Outsourcing: Kenya gunning for India’s crown?
When you think about outsourcing (especially offshore outsourcing), usually India comes foremost to mind. The country has been the premier outsourcing destination for years, providing services such as software development and call centers to companies in the West. Though there are other countries gunning for the profitable outsourcing contracts as well, for example the Philippines, India is considered a dominant player.
Now it seems like a new threat to India’s dominance is rising on the African east coast. Kenya is about to get a significant boost to its Internet infrastructure, and since most people there speak English they have a good opportunity to set up for example call center operations. (Most of the population in Kenya is bilingual, the official languages being English and Swahili.)
High interest for outsourcing in Kenya
If you look at the regional interest for outsourcing in 2005, India’s dominance was clear. They were ahead of the game.
Regional interest for outsourcing, 2005, India is #1
Data from Google Insights for Search, red emphasis added by us.
However, in 2008, the regional interest for outsourcing in Kenya is actually higher than that of India.
Regional interest for outsourcing, 2008, Kenya is #1
Data from Google Insights for Search, red emphasis added by us.
If nothing else, this shows that the interest to provide outsourcing services is extremely high in Kenya now.
What “regional interest” means: The regional interest as defined by Google is an indication of how likely it is that someone in a specific geographic region searches for a specific term (in this case “outsourcing”).
Infrastructure is key to Kenya’s outsourcing plans
For IT-related outsourcing, good and affordable Internet access is a must, and Kenya’s government has put a high priority on this.
We here at Pingdom have looked at the state of the Internet infrastructure in Africa before, and wrote an article about it back in April. For the time being, the capacity of the Internet in Africa is very limited.
Fortunately, there are developments that will greatly improve this situation both in Kenya and much of East Africa.
Kenya will get serious upgrades to its Internet connectivity via several high-capacity submarine cables that are set for 2009 and 2010 (TEAMS, EASSy and SEACOM), which will also lower the prices for Internet access. Once this happens, we expect that the development of the Internet in Kenya will accelerate rapidly.
What the business world is saying about Kenya’s outsourcing
We’re not the only ones who have noticed Kenya’s interest in becoming a new outsourcing powerhouse. For some added perspective, here are snippets from recent articles from the well-respected CIO Magazine and The Christian Science Monitor.
From an article about Kenya’s economic growth in CIO Magazine:
IDC projects that data centers, managed services, help desks, call centers, and application and hosting services will be key areas to watch in 2009.
The business process outsourcing sector is also expected to reap benefits, given that the government is fully supporting efforts to lower the cost of bandwidth.
From an article about outsourcing in Kenya in The Christian Science Monitor:
“People say to me, ‘Wow, this is happening in Kenya? We only think of you for athletics and wildlife,’ ” says Gilda Odera, managing director of Skyweb-Evans in the heart of the capital, Nairobi. “But people are getting really interested in us.”
Her call center and a dozen others are seeds of an industry that the government hopes will put the East African country on equal terms with India as an outsourcing destination.
The government is pumping millions of dollars into improving the country’s outdated telecom system in an effort to capitalize on Kenya’s large pool of English-speaking graduates.
Eventually it wants Kenya to be as well-known for its call centers as its lions, tea, and coffee.
A great opportunity for Kenya
If Kenya continues to aggressively improve its Internet infrastructure and market itself as a serious alternative to India, there really is no reason why Kenya wouldn’t be able to get a significant portion of the outsourcing cake in the coming years.
It looks like 2009 and 2010 will be key years for Kenya.
- Kenya will get serious upgrades to its Internet connectivity via high-capacity submarine cables.
- Low salary levels will make them highly competitive in the cost department.
- You could also speculate that since the time zone is only shifted by a couple of hours from central European time, European companies might in many cases favor Kenya over India. It would facilitate meetings and other daytime activities.
Of course, Kenya doesn’t have India’s 1+ billion population, but with an estimated population of 38 million there is still a pretty large pool to recruit from…
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Adrian
October 8th, 2008 at 7:20 am
What is the level of education in Kenya versus that of India? Are they competitive? I’m asking because I simply don’t have a clue.
Kimmy B
October 8th, 2008 at 10:46 am
Interesting! I had no idea that this was happening. I suspect it would be great for that region if they could get an influx of money through offshore outsourcing.
I also wonder what will happen with outsourcing and offshoring in general now that a recession is hitting us. Will it increase or decrease?
Josef Garvi
October 8th, 2008 at 11:35 am
Would be great if this is the case. The biggest issue in Africa will be finding enough skilled programmers. My experience from West Africa is that they are not so numerous yet, but lets hope they become soon! And of course, there are more things that can be outsourced besides programming (customer support centers, data collection and so forth). I think the recession will increase the interest in outsourcing, as companies will try to cut costs to improve their profits / cushion their losses.
Hannington
October 15th, 2008 at 10:11 am
Josef, actually we do have quite a large number of software programmers over here. From .Net, Oracle, Delphi, you name it. Whatever you require, trust me you’ll get it here – and they are profficient programmers for that matter.
My company has been in BPO since 1998. Amongst the biggest software projects we’ve done, which is still on-going, is the developement of Clinical Software for European Hospitals – mainly British, but also used in Germany and Australia. Our software is currently being used by about 23 hospitals accross these regions.
Alhough we were more or less the pioneers of Software outsourcing in this region, other companies have come up as well but the main BPO avenue for them is Call Center and Telemarketting which we’ve also ventured into and is doing pretty well despite poor IT infrastructure.
The main challenge as I see it, at least from our experience, is that most of the companies in the west do not trust African solutions easily, be it software solution or a call center solution. You should hear some of the comments our marketting staff encounter in their day to day endeavours to lure these companies to do business with us.
Fortunately, once they get a taste of the quality of service rendered, they never get disappointed and never cease to regret their earlier sentiments.
I hope one of you will be doing business with us in a short while to experience it for yourselves.
Outsourcing to India is best
October 16th, 2008 at 8:48 pm
Outsourcing is an exceptional way to capitalize in on your core concerns in today’s business world. :d With the ever growing unsuitability of our economy.
One must come to the conclusion and determine if business process outsourcing is for their business or not. 
What if it was your only option? The banks have been given a financial bailout, however what about the rest of the suffering business economy in general? Literally a year worth of downward upside down stock portfolio’s. Trillions of $$ Dollars were lost and sure not a result of outsourcing.
I think we need to diversify ourselves and become pioneers of the future together rather than continuing to be adverse!
nadja007
October 17th, 2008 at 4:05 pm
Yes, I agree. Nowadays, numbers outsourcing companies are increasing most especially in Asia. Offshoring can be big help to your company and it make your job simnple.
Charles Ombongi
December 27th, 2008 at 4:44 am
I am new to this forum, I have read a number of comments and my reply will be to a particular consern by Josef Garvi about the level of skilled programers in Kenya, I want to assure Mr. Josef we indeed have many skilled programmers in any language that you can think of, the only problem is that the rest of the world knows Kenya as a tourist destination and an athletics powerhouse. The government of Kenya as already initiated a number of infrastructural projects to make Kenya a BPO destination of choice, we believe in the next few days you are going to see state of the art software exports from kenya, my company is the latest entrant into outsourced software development http://www.skycomafrica.com
Charles Ombongi
Business Development Manager
skycom technologies
Josef Garvi
March 8th, 2009 at 12:51 pm
Just dropped back to this thread, and read the encouraging replies from Hannington and Ombogoni. Glad to hear about your successes. I hope there will be more of them in the future. I am still waiting to meet my first fellow west african Java programmer in real life, and hope I will be meeting many soon!
That said, I must confess that I am not located in the best situated geographical area (eastern Niger). And I do see that the number of people working with IT is growing by the year, just haven’t really seen the programming sector take off quite yet. But I do believe it will, one day!
Brenda
June 8th, 2009 at 12:24 am
This is an eye opener indeed. I run into this website as i was doing a research on the Outsorcing business in Kenya and Africa in general. I am proud that the Kenyan Govt has prioritised in the Fibre optics which by now should be ready.
I am confident that Kenya will attract enough investors and will be the next outsourcing hub weighing all the pros and cons.This will also create jobs for thousands youths in my country. I am working on a documentary which i cant give details now, but once i am done with it, i will definately post it on the Yu tube, face book, and “here” for all and sundry to see, and i will appreciate any constructive criticism.
Kennedy Kamau
July 22nd, 2009 at 6:04 am
Greetings to all and congratulations for holding such insightful discussions about my country Kenya.
I ran into this page by sheer luck. I am an experienced programmer, database and web applications developer. I do a few project for US/Canadian and UK based companies but I must admit the Indians are a force to reckon with. They will bid extremely low for high quality technical work. This dissuades me from even going further. For US/UK/Canadian based buyers, talk to me if you need small, medium and largescale providers, telemarketers, programmers etc. The cables have landed!
Loan Modification Processing
August 18th, 2010 at 6:07 am
What are the stats for 2010, who is leading now?