Kenya BPO hurt from unemployment in the West

February 21, 2012: The technology companies in Kenya that runs operations of the Western business organizations will experience tough competition in 2012 as the unemployment rate in the West is rising. This will result in lesser outsourcing due to strict regulations by the governments in order to tide over the economic instability.

The contribution of the Information Technology and Communication Industry to the Gross Domestic Product of Kenya stands at 5 per cent and the industry expects it to increase by 25 per cent in the next five years time. The contribution of the industry to the growth rate of GDP now stands at about 24 per cent. Estimates however show that the industry will employ approximately 100,000 individuals in 2011.

There are many shortcomings with the business process outsourcing sector in Kenya and it includes lack of funds, slow internet connection and the increased cost of bandwidth. These problems are faced by other countries in Africa too. Still many of countries in Africa are in the process of increasing investment in the sector to improve their position in the outsourcing world.

Currently Kenya is in a much better position when compared to any other countries in the Eastern part of Africa. But with the kind of support given by governments of other countries such as Uganda, Kenya may soon lose their dominance. Outsourcing non core activities such as customer care and document management are means for organizations in the west to cut cost.

Security concern is another issue faced by the industry. The security situation in the country has restricted the operation of the company during night hours and the companies are forced to operate during daytime. This makes it difficult for the service providers to offer 24 hours support.

Data with the European Union shows that 23.816 million people in the region were unemployed towards the end of 2011. There was an increase of 923,000 in the number of unemployed individuals from 2010. In the case of United States, the current unemployment rate is 8.5 per cent which was 4 per cent in 2000.

The US government has made it clear that it would take measures to check outsourcing of jobs to offshore locations. This is a clear indication that the BPO industry all over the world has a tough time ahead in the years to come. The move by the US government is to check the unemployment rate in the country.

Meanwhile Tholons has included Nairobi, capital of Kenya in the top 100 destination for outsourcing during 2012. It is evident from the findings that Kenya has a long way to go to get a place among the most preferred destinations.

Kenya has joined hands in coordinating with other countries in East Africa to make the region attractive as an outsourcing destination. The government of Kenya has increased the spending on IT by 8 per cent and the fund is being utilized to improve infrastructure, marketing and R&D. The Kenya Vision 2030 aims in developing the Information Technology and Business Process Outsourcing industry by providing subsidy to the companies in the areas of power and broadband prices.

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