Kenya Wants To Grab Piece Of Outsourcing Pie

Instead of Bangalore, could it be Nairobi that banking customers from rich countries talk to next year?

NAIROBI, Aug 1 – Instead of Bangalore, could it be Nairobi that banking customers from rich countries talk to next year?

Kenya — impeded in the call centre industry to date by poor communications links to the rest of world — is banking that the first fibre-optic cable in east Africa to be laid by mid-2008 will boost its status as the region’s top economy.

Many Kenyan entrepreneurs hope that this, plus cheap labour, clear accents, and customer fatigue with Indian call centres could help the African country hook into the burgeoning call centre and outsourcing industry, worth $130 billion worldwide.

Once the technology is in place they hope Kenya’s industry can take on established hubs in India and the Philippines.

Cascade Global, an outsourcing advisory firm, estimates its current size at $5 million and with 3,000 employees since the first call centre was set up a couple of years ago.

“Our biggest selling point is our language. Everywhere we go, people are amazed at how clear our accent is,” said Peres Were, managing director of Cascade Global.

“They are finding that India is getting saturated and quality is not very good. They want to give Africa a try.”

HAVE A NICE DAY…DAY

Technology is Kenya’s main hurdle. No matter how clear the Kenyan accent, the irritation of an echo on the line is bad for business.

Call centre operators in east Africa’s biggest economy rely on an outdated satellite system where echoes caused by latency — the time gap created when calls travel some 36,000 km through space and back — spoil call quality.

For that service, they pay a hefty $7,000 per megabyte of bandwidth each month, compared with the roughly $500 per megabyte Indian operators pay.

Call centre entrepreneur Eric Nesbitt says that when he told prospective American clients their calls would be routed through a satellite connection, they were no longer interested in doing business with him.

They knew the outmoded technology would lower the quality on voice calls, which would irritate their customers.

“Clients are not going to change their systems to handle a satellite link just for us. It’s like, ‘why bother? Who are you guys anyway?’ They have no interest,” Nesbitt, operations director of KenCall, told Reuters.

“When we have fibre and that takes that discussion off the table, then we will be equal to everyone in the world.”

India, usually the first stop for western companies looking to increase profits by outsourcing some of their business processes, earned $39.6 billion in the last financial year from call centres, back office operations and software development.

The sector employs 1.5 million people there and contributes 5.2 percent to the nation’s gross domestic product.

The Philippines earned $3.26 billion in 2006 and hopes to double that by 2010.

MULTINATIONALS

Kenya’s planned $100 million undersea cable will connect Mombasa with Fujairah in the United Arab Emirates.

Known as The East African Marine Systems (TEAMS), it will bring the cost of bandwidth down to levels similar to what India is paying.

The government has in the meantime secured a World Bank loan to subsidise the cost of bandwidth until its own cable lands in Mombasa.

But archaic technology is not the only hurdle the young Kenyan call centre industry has to deal with.

“Our main disadvantage is that we are at infancy and many companies out there do not know we are there,” said Gilda Odera, managing director of Skyweb-Evans, another call centre.

Here, Kenyans hope their confidence and good English language skills can make a difference.

India’s large English-speaking workforce — with wages well below western levels — have helped to attract business but it is fast becoming a more expensive outsourcing destination, industry analysts say.

Indian agents with clear accents are unwilling to take low salaries so more and more workers with stronger rural accents are getting into the market.

Kenyans are also banking on bad press generated over the Indian industry for clients to look their way. And they say that lately, they have been receiving a lot of inquiries from multinationals looking for a new location.

“Ours is a young industry and fragmented but in a few years, there will be bigger players,” said Mugure Mugo, managing director of Preciss, a business process outsourcing firm. (Additional Rosemarie Francisco in Manila and Sumeet Chatterjee in Bangalore)