[kictanet] Day 9 of 10- BPO Discussions, Strengths and Weaknesses (Observations from USA and UK); and Trends and Niches

Fri Jun 12 00:16:24 EAT 2009

- Day 9 of 10 - BPO
Discussions, BPO Discussions, Strengths and Weaknesses (Observations from USA
and UK); and Trends and Niches
My apologies about the bouncing emails yesterday, the issue is being addressed. As we close the youth and gender debate,  I do recognize that some issues may be pending on this so feel free to address them but under the right subject header. I also noticed that there were queries about the labour laws and Employment Act and maybe we can revisit this at the right time.
However, we have two days to discuss
the final theme beginning today. This theme synthesizes the strengths that make
South Africa, India, Mauritius and Kenya choice BPO destinations. It also
synthesizes the countries’ weaknesses. Finally, the synthesis includes
observations from the USA and UK as sources of outsourced work, the trends in
BPO and the niches the selected countries have pursued or are likely to pursue.
The following is a summary of the research findings; a more detailed summary is
attached.
STRENGTHS AND WEAKNESSES
The researchers found
that some of India’s strengths
include government championship, the government works closely with NASCCOM
(National Association of Software Services Companies) and involves NASCCOM in
all policy decision making regarding the industry.  India generally has a large pool of science,
technology and engineering graduates which has made it a preferred destination
for high end knowledge process outsourcing. In addition, there are tax
incentives; National Skills registry (NSR) to facilitate personnel background
checks; and investors have single window clearance for License application. South Africa on the other hand also has
clear government championship for the BPO sector evidenced by the fact that
investors and potential vendors are wooed from the Office of the President.
There is also commitment to regulatory changes when required. There is an effective marketing strategy
(target marketing and perception management), which has made many in the world
perceive South Africa to be politically and economically stable. There
is world class connectivity; S. Africa has 10 international airports, an
excellent road and railway network. 

Mauritiusstrengths include good ratings from the
World Bank ‘Doing Business Indicators’ which ranks the country at position 24
for favourable investment climate and number 11 for protecting investors and 7
for starting a business. In addition, it is a multilingual country (with two
European languages) so it is an attractive destination for both English and French
speaking clients. Some of the key strengths that make Kenya a choice destination for outsourcing is that it is a good
place to work and holiday (temperate weather and beautiful country). Indeed,
many senior people working for bilateral or international organizations have
preferred to live in Kenya after the end of their contracts. Kenya also has
government championship of the BPO industry. The country is strategically
located and a regional hub for communications and finance. Kenyans generally
have a good English accent for English speaking clients.

Weaknesses were also
assessed in all four countries.  In India, for example, there has/was an
international backlash due to security breaches that made some companies pulled
out of India. There is also the issue of high cost of electricity. Another
factor is the heavy Indian accent which has resulted in poor customer
experience especially for call centre work for international clients. In S. Africa the cost of operation is still high compared to other outsourcing
destinations. Also, even though there are BPO specific incentives,
investors are yet to take advantage of these because of the strict
qualification criteria.

In Mauritius some of the weaknesses
highlighted were the negative perception of
working in 24/7 environment and many Mauritians cannot imagine working at
night. Secondly, Internet and mobile communication tariffs are still high
despite liberalization and presence of the submarine cable. Finally, in Kenya, I will emphasize a little more,
there is a perception in client countries thatKenya is not politically stable.  It also appears that Kenya lacks an effective marketing strategy. Some believe that Kenya is sending the
wrong people to woo investors. There is lack of coordination and perceived ‘bad
blood’ between some of the key institutions and groups that represent this
industry; this is also evident to client countries like in the UK. This is not
helped with the soaring electricity costs combined with
the high amount of power outages which has made the cost of doing business very
high as companies have to invest in generators.Of course, the state of the road infrastructure is wanting and the
issue of constant traffic jams causing loss of productive time.

USA
and UK: The attached summary has some analysis from the USA and
UK which includes their preferred outsourcing destination. In the USA, the top
ten (10) preferred outsourcing destinations, in order of preference are: 1.
Rural or Small Town USA (via Indian Companies), 2. India, 3. Eastern & Central
Europe, 4. UK & Ireland (areas of high unemployment), 5. South America, 6.
Mexico, 7. Philippines, 8. Canada, 9. Russia and 10. Middle East. It can be
noted that Africa does not feature. In the UK, the perceived best three
destinations as voted during NOA’s 2008 (www.noa.co.uk.index.php/awrds ) annual awards: 1. Egypt, 2. Romania and 3. Philippines. 
NICHE AREAS
Some of the proposed niche areas for the vendor countries are:

India: The niche areas for
India are a little hard to perceive as they were front-runners in the BPO
industry amongst developing countries. Over time they have found that some of
their niche areas are in remote ICT systems maintenance, software development,
and numerical analysis for various companies.In addition, they have capitalized on their experience and historical
advantage and are now outsourcing work (or assisting the client countries to
outsource work) to destinations where they do not have the comparative
advantage. A case in point is actuarial work to South Africa. 

South Africa: Great potential in the banking
sector. South Africa also has excellent actuarial and
insurance services. It is common to find people who may source work to India
because it is cheaper but are now taking some of the actuarial work to South
Africa as they will find the skill sets that they may not get as easily in
India or Philippines. This trend may increase as they are willing to pay the
optimum price for these skill sets not necessarily the cheapest price.

Mauritius: Mauritius’s greatest niche
comes from the fact that the country is generally multilingual in two European
languages (English and French). Many of the current BPO work in developing
countries are amongst English speakers and they definitely need contacts who
can also work with their potential French clientele. Mauritius is a good
destination for back office transcription and translation services. It may also
be a good destination for front office work that needs translation (English-French).

Kenya:Kenya
appears to be an excellent destination for some types of back office work.
These include financial services (accounting and payroll services) and legal
work as there is a highly educated population in these areas. It can be argued
that there may be an opportunity for front office (call centre work) as many
say the Kenyan accent is neutral though there has to be training in this area
to ensure there is standardization so Kenya can avoid many of India’s mistakes.
There is clearly an opportunity for transcription and translation services
(based on fact that multi-lingual workers are easy to find). Due to the
predominance of the tourism and hospitality industries in the economy, customer
service orientation is high amongst trained Kenyans. 

Discussion
Q12.There are many institutions marketing Kenya
and are not doing a good job of it and/or are not working from the same script.
What institutional set up should we have for marketing Kenya for BPO&O and
how can we improve the coordination and the similarity of the messages?
Discussion
Q13.
Consider the following three examples. One, South Africa has many challenges,
some of which, like security, are more serious than those for Kenya. However,
many in the world perceive South Africa as a worthwhile destination in Africa.
A lot of work has been done by the South African Government to create this
perception. Two, India’s cost of electricity is as high and unreliable as
Kenya’s. However, India is still the number one BPO destination. Three, there is
the issue of the heavy Indian accent which has resulted in poor customer
experience. Consequently, there are jobs that are going back on-shore to the
client countries. Some of these clients are willing to outsource again to the
right destination where accent will not be a major problem. This was confirmed
in interviews in the UK. Given the strengths of Kenya, the opportunities
available locally and abroad, and the lessons from other outsourcing
destinations, what key marketing strategies should Kenya adopt?
Discussion Q14.
Given the findings reported here and the discussions that we have had here on
KICTANET in the last two weeks, what niche(s) do you think Kenya should pursue?

I
know the Bugdet 2009-2010 issues may be upper most in your minds but let us
focus on bringing this excellent 10 day discussion to fruition. 
I thank
you in advance.  
Nyaki

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