Introduction and Preliminary Observations (Supported by IDRC , Canada & UoN)

1. Introduction and Preliminary Observations(Supported by IDRC, Canada & UoN) KICC, Lenana Room – 10th Dec, 2008 Prof. Timothy M. Waema

2. Agenda • Overall objective • Specific objectives • Scope • Preliminary observations/key issues

3. 1. Overall objective • To undertake comprehensive research in the business process outsourcing (BPO) sub-sector in pioneer, emerging and mature markets in order 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.

4. 2. Specific objectives • To provide empirical evidence and recommendations to inform the development of BPO legislation, policy and strategy • To identify the critical success factors that underlie BPO industries in developing countries (in pioneer, emerging and mature markets) • To examine and provide comprehensive case studies of eight countries representing pioneer, emerging and mature BPO markets

5. To provide a deeper understanding of youth employment and gender issues within the BPO sector in pioneer, emerging and mature markets • To increase the level of awareness and input among key stakeholders through interactive dialogue on key BPO issues within the Kenyan context • To contribute to knowledge in this emerging area through publication and dissemination of a book

6. 3. Scope • 8 countries classified under 4 categories: • BPO clients: U.S.A., U.K. (3 BPO clients each) • Pioneer BPO services: Kenya & Ghana (3 companies & 1 BPO client each) • Emerging BPO services: South Africa & Egypt (3 companies & 1 BPO client each) • Mature BPO Services: India & Mauritius (3 companies & 1 BPO client each)

7. BPO Associations: • USA – International Association of Outsourcing Professionals (IAOP) • India - Regional Asian BPO Association • UK – National Outsourcing Association (NOA) • Kenya - Business Process Outsourcing and Call Centres Association (BPOCCA) • South Africa - Business Processing enabling SA (BPeSA)

8. 4. Preliminary Observations/Key Issues

9. USA • Africa • Little knowledge about Africa • Great interest in Africa as an alternative outsourcing destination • Creating jobs in Africa as a CSR is another attraction • HR • Availability of a large pool of personnel (ready and waiting to be employed) as key factor in making decision to outsource to a country • Critical issues • English proficiency • Similar work ethic (24 hr shift patterns, time keeping, daily reports, etc.)

10. USA • Infrastructure • Fibre optic cable to global Internet (affordable and quality internet service) • Training • Not concerned about availability of ‘certified’ trained agents • Clients ready to invest in training a vendor to undertake work to the standards they require • Expect a vendor to invest as well • Others willing to cost share • Size of vendor • Some expect > 100 seats • For others, ability to ramp up is more important

11. South Africa (4 vendors, 1 consultant, 1 client, 2 vendor assocs) • Size and capacity to service large markets • >=1,000 seats per vendor and potential clients start listening • Clients look for the number of seats in a country/region rather than seats per vendor • Training • Training must be supported by both relevant government bodies and associations • Quality training standards must be put in place • Personnel at all levels must be trained according to their level in the hierarchy • In-house & continuous training is very important

12. South Africa • Build confidence via on-shore outsourcing • PEs must be willing to outsource. This encourages local private sector to outsource • With local market confidence, go international • Quality assurance procedures & standards • QA procedures must be clear and understandable to your potential client • Support from Govt & other relevant institutions (public/private) is very important • Critical issues for clients • National culture - politeness, customer orientation, etc. • Accent and communication skills • Experienced personnel (& retention)

13. South Africa • Other issues • Infrastructure & its cost implications • Time zones & geographical location • SA has long flying hours to potential clients like North America and Europe • Kenya is better located • Political stability and security • Management confidence and international exposure • Race/colour issues • Employment and labor policy issues e.g. BEE in RSA can impact negatively on a vendor

14. Kenya • Negatives • Soaring electricity costs has huge implications on the businesses especially those that have to work literally 24 hours • High bandwidth costs - promised bandwidth subsidy is taking forever to become reality • Political instability earlier this year was a huge set-back and still feeling the ripples • Positives • ‘Perceived' govt support for the BPO industry as a key area in V2030 - the reality is different • Large local unexploited market for BPO services particularly in the area of ‘Back Office’ data capture and imaging services

15. Kenya • Critical issues for clients • Work ethic • Communication skills (international clients) • Skin colour

16. Kenya • Other observations • More effort is directed at marketing the country to the international rather than the local public and private sector clients • BPOs are more focused at getting to the international market rather than local • Training • Kenyan BPO vendors impart formal communication skills through in-house peer assessment and continuous improvement techniques. This ensures that the right standards are attained in terms of floor etiquette, team etiquette, productivity, and reliability • One of companies operating in Kenya is preparing to invest in a training centre in the near future