[kictanet] BBC Article on Kenya Outsourcing

[Paul Kukubo]

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    <http://www.bbc.co.uk/news/>
http://www.bbc.co.uk/news/technology-12004815
 <http://www.bbc.co.uk/news/>[image: BBC News]OLOGY<http://www.bbc.co.uk/news/>
  16 December 2010 Last updated at 23:40 GMT Kenya's ambitions for an
outsourced futureBy Jonathan FildesTechnology reporter, BBC News

Stare out of the office windows at Park Towers and - if you are lucky - you
may spot a zebra or a giraffe.

The sleek, glass building on the edge of Nairobi National park belongs to
Horizon Contact Centers, one of a handful of emerging Kenyan firms that hope
to grab a large slice of the global outsourcing market and establish the
country as a leading provider of the call centres and back offices of the
world.

Inside, there is little time for safaris. The sleek offices are packed with
rows and rows of blue cubicles staffed by young graduates, all calmly
talking into headsets and typing into identical PCs.

The rhythmical conversations are polite and familiar to anyone who has
called a customer support line or has picked up a cold call from an
insurance firm.

"Kenya is very well known for its runners and wildlife, but when people talk
about IT services there is a question mark," says Sanjay Sikka, chief
executive of the year-and-a-half-old firm.

Now that is all set to change, he says.
Net effect

Four years ago, the Kenyan government unveiled its Vision 2030 plan to
develop the country<http://www.nesc.go.ke/News&Events/KenyaVision2030Intro.htm>
.

Central to its goals were the use of technology and a desire to emulate the
success of countries such as India, South Africa and the Philippines.

"It is not about taking India's business away from them," explains Paul
Kukubo of the government's ICT board, in charge of promoting Kenya as an
outsourcing destination for foreign firms.

"The market is so big globally that the issue isn't about competition. The
source markets - the US and the UK - are still looking for high quality, low
cost destinations to do business."

Until recently, Kenya was not in a position to go after the business. Its
digital infrastructure - and particularly its satellite communications links
with other countries - was prohibitively expensive for firms that rely on
instant communication.

That changed in 2009, when the first of three undersea internet cables
arrived in the country.

"I travel around the world trying to make the case for international
investment in outsourcing," says Mr Kukubo.

"Before the cables came it wasn't even a discussion. Now we have seen a huge
interest with companies saying 'you have the basic ingredients'."

Mr Sikka, who's firm initially used a grant from the World Bank to help pay
for the expensive satellite links, agrees.

"It's had a huge impact on cost," he says. "It's made Kenya competitive with
the rest of the world."
Perception problem

Down the road from Horizon's sleek headquarters is Kencall, Kenya's first
outsourcing firm, started in 2005.

Before the cables arrived it had to use voice compression technology to
ensure that customers did not pick up on the lags in conversations as the
calls were beamed thousands of miles up via the satellite

"When you calculate that distance to go up to that satellite and back down
again at the speed of light, it would mean that for a word to be heard in
England it would take about 6-700 milliseconds," says its founder Nik
Nesbitt.

"That delay makes calls horrible."

Now, there is no need for the technology. This has brought other benefits,
says Mr Nesbitt.

"Our bandwidth costs have dropped about 90%. However, the part that is most
exciting to us is that we are able to go out and get higher value more
attractive work because we have the fibre optic capability, which pays us
more."

He says the cables "offer a perception of reliability" to potential
customers.

"Previously, the satellites offered that reliability, but not the
perception," he says.

But reliable cheap bandwidth is not the only selling points for Kenya, says
Mr Sikka.

He highlights the country's "abundant talent pool" and its "neutral accent".

"India invests a lot in so-called accent neutralisation, where the agents
are taken through a course," says Mr Sikka, himself a veteran of the Indian
outsourcing scene.

Kenya, he says, does not have that problem. It's a mantra repeated by
everyone pushing Kenya as an outsourcing destination.

Mr Sikka also emphasises the population's "cultural affinity" with countries
such as the US and the UK.

"Cultural affinity to the UK is very important," he says. "It is very
important to show an empathy and understanding of the culture. It can't be
someone calling up from an alien world with no understanding about what it
means to live there."

He says young Kenyans consume the same TV shows and music as their
counterparts in the US and the UK, and they follow the same sports teams.

The legacy of the British schooling system in Kenya is also an advantage, he
says.

"The main thing when you are talking on the phone is getting into the
customer's shoes."
Price point

Kenya is not just targeting call centre work. Horizon offers data
processing.

Nearby, in a conspicuous four-storey red building, Ken-Tech data offers
other services such as image tagging.

For example, the firm does processing work for an unnamed smartphone
application that allows users to take a picture of a product to find the
best prices online.

The pictures are sent to a team of people in their offices, who analyse the
images and tag them with descriptive words that can be used to find the best
prices on the web.

"The results are sent back to the phone within 30 seconds," says Lakshmanan
Manickam, general manager of the firm, and another person who has moved from
India to kick-start the industry.

This work requires a "highly-skilled workforce", he says, who are able to
describe objects accurately.

The firm also creates content for websites and audits transcriptions and
translations for US companies.

He says it is much easier - and cheaper - to set up these projects in Kenya;
factors that will make it "the next outsourcing destination".

But not everyone is so optimistic about Kenya's chances.

"I'm more conservative about what it can do," says Erik Hersman, an
entrepreneur and a major figure in the local technology start-up community.

"If you are just trying to bid against your Indian counterparts, I think it
is a hard thing to do, particularly when they have so much experience."

He believes that rather than offering similar services to other countries,
Kenya needs to find its own niche if it is to be successful.

"I think it is a little bit more of a difficult space than people make it
out to be."

In addition, he says, the country should not try to compete with other
countries on price.
'Lone voice'

It is a view echoed by Mark Hillary, author of Who Moved my Job.

"If your basic offering is, 'it is cheaper to work here than India', than
that is a pretty poor sales pitch," he says.

Instead, he says, firms and government should look at the kinds of graduates
that are coming out of the country's universities and offer services based
on their skills.

This has worked for countries such as Bangladesh, he says, which has
developed a concentration of animation firms.

He says Kenya's historical ties with the UK, which means it has similar
accountancy and legal systems, offers opportunities for outsourcing firms.

However, Mr Hillary says his studies conducted with the United Nations
suggest the country may face other challenges.

"We found the biggest inhibitor was people's sense of corruption," he says.
"But, it's more about the perception of doing business than the reality."

A spate of violence following the disputed 2007 presidential elections also
damaged the country's reputation.

But the government's Mr Kukubo remains optimistic.

"One has to be candid about these things," he says.

"[The 2007 violence] was one of those things that was incidental and rare in
Kenya's history.

"Out of that crisis was born a new Kenya, really. Bad as it may have been, I
think we learnt out lessons."

In the next year, he says, there will be an "explosion of interest" from
firms wanting to set up in Kenya.

It has already invested in a new business park on the Mombasa Road, a
stone's throw from Kencall, Horizon and Ken-Tech data.

The 500,000sq ft (46,450sq m) of empty office space, primed for an influx of
local and India firms, is an indication of its conviction.

And it is a validation for Kencall's Mr Nesbitt.

"When we started Kencall, we were really a voice in the wilderness talking
about outsourcing. I think everyone sat there with one raised eyebrow
waiting to see what could happen.

"But people have now begun to see that this can actually work in Kenya."
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Paul Kukubo
Chief Executive Officer, Kenya ICT Board
PO Box 27150 - 00100
Nairobi, Kenya

12th Floor, Teleposta Towers Koinange Street

Tel +254 20 2089061, +254 20 2211960
Fax: +254 20 2211962
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