WALUBENGO: Why BPO industry is limping

Wananchi line up to open CDS accounts ahead of Safaricom share offer in 2008. The firm paid out Sh0.31 dividend per share in 2013. FILE 

In Summary

• BPO is a win-win situation since managers are spared the administrative overheads of thinking and managing non-core functions.

By John Walubengo
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Business Process Outsourcing  (BPO) is a term that describes the process of  delegating non-core functions to third parties in order to cut down on costs.

 Most organisations are familiar with the idea of outsourcing cleaning and security services to third parties in order to reduce the Human Resources administrative overheads of managing  this cadre of employees.

Perhaps you are a bank, a hospital or a supermarket and since your core business is not offering cleaning or security services, you are better off if you offloaded these services to third parties who are more focused and competent in these areas.

It is a win-win situation as managers are spared the administrative overheads of thinking and managing non-core functions while having more quality time to focus on what banks, hospitals or supermarkets are mandated to do.

With the Internet as the medium, this concept radically extends the nature and the geographic reach of what can be outsourced, when it can be outsourced and to whom.

A classic example is a US-Bank, based in New York with local Americans as the majority customers.  The bank realises that it is having a large work-force of clerical staff whose main role is to receive and service calls from customers who have issues with their bank statements.

INTERNET TECHNOLOGY

Through Internet technology, these calls can be re-routed to Bangalore, India where a large work-force of Indian clerical staff receive the calls, access the American banking system and through the internet and effectively answer the queries raised by the American customer. 

The American Bank is happy because, it is 50 per cent cheaper to maintain an Indian clerk in Bangalore than it is to maintain an American clerk in New York.  The Indian clerk is happy because his income in dollars is several times bigger than his peers in Bangalore.  The American customer is happy since he gets his queries answered any time he calls – day or night – by happy clerical staff.

This is a basic Call-centre BPO Operation - but it serves to show why and how India is making billions of dollars every year as European and American Corporates move their non-core business functions off-shore.

In 2005, Kenya began its journey to eat into this global BPO market that is dominated by the Indians.  The argument then was that Kenyans with their “neutral” English accents would do better than their Indian counterparts in this market. But eight years down the road, there seems to be little evidence that the millions of jobs envisioned have materialised.

Various reasons have been advanced but the main one must include the lack of legislation that would provide assurance to foreign companies that their data will be protected and not abused when processed through Kenyan  BPO companies.

The second reason is that our BPO industry has not been reasonably tried and tested – particularly when it comes to big contracts that would require thousands of agents to execute. Government must therefore offer some of its non-core functions to BPO operators to use as stepping stones to the International BPO markets.

The final reason could be that we are trying to play catch-up with India – which has been in this business for over 20 years.  Perhaps we should change tact and simply create our own BPO niche that is unique to our competencies.  Let us think about spinning new BPO opportunities around the tourism, agriculture or education sectors.