culture)! That is% clients (especially services that involve regular direct interaction "ith the
customers e!g! call4contact centres) "ill outsource to vendors that are able to replicate the client$s "or
culture and deliver e*actly the same (or higher) #uality of service as an in+house or on+shore operation!
Other drivers include< cultural alignment% balance on+shore and off+shore% vertical e*pertise%
technological no"ledge% innovative business models% global footprint% re+architecting to
transformational% connecting operations to analysis% and tailored industry services!
+)at are t)e opportunities for outsourcing in client countries:
In both )S and )K% the follo"ing are the ma2or industries "here most of the outsourced "or is
derived< baning( investment management( insurance( legal( supply chain% logistics% transportation(
healthcare( ne"s% media 3 entertainment( energy 3 utilities( agriculture4food( pharmaceutical4biotech(
government 3 public agencies( and manufacturing!
+)ic) are t)e preferred outsourcing destinations:
In the )S&% the top ten (/5) preferred outsourcing destinations% in order of preference are< /! -ural or
Small To"n )S& (via Indian .ompanies)% :! India% 9! Eastern 3 .entral Europe% C! )K 3 Ireland
(areas of high unemployment)% 0! South &merica% A! 'e*ico% ?! Philippines% K! .anada% E! -ussia and
/5! 'iddle East! It can be noted that &frica does not feature! In the )K% the perceived best three
destinations as voted during ,O&$s :55K ("""!noa!co!u!inde*!php4a"rds ) annual a"ards< /! Egypt%
:! -omania and 9! Philippines! Only Egypt% "hich is often considered as part of the 'iddle East%
features in &frica!
ic)e service areas
The niche service areas for India% South &frica and 'auritius are sho"n in the table belo"! The table
also sho"s the recommended niche service areas for Kenya% from an analysis of the strengths%
"eanesses% opportunities and threats!
India South &frica 'auritius Kenya
a) Soft"are development
b) Engineering services
c) .all .entre services
a) .all centre services for
financial services
industry!
b) 7igh+end actuarial
services
a) 6rench4English call
centre services
b) Translation Services
c) Soft"are =evelopment
a) .ustomer Service
b) Bac Office e!g!
transcription% data
processing
c) BPO Training for the
region
It is to be noted that the three niche service areas for Kenya do not mean that Kenya cannot provide
other services e!g! soft"are development!
?
;! Critical Issues and Policy Recommendations
The follo"ing summari8es the critical issues the policy recommendations for Kenya based on the
research results!
Critical Issues Policy Recommendations
Policy frame1or0
Iac of specific BPO policy =evelopment of a specific BPO sector policy as pledged in the medium
term plan of the Kenya >ision :595! This policy should% among other
things<
• demonstrate a strong commitment by the Bovernment by outsourcing
some of its services
• address standards in the I.T+BPO sector
• address incentive scheme for BPOs
• align "ith Kenya >ision :595
Iac of BPO strategy and "ea
'3E frame"or! The
'cKinsey3.ompany go+to+
maret strategy has serious
shortcomings and is not
informed by an in+depth
situational analysis
a) .ombine the results of this study "ith those of 'cKinsey3.ompany
and create an informed strategy for the BPO sector in Kenya
b) Strengthen the '3E functions of the KI.TB and Kenya >ision :595
Secretariat
I.T and BPO are not real
sectors% e!g! one cannot obtain
aggregated socio+economic data
on these sectors
.reate a single I.T+BPO sector and mainstream it into the national
planning and operational frame"ors! 6or e*ample% it should be possible
to obtain aggregate socio+economic data (e!g! employment in the sector%
B=P contribution to other sectors and nationally)% data on I.T sector
indicators (e!g! I.T+BPO infrastructure access and use)% I.T industry data
(e!g! I.T+BPO products manufactured and services offered)% etc!
7egal and regulatory frame1or0
;ea legal frame"or for BPO
and I.T sectors (no data
protection% "ea IP- la"s% etc!)
a) In the short+term% strengthen e*isting la"s to provide an enabling legal
frame"or for I.T+BPO
o -evie" the IP- legislations to provide an enabling
environment for protection of intellectual property in a global
no"ledge economy
o -evie" the Kenya employment act to address :C hour
economy and employees "oring at night or at odd hours
b) In the medium+ to long+term% develop separate legislations critical for
I.T+BPO sector and compliant "ith relevant international la"s (data
protection% freedom of information% e+commerce% IP-% labour)
Iac of a BPO incentive
frame"or (currently leveraging
on EP@ incentives)
=evelop a BPO incentives frame"or as an integral part of the la" that
"ill transform EP@s into SE@s! This la" should rationali8e all the
incentives for all types e*port+oriented firms to be established in these
8ones! One should be able to operate from any"here and still be entitled to
the incentives! This incentive frame"or should be time+bound and should
be aimed at ensuring the BPO sector taes off in Kenya in the ne*t five
years
Iac of BPO standards a) =evelop BPO standards% benchmared to international standards
b) Ensure all ey BPO firms adopt these standards
Institutional frame1or0
K
'any institutions "oring on
different aspects of BPO% "ith
very little coordination
a) In the short+term% change the mandates of an e*isting body to
coordinate all the institutions that deal "ith BPO e!g! the Kenya I.T
Board
b) In the medium+ to long+term% create a ne" entity (body corporate "ith
po"er and a po"erful champion) to coordinate I.T+BPO activities
across all ministries and public enterprises that have a role to play in
I.T+BPO
'any and "ea I.T and BPO
industry associations (.SK%
ITS&% KBPO..S% KEPS&$s
I.T Sector Board% TESPOK%
etc!)
a) Strengthen KBPO..S to be the ey BPO industry association
b) .reate a strong I.T association
8uman resource issues
,o updated sills database for
I.T e*ists (.omputer Society of
Kenya I.T ;orforce Survey
-eport% :55A is a useful for
launching fresh census)
a) In the short+term% leave 'oI. to continue "ith initiative already
started N "oring "ith K,BS
b) In the medium+ to long+term% establish frame"or for collection and
updating of I.T sills data
c) In the medium+ to long+term% tas the national body responsible for
I.T+BPO coordination to be established as recommended under
institutional frame"or "ith this responsibility
Slo" implementation of integra+
tion of I.T across all levels of
Education and Training
a) 6ast+trac implementation of integration of I.T into education as
defined in Sessional Paper ,o! / of :550 on Policy 6rame"or for
Education% Training and -esearch and the ,ational Strategy for
Education and Training55A)
b) &ppoint a champion to oversee the implementation
7igh rates of attrition in BPO
;or ethic and culture that is
incongruent "ith off+shore
clients
a) Kenya BPO and .ontact .entre Society to finali8e the Standards and
Ethics Buidelines% "oring "ith the Bovernment and other
staeholders
b) Encourage in+house% peer assessment methods of training to transform
agents
c) &c#uire legal force for the Buidelines in order to guarantee robust
career gro"th and long+term opportunity
Iac of a policy to support
sustained development of
speciali8ed BPO sill sets to
meet demand
a) .reate and implement a policy<
• To incorporate BPO training into curricula across the education
system (secondary 3 tertiary levels)
• To provide training incentives for tertiary institutions to provide
BPO training
• To provide training incentives for in+house training
• To encourage creation of .entres of E*cellence for BPO training by
private sector or based on PPP
b) &s part of the BPO sector strategy to be developed% develop a strategy
on I.T+BPO sills re#uirements and mainstream it into relevant
ministries for implementation
&bsence of common
certification of agents based on a
common curriculum
-egulate e*aminations and certifications in I.T+BPO
9out) and gender issues
BPO "oring environment not
conducive
&mend the Employment &ct% :55? to e*plicitly regulate "oring hours for
employees and to re#uire employers to facilitate safe commuting at night
Iac of a"areness on BPO as a
source of viable employment
a) Kenya BPO and .all .entre Society to create standards for career
progression in standard BPO 2obs
E
b) -elevant public and private agencies e!g! 'inistries of Iabour% Louth
and I.T% KI.TB% KBPO..S% Ka8i K"a >i2ana% etc% to mount
programmes to promote the industry among the youth
c) -elevant public and private industry staeholders to sensitise trainees
and trainers in BPO+related courses that may open up opportunities in
BPO for the youth and "omen
9 months maternity leave
(6ederation of Kenya Employers
launched a complaint)
The Bovernment% through the 'inistry of Louth and Bender% to provide a
social "elfare itty to compensate employers "ho may be adversely
affected by the female employees$ absence
Incentives
Ta* incentives N lac of specific
ta* incentives for the BPO sector
Bovernment to provide ta* incentives for a specific time period to
encourage BPO industry gro"th% especially in the rural areas
.apacity building N lac of
ade#uate human sills to gro"
the BPO sector
a) Integrate BPO training in curricula of all higher learning institutions
b) & proper training frame"or modeled on international standards to be
adapted for guidance to institutions
c) Bovernment to select specific institutions to provide training grants to
develop capacity
d) Provide training grants to ma2ority local shareholding companies to en+
courage gro"th of S'Es in the sector
7igh band"idth and
telecommunications costs
Poor uptae of the band"idth
subsidy
a) -evie" band"idth subsidy re#uirements to enable more firms to #ual+
ify
b) -eduction of band"idth tariffs N the undersea cables landing in Kenya
"ill sort this out
c) Ensure reduction in other telecommunications tariffs through competi+
tion and other regulatory interventions by ..K
7igh start+up e*penses a) Provision of phased out incubation centres for start+up BPO companies
for 9 year periods
b) Bovernment to outsource BPO "or to local ma2ority o"ned centres
Inade#uate mareting of Kenya
as a BPO destination
a) =eveloping the domestic BPO maret segment
b) 'areting and funding local BPOs to maret their services internation+
ally
ic)e for Kenya
Inade#uate human capacity a) =etermine the current and medium term supply capacity of sills
against current and forecast demand for BPO services in niche areas
b) 'oI. 3 ministries in charge of Education to "or together to develop
a policy4frame"or to institutionali8e capacity building for BPO sector
c) Provide training incentives to encourage creation of .entres of E*cel+
lence for BPO training in niche areas by private sector or based on PPP
d) &s part of the BPO sector strategy to be developed% develop a strategy
on I.T+BPO sills re#uirements and mainstream it into relevant minis+
tries for implementation
Poor branding and positioning a) I.T Board4Brand Kenya Board to develop specific positioning state+
ments based on the identification of the niche areas
b) I.T Board and Brand Kenya Board to develop robust branding strategy
so as to increase a"areness in Kenya$s target marets about the coun+
try$s capabilities in the niche areas
c) =evelop specific messaging and mareting collateral or communication
materials for each niche area
d) Identify and invest in on+going P- activities such as events so that
there is continuous communication regarding Kenya$s capabilities in
the niche areas
/5
Iac of patriotism4 negative atti+
tude
a) Introduce in school curriculum% training on positive attitude and nation+
al pride
b) Provide civic education against negativity as one of the mandates of a
national body in charge of BPO
c) 6orm a HKenya cultureJ through a national policy
,ot taing advantage of regional
opportunities
a) I.T Board should maret Kenya as a regional hub for BPO services
b) The Kenyan Bovernment to continue advocating for the East &frican
community as Kenya "ill benefit
c) E&. to "or together in mareting the region for BPO services to
avoid unnecessary competition
References
.omputer Society of Kenya55A)! Kenya ,ational I.T ;orforce Sills =emand Survey -eport!
Bovernment of Kenya55?)! Kenya >ision :595< & Blobally .ompetitive and Prosperous Kenya
Bovernment of Kenya55?)! The Employment &ct% :55?!
Kearney% &!T!55E)% The :55E &!T! Kearney Blobal Services Iocation Inde*< The Shifting geography of off+
shoring
Kenya ,ational Bureau of Statistics55E)! The Ieading Economic Indicators% :55E!
'inistry of Education55A)! ,ational Information and .ommunications Technology (I.T) Strategy for
Education and Training!
'inistry of Education Science and Technology550)! Sessional Paper ,o! / of :550 on Policy 6rame"or for
Education% Training and -esearch!
'inistry of Information and .ommunication55A)! ,ational Information and communications Technology
(I.T) Policy!
-epublic of 'auritius% 'inistry of Information Technology and Telecommunications% ,ational I.T Policy%
:55?+//
-epublic of 'auritius% 'inistry of Information Technology and Telecommunications% ,ational I.T Strategic
Plan% :55?+:5//
-epublic of South &frica% The Sills =evelopment &ct ,o! E? of /EEK!
Pillai &!55A)! 7uman -esource Issues in Business Process Outsourcing!
Schramm ;! (/E?/)! F,otes on case studies of instructional media pro2ects$( ;oring paper for the &cademy of
Educational =evelopment( ;ashington =!.!
Lin -!K! (/EE9)! Case Study Researc! "esign and #etods! Sage Publications% .alifornia
//
doc_644780416.pdf
Kenya is preparing itself to enter into the global and vibrant Business Process Outsourcing (BPO) and IT Enabled Services (ITES) market. It however lacks empirical evidence and tailored research to guide its policy decisions and investment options. There is demand and specific requests from the government and key stakeholders in the sector for this type of information.
Development of a Business Process Outsourcing Industry in
Kenya: Critical Success Factors
IDRC Grant o! "#$$%%&##"
Policy Brief
'y
Prof! (imot)y *! +aema
,Principal Investigator-
Gilda Odera
Cat)erine !.! .deya&+eya
Peres +ere
/up)rait) *ut)oni *asinde
C)ristop)er C)ep0en
/unice Kariu0i
Peter Kenduiy1o
.ugust 2##3
This report is presented as received by IDRC from project recipient(s). It has not been subjected to peer review or other review processes.
This work is used with the permission of Timothy M. Waema.
© 2009, Timothy M. Waema, Gilda Odera, Catherine N.A. Adeya-Weya, Peres Were, Euphraith Muthoni Masinde, Christopher
Chepken, Eunice Kariuki, Peter Kenduiywo.
/4ecutive Summary
Kenya is preparing itself to enter into the global and vibrant Business Process Outsourcing (BPO) and
IT Enabled Services (ITES) maret! It ho"ever lacs empirical evidence and tailored research to guide
its policy decisions and investment options! There is demand and specific re#uests from the
government and ey staeholders in the sector for this type of information! This policy brief is a
synthesis of a study "hose aim "as to provide evidence and a deeper understanding of the imperatives
for success in this industry to better inform Kenya$s policy decisions and investment choices! It "as
carried out through a case study method to establish the critical success factors in four vendor countries
(India% South &frica% 'auritius and Kenya) "ith relation to the policy% legal% regulatory and
institutional frame"ors( human resource issues( youth and gender issues( and various forms of
incentives! The study also researched on the outsourcing issues in t"o client countries ()K and )S&)!
The research found that in the three countries (e*cluding Kenya)% the BPO+ITES industry is given a
high priority% there is strong and appropriate legal frame"or and the industry associations are strong
and are ey in driving the BPO+ITES industry% "hile in South &frica the national and regional
associations receive state funding! On human resources% the study found that India introduces children
to science and technology at a very early age and it has a ,ational Sills -egistry and that in 'auritius%
the national association "as "oring "ith the government to create an I.T academy to train for the
industry! The research found that countries had differing measures for gender e#uity% participation of
youth in employment% and incentives in the BPO+ITES industry! It "as particularly noted that South
&frica did not have ta* incentives but had a variety of investment and training and sills support
incentives% "hile 'auritius had abolished all the ta* incentives e*cept for a /01 corporate ta*!
The study found that the ey drivers in out+sourcing and off+shoring in both )S& and )K "ere
similarity in "or culture and #uality! The ma2or industries "here most of the outsourced "or is
derived "ere found to be in baning( investment management( insurance( legal( supply chain% logistics%
transportation( healthcare( ne"s% media 3 entertainment( energy and utilities( agriculture4food(
pharmaceutical4biotech( government 3 public agencies( and manufacturing! It emerged that no &frican
country featured in the top /5 preferred outsourcing destinations in the )S& "hile in the )K% only
Egypt in &frica "as in the top three perceived best three destinations!
6or Kenya% the research found a "idespread perception that it laced an effective and focused
mareting as a BPO destination! It also emerged that Kenya (and &frica in general) is vie"ed as a
country (and continent) "ith challenged infrastructure% poor "or culture4ethics and constraining socio+
economic environment! 7o"ever% individuals4organi8ations that have had a chance to visit4interact
"ith Kenya(ns) have a different testimony( Kenya has a high chance of being a favorable outsourcing
destination if correct measures are put in place! The study contends that Kenya has ey strengths%
including a highly silled and competitive pool of labour% neutral English accent% strategic location as a
regional hub for communication and finance% and production of over 95%555 and over :05%555
university high school graduates annually% respectively! In addition% Kenyans generally have a "arm
and "elcoming culture4attitude% due to the predominance of the tourism and hospitality industries in the
economy!
;hen the above strengths are considered% the provision of call centre/customer services an ideal niche
for the country to carve for itself in the BPO space! Kenya can also capitali8e on its large pool of high
school and diploma graduates to provide back office services such as transcription% digiti8ation% data
entry and various other data processing services! In addition% Kenya can use its e*cellent education
:
system to create a niche in BPO-ITES training for the region!
The ey policy recommendations are<
? ) =evelopment of a BPO sector policy as pledged in the medium term plan of >ision :595!
? ) In order to address the lac of a strategy and a "ea '3E frame"or% combine the results of
this study "ith those of 'cKinsey3.ompany and create an informed strategy for the BPO
sector in Kenya and strengthen the '3E functions of the KI.TB and >ision :595 Secretariat!
? ) .reate a single I.T+BPO sector and mainstream it into the national planning and operational
frame"ors!
? ) In order to address the "ea legal frame"or% strengthen e*isting la"s to provide an enabling
legal frame"or for I.T+BPO in the short+term% "hile in the medium+ to long+term% develop
separate legislations critical for I.T+BPO sector and compliant "ith relevant international la"s!
6or youth and gender% amend the Employment &ct% :55? to e*plicitly regulate "oring hours
for employees and to re#uire employers to facilitate safe commuting at night!
? ) =evelop a BPO incentives frame"or as an integral part of the la" that "ill transform EP@s
into SE@s! In addition% provide ta*% training and set+up incentives for a specific time period to
encourage BPO industry gro"th% especially in the rural areas!
? ) In order to address the lac of standards% develop BPO standards% benchmared to international
standards and ensure all ey BPO firms adopt these standards!
? ) 6or institutional frame"or% change the mandates of an e*isting body to coordinate all the
institutions that deal "ith BPO in the short+term% "hile in the in the medium+ to long+term%
create a ne" entity (body corporate "ith po"er and a po"erful champion) to coordinate I.T+
BPO activities across all ministries and public enterprises that have a role to play in I.T+BPO!
In addition% strengthen KBPO..S to be the ey BPO industry association and create a strong
I.T association!
? ) In order to address the lac of updated sills database% establish frame"or for collection and
updating of I.T sills data and tas the national body responsible for I.T+BPO coordination to
be established as recommended under institutional frame"or "ith this responsibility!
? ) 6ast+trac implementation of integration of I.T into education as defined in Sessional Paper
,o! / of :550 on Policy 6rame"or for Education% Training and -esearch and the ,ational
Strategy for Education and Training
55A)!? ) In order to address BPO sills sets% create a policy and strategy on I.T+BPO sills re#uirements
and mainstream into relevant ministries for implementation!
? ) =evelop and implement a mareting% branding and positioning strategy for Kenya!
"! Introduction
The study "as conducted by the School of .omputing and Informatics% )niversity of ,airobi% in
collaboration "ith the Kenya BPO 3 .ontact .entre Society (KBPO..S) and the Kenya I.T Board
and it "as funded by the International =evelopment -esearch .entre (I=-.)!
Pro'lem
Building on the Indian Success story% "here I.T has gro"n from a negligible industry over 95 years
ago to an industry that produces a significant portion of B=P% many developing countries such as
Philippines% 'auritius% Kenya% Bhana% -"anda and .osta -ica among others have identified I.T as a
ey sector for achieving rapid economic gro"th! In particular% the Business Process Outsourcing and
IT Enabled Services industry% "here commercial and industrial corporations in rich countries outsource
9
their non+critical operations to developing countries "here costs are much lo"er and at the same or
higher #uality% has been identified as an opportunity! &s Kenya is preparing itself to enter into the
global and vibrant BPO+ITES maret% it ho"ever lacs empirical evidence and tailored research to
guide its policy decisions and investment options! This study on "hich this policy brief is based "as
aimed at addressing this challenge!
O'5ective
The overall ob2ective of the study "as to undertae comprehensive research in the business process
outsourcing (BPO) sub+sector in pioneer% emerging and mature marets to provide evidence and a
deeper understanding of the imperatives for success in this industry to better inform Kenya$s policy
decisions and investment choices!
Researc) *et)odology
The researchers used the case study approach% "hich involved a revie" of e*isting documents! These
documents included national policies and strategies% la"s governing the BPO sector4industry in a
country% publicly available documents on the BPO firms and associations chosen to be part of the case
studies! 6urther% the case study involved ey informant intervie"s "ith the ey national officials and
persons involved in the BPO firms and associations! These people "ere identified through contacts the
researchers had% contacts from other intervie"ees and search through the "ebsites of the chosen BPO
firms and associations! In one or t"o cases% the researchers used the Embassies of the case study
countries to obtain contacts!
6inally% structured #uestionnaires "ere administered for the various sources of information% namely
"ith BPO vendor managers% BPO client managers% BPO consultants% and youth and "omen "oring in
the BPO companies! These #uestionnaires "ere piloted "ith one BPO vendor in Kenya and the final
instruments compiled ready for data collection!
Seven countries% e*cluding Kenya% "ere chosen for the study! These countries "ere South &frica%
Egypt and Bhana as emerging BPO destinations "ith great promise( India and 'auritius as mature
BPO destinations( and )K and )S& representing the countries "ith the highest outsourcing "or! =ata
"as not collected from Bhana and Egypt as planned because of budget constraints!
One of the ey ob2ectives of the research "as to increase the level of a"areness and input among ey
staeholders through interactive dialogue on ey BPO issues "ithin the Kenyan conte*t! Therefore% the
researchers organi8ed a half+day "orshop to sensiti8e the staeholders about the study and discuss the
methodology to be used especially the #uestions to be ased! ¬her staeholder "orshop "as held
half "ay through the research to report on interim findings! The total findings "ere also discussed in
the Kenya &ction I.T net"or (KI.T&,ET) online forum! 6inally% there "as staeholders$ "orshop
to discuss the policy options and implications!
This policy brief presents the overvie" of findings% focusing on the critical success factors! It also
presents the critical issues for Kenya and the policy recommendations!
2! Overvie1 of Findings 6 Critical Success Factors
The researchers looed at the critical success factors (.S6s) "ith relation to the policy% legal%
regulatory and institutional frame"ors( human resource issues( youth and gender issues( and various
C
forms of incentives in the four vendor countries! The researchers also studied outsourcing issues in
client countries ()K and )S&)! This section outlines the critical success factors along these issues!
Policy frame1or0
The critical success factors in India "ere that policy priority is given to IT+BPO sector in Special
Economic @ones to spur gro"th and that there is cyber security training and a"areness policy! In
'auritius% the .S6s "ere that the BPO4ITES industry is an integral part of national development vision
(the 0th pillar of national development) and that this industry$s vision and strategy is driven from the
top of Bovernment! The BPO and Outsourcing sector in South &frica is of the top three priority sectors
to stimulate gro"th! South &frica has a comprehensive incentive frame"or to attract investors and an
aggressive mareting as a BPO destination! 6inally% in Kenya% "hich is very young in BPO% the only
critical issue at policy level "as the support the Bovernment had accorded to the BPO and I.T sectors%
especially the prominent role of BPO and the I.T infrastructure pro2ects that the Bovernment had
initiated (TE&'S undersea cable and national fibre bacbone infrastructure pro2ects)!
7egal and regulatory frame1or0
In all the vendor countries% there is a legal4regulatory frame"or to support the I.T+BPO sector! 6or
e*ample% India has a strong legal system and compliance "ith international la"s e!g! labour la"s%
international relationship% etc! and has adopted International standards! South &frica has IP- and data
protection la"s to provide confidence to investors and has comprehensive BPO+specific Duality
&ssurance 6rame"or (standards) benchmared to global best practice! In Kenya% there is the Kenya
the .ommunications (&mendment) &ct :55E "hich has provided for e+transactions including e+
signatures!
Institutional frame1or0
There is concern that there is no institutional cohesion for the BPO industry in Kenya! There is the
Kenya I.T Board% Kenya BPO and .ontact .entre Society and E*port Promotion council "ho all offer
support to the BPO sector in various "ays! This is different from India "hich has one umbrella
institution ,&SS.O' "hich has a close "oring relationship "ith government and academia! In
'auritius( there is a dynamic and effective Board of Investment ("hich offers a One Stop Shop (OSS)
for BPO investors)% and there is effective advocacy by Outsourcing Telecommunication &ssociation of
'auritius (OT&')! In South &frica there are active BPeS& and regional BPO associations% "ith
Bovernment funding! In 'auritius% one of the critical success factors has been the Board of Investment!
This Board is very effective and dynamic and effectively interfaces investors "ith the total government
for licenses% registration% etc! through its one stop shop facility! This is yet to happen in Kenya!
8uman resource issues
The human resources issue is one of the critical success factors! & case in point is that India produces /
million graduates per annum% compared to Kenya$s 2ust over 95%555! In addition% children in India are
introduced to science and technology right from nursery school! Their ey success factor% ho"ever% is
their ,ational Sills -egistry to ensure that individuals employed by organi8ations have their
bacground and #ualifications verified% thereby preventing% if not eliminating% the menace of fae
resumes! 'auritius has the advantage of having a dual international language speaing population
(6rench and English) combined "ith the fact that they are in the process of developing an I.T
&cademy to train people post School .ertificate! They also have e*change or travel visits for those in
the industry to visit similar institutions overseas! South &frica has a very specific FTraining and Sills
Support Brant$ for company specific training!
0
;hat does all this mean for KenyaG Kenyans generally have a neutral accent and English is the official
language% this is a huge advantage over countries lie India! &part from the university graduates%
:A5%555 graduate from high school annually and they could also contribute to the BPO "orforce! One
dra"bac is that despite the fact that the Employment &ct :55? is employee friendly( the BPO
standards for career progression opportunities are not yet developed!
9out) and gender issues
The researchers found that "omen in India and 'auritius are more e*cluded from ey positions in the
BPO industry unlie in Kenya and South &frica! In India% this is being addressed "ith a focused
H;omen in Ieadership+IT InitiativeJ by ,&SS.O'! India also has an elaborate FE#ual -emuneration
&ct% /E?A (&ct :0 of /E?A amended by &ct CE of /EK?)$ for ensuring e#ual remuneration for both
genders and a strong legal system and compliance "ith international la"s% including labour la"s!
'auritius gives privileges to "omen to absent themselves from "or during pregnancy and prohibits
employment of female employees in industrial undertaings bet"een /5 pm and 0 am! In addition% I.T
Iiteracy% I.9 and I.T &"areness courses is provided to "omen in different regions of 'auritius by
the ,ational .omputer Board! South &frica has a po"erful Office on the Status of ;omen (OS
! This office has developed policy on "omen empo"erment and gender e#uality% "ith section on HI.T
and "omenJ! South also has a provision for 6amily -esponsibility Ieave but has no gender affirmative
action! In Kenya% there are "omen friendly labour la"s that provide for 9 months maternity leave% :/
days annual leave and : "ees paternity leave! Kenya is also trying to open up the opportunities for the
youth by ensuring there is a specific 'inistry for Louth! Kenya% South &frica and India also encourage
youth employment unlie in 'auritius "here youth are not allo"ed to "or in industrial undertaings
bet"een A pm and A am and not for more 9A hours in a "ee!
(a4 incentives
<hough not e*haustive by any means% India has /551 ta* holiday for the first 0 years and 051 for
ne*t 0 yrs compared to Kenya "hich offers a /5 year corporate income ta* holiday for EP@ companies!
In India also% E51 profits of soft"are e*ports is e*empted from ta*! 'auritius interestingly abolished
all ta* incentives e*cept a /01 corporate ta*% one the lo"est globally! South &frica does not offer any
ta* incentives!
Infrastructure incentives
The infrastructural incentives are many but also varied in all countries! India has 90 government o"ned
and :0 privately o"ned soft"are development plants! It also has the "orld$s lo"est telecommunication
tariffs and largest domestic satellite system! 'auritius has a .yber .ity and Incubation centre for I.T
services! South &frica has the most modern telecommunication system in &frica% over /5 international
airports and an e*cellent road net"or! ;here does this leave KenyaG The government has set aside
Ksh! E55m for developing business pars% the TE&'s fibre optic cable has landed and band"idth
prices are e*pected to go do"n% and there "as band"idth subsidy from ;orld Ban for the established
BPO operators! In essence% there are a lot of plans that 2ust have to be translated into implementation!
Ot)er incentives
There are other useful incentives "hich cannot be easily categori8ed! 6or India% these include
liberali8ed norms for investments of up to /551 foreign e#uity "ith full repatriation benefits% fast trac
clearance of goods imported by manufacturers of electronic goods% and additional resources from the
government for technical manpo"er development! In 'auritius% there is free repatriation of capital and
profits "ithout any prior .entral Ban approval% dividends from companies resident in 'auritius and
from holders of -egional =evelopment .ertificates are ta*+free% and a M;or 3 Iive in 'auritiusM
A
department "hich has been set up "ithin the Board Of Investment (BOI) as a single+facing service
counter to e*pedite formalities for individuals and investors setting up in 'auritius! In South &frica%
there is e*port 'aret and Investment &ssistance% encouragement of the gro"th of offshore
outsourcing% through mareting the services of those e*porting services! Soft"are development and the
private sector associations in South &frica also receive funding (an incentive) from the government! On
the other hand% Kenya has the Kenya I.T Board to maret of Kenya as a competitive destination for
BPO!
+)at are t)e drivers for outsourcing in client countries:
In both )S& and )K% critical driver for outsourcing is similarity in "or culture and #uality (client+
centric culture)! That is% clients (especially services that involve regular direct interaction "ith the
customers e!g! call4contact centres) "ill outsource to vendors that are able to replicate the client$s "or
culture and deliver e*actly the same (or higher) #uality of service as an in+house or on+shore operation!
Other drivers include< cultural alignment% balance on+shore and off+shore% vertical e*pertise%
technological no"ledge% innovative business models% global footprint% re+architecting to
transformational% connecting operations to analysis% and tailored industry services!
+)at are t)e opportunities for outsourcing in client countries:
In both )S and )K% the follo"ing are the ma2or industries "here most of the outsourced "or is
derived< baning( investment management( insurance( legal( supply chain% logistics% transportation(
healthcare( ne"s% media 3 entertainment( energy 3 utilities( agriculture4food( pharmaceutical4biotech(
government 3 public agencies( and manufacturing!
+)ic) are t)e preferred outsourcing destinations:
In the )S&% the top ten (/5) preferred outsourcing destinations% in order of preference are< /! -ural or
Small To"n )S& (via Indian .ompanies)% :! India% 9! Eastern 3 .entral Europe% C! )K 3 Ireland
(areas of high unemployment)% 0! South &merica% A! 'e*ico% ?! Philippines% K! .anada% E! -ussia and
/5! 'iddle East! It can be noted that &frica does not feature! In the )K% the perceived best three
destinations as voted during ,O&$s :55K ("""!noa!co!u!inde*!php4a"rds ) annual a"ards< /! Egypt%
:! -omania and 9! Philippines! Only Egypt% "hich is often considered as part of the 'iddle East%
features in &frica!
ic)e service areas
The niche service areas for India% South &frica and 'auritius are sho"n in the table belo"! The table
also sho"s the recommended niche service areas for Kenya% from an analysis of the strengths%
"eanesses% opportunities and threats!
India South &frica 'auritius Kenya
a) Soft"are development
b) Engineering services
c) .all .entre services
a) .all centre services for
financial services
industry!
b) 7igh+end actuarial
services
a) 6rench4English call
centre services
b) Translation Services
c) Soft"are =evelopment
a) .ustomer Service
b) Bac Office e!g!
transcription% data
processing
c) BPO Training for the
region
It is to be noted that the three niche service areas for Kenya do not mean that Kenya cannot provide
other services e!g! soft"are development!
?
;! Critical Issues and Policy Recommendations
The follo"ing summari8es the critical issues the policy recommendations for Kenya based on the
research results!
Critical Issues Policy Recommendations
Policy frame1or0
Iac of specific BPO policy =evelopment of a specific BPO sector policy as pledged in the medium
term plan of the Kenya >ision :595! This policy should% among other
things<
• demonstrate a strong commitment by the Bovernment by outsourcing
some of its services
• address standards in the I.T+BPO sector
• address incentive scheme for BPOs
• align "ith Kenya >ision :595
Iac of BPO strategy and "ea
'3E frame"or! The
'cKinsey3.ompany go+to+
maret strategy has serious
shortcomings and is not
informed by an in+depth
situational analysis
a) .ombine the results of this study "ith those of 'cKinsey3.ompany
and create an informed strategy for the BPO sector in Kenya
b) Strengthen the '3E functions of the KI.TB and Kenya >ision :595
Secretariat
I.T and BPO are not real
sectors% e!g! one cannot obtain
aggregated socio+economic data
on these sectors
.reate a single I.T+BPO sector and mainstream it into the national
planning and operational frame"ors! 6or e*ample% it should be possible
to obtain aggregate socio+economic data (e!g! employment in the sector%
B=P contribution to other sectors and nationally)% data on I.T sector
indicators (e!g! I.T+BPO infrastructure access and use)% I.T industry data
(e!g! I.T+BPO products manufactured and services offered)% etc!
7egal and regulatory frame1or0
;ea legal frame"or for BPO
and I.T sectors (no data
protection% "ea IP- la"s% etc!)
a) In the short+term% strengthen e*isting la"s to provide an enabling legal
frame"or for I.T+BPO
o -evie" the IP- legislations to provide an enabling
environment for protection of intellectual property in a global
no"ledge economy
o -evie" the Kenya employment act to address :C hour
economy and employees "oring at night or at odd hours
b) In the medium+ to long+term% develop separate legislations critical for
I.T+BPO sector and compliant "ith relevant international la"s (data
protection% freedom of information% e+commerce% IP-% labour)
Iac of a BPO incentive
frame"or (currently leveraging
on EP@ incentives)
=evelop a BPO incentives frame"or as an integral part of the la" that
"ill transform EP@s into SE@s! This la" should rationali8e all the
incentives for all types e*port+oriented firms to be established in these
8ones! One should be able to operate from any"here and still be entitled to
the incentives! This incentive frame"or should be time+bound and should
be aimed at ensuring the BPO sector taes off in Kenya in the ne*t five
years
Iac of BPO standards a) =evelop BPO standards% benchmared to international standards
b) Ensure all ey BPO firms adopt these standards
Institutional frame1or0
K
'any institutions "oring on
different aspects of BPO% "ith
very little coordination
a) In the short+term% change the mandates of an e*isting body to
coordinate all the institutions that deal "ith BPO e!g! the Kenya I.T
Board
b) In the medium+ to long+term% create a ne" entity (body corporate "ith
po"er and a po"erful champion) to coordinate I.T+BPO activities
across all ministries and public enterprises that have a role to play in
I.T+BPO
'any and "ea I.T and BPO
industry associations (.SK%
ITS&% KBPO..S% KEPS&$s
I.T Sector Board% TESPOK%
etc!)
a) Strengthen KBPO..S to be the ey BPO industry association
b) .reate a strong I.T association
8uman resource issues
,o updated sills database for
I.T e*ists (.omputer Society of
Kenya I.T ;orforce Survey
-eport% :55A is a useful for
launching fresh census)
a) In the short+term% leave 'oI. to continue "ith initiative already
started N "oring "ith K,BS
b) In the medium+ to long+term% establish frame"or for collection and
updating of I.T sills data
c) In the medium+ to long+term% tas the national body responsible for
I.T+BPO coordination to be established as recommended under
institutional frame"or "ith this responsibility
Slo" implementation of integra+
tion of I.T across all levels of
Education and Training
a) 6ast+trac implementation of integration of I.T into education as
defined in Sessional Paper ,o! / of :550 on Policy 6rame"or for
Education% Training and -esearch and the ,ational Strategy for
Education and Training
55A)b) &ppoint a champion to oversee the implementation
7igh rates of attrition in BPO
;or ethic and culture that is
incongruent "ith off+shore
clients
a) Kenya BPO and .ontact .entre Society to finali8e the Standards and
Ethics Buidelines% "oring "ith the Bovernment and other
staeholders
b) Encourage in+house% peer assessment methods of training to transform
agents
c) &c#uire legal force for the Buidelines in order to guarantee robust
career gro"th and long+term opportunity
Iac of a policy to support
sustained development of
speciali8ed BPO sill sets to
meet demand
a) .reate and implement a policy<
• To incorporate BPO training into curricula across the education
system (secondary 3 tertiary levels)
• To provide training incentives for tertiary institutions to provide
BPO training
• To provide training incentives for in+house training
• To encourage creation of .entres of E*cellence for BPO training by
private sector or based on PPP
b) &s part of the BPO sector strategy to be developed% develop a strategy
on I.T+BPO sills re#uirements and mainstream it into relevant
ministries for implementation
&bsence of common
certification of agents based on a
common curriculum
-egulate e*aminations and certifications in I.T+BPO
9out) and gender issues
BPO "oring environment not
conducive
&mend the Employment &ct% :55? to e*plicitly regulate "oring hours for
employees and to re#uire employers to facilitate safe commuting at night
Iac of a"areness on BPO as a
source of viable employment
a) Kenya BPO and .all .entre Society to create standards for career
progression in standard BPO 2obs
E
b) -elevant public and private agencies e!g! 'inistries of Iabour% Louth
and I.T% KI.TB% KBPO..S% Ka8i K"a >i2ana% etc% to mount
programmes to promote the industry among the youth
c) -elevant public and private industry staeholders to sensitise trainees
and trainers in BPO+related courses that may open up opportunities in
BPO for the youth and "omen
9 months maternity leave
(6ederation of Kenya Employers
launched a complaint)
The Bovernment% through the 'inistry of Louth and Bender% to provide a
social "elfare itty to compensate employers "ho may be adversely
affected by the female employees$ absence
Incentives
Ta* incentives N lac of specific
ta* incentives for the BPO sector
Bovernment to provide ta* incentives for a specific time period to
encourage BPO industry gro"th% especially in the rural areas
.apacity building N lac of
ade#uate human sills to gro"
the BPO sector
a) Integrate BPO training in curricula of all higher learning institutions
b) & proper training frame"or modeled on international standards to be
adapted for guidance to institutions
c) Bovernment to select specific institutions to provide training grants to
develop capacity
d) Provide training grants to ma2ority local shareholding companies to en+
courage gro"th of S'Es in the sector
7igh band"idth and
telecommunications costs
Poor uptae of the band"idth
subsidy
a) -evie" band"idth subsidy re#uirements to enable more firms to #ual+
ify
b) -eduction of band"idth tariffs N the undersea cables landing in Kenya
"ill sort this out
c) Ensure reduction in other telecommunications tariffs through competi+
tion and other regulatory interventions by ..K
7igh start+up e*penses a) Provision of phased out incubation centres for start+up BPO companies
for 9 year periods
b) Bovernment to outsource BPO "or to local ma2ority o"ned centres
Inade#uate mareting of Kenya
as a BPO destination
a) =eveloping the domestic BPO maret segment
b) 'areting and funding local BPOs to maret their services internation+
ally
ic)e for Kenya
Inade#uate human capacity a) =etermine the current and medium term supply capacity of sills
against current and forecast demand for BPO services in niche areas
b) 'oI. 3 ministries in charge of Education to "or together to develop
a policy4frame"or to institutionali8e capacity building for BPO sector
c) Provide training incentives to encourage creation of .entres of E*cel+
lence for BPO training in niche areas by private sector or based on PPP
d) &s part of the BPO sector strategy to be developed% develop a strategy
on I.T+BPO sills re#uirements and mainstream it into relevant minis+
tries for implementation
Poor branding and positioning a) I.T Board4Brand Kenya Board to develop specific positioning state+
ments based on the identification of the niche areas
b) I.T Board and Brand Kenya Board to develop robust branding strategy
so as to increase a"areness in Kenya$s target marets about the coun+
try$s capabilities in the niche areas
c) =evelop specific messaging and mareting collateral or communication
materials for each niche area
d) Identify and invest in on+going P- activities such as events so that
there is continuous communication regarding Kenya$s capabilities in
the niche areas
/5
Iac of patriotism4 negative atti+
tude
a) Introduce in school curriculum% training on positive attitude and nation+
al pride
b) Provide civic education against negativity as one of the mandates of a
national body in charge of BPO
c) 6orm a HKenya cultureJ through a national policy
,ot taing advantage of regional
opportunities
a) I.T Board should maret Kenya as a regional hub for BPO services
b) The Kenyan Bovernment to continue advocating for the East &frican
community as Kenya "ill benefit
c) E&. to "or together in mareting the region for BPO services to
avoid unnecessary competition
References
.omputer Society of Kenya
55A)! Kenya ,ational I.T ;orforce Sills =emand Survey -eport!Bovernment of Kenya
55?)! Kenya >ision :595< & Blobally .ompetitive and Prosperous KenyaBovernment of Kenya
55?)! The Employment &ct% :55?!Kearney% &!T!
55E)% The :55E &!T! Kearney Blobal Services Iocation Inde*< The Shifting geography of off+shoring
Kenya ,ational Bureau of Statistics
55E)! The Ieading Economic Indicators% :55E!'inistry of Education
55A)! ,ational Information and .ommunications Technology (I.T) Strategy for Education and Training!
'inistry of Education Science and Technology
550)! Sessional Paper ,o! / of :550 on Policy 6rame"or for Education% Training and -esearch!
'inistry of Information and .ommunication
55A)! ,ational Information and communications Technology (I.T) Policy!
-epublic of 'auritius% 'inistry of Information Technology and Telecommunications% ,ational I.T Policy%
:55?+//
-epublic of 'auritius% 'inistry of Information Technology and Telecommunications% ,ational I.T Strategic
Plan% :55?+:5//
-epublic of South &frica% The Sills =evelopment &ct ,o! E? of /EEK!
Pillai &!
55A)! 7uman -esource Issues in Business Process Outsourcing!Schramm ;! (/E?/)! F,otes on case studies of instructional media pro2ects$( ;oring paper for the &cademy of
Educational =evelopment( ;ashington =!.!
Lin -!K! (/EE9)! Case Study Researc! "esign and #etods! Sage Publications% .alifornia
//
doc_644780416.pdf