- 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