Developments and Challenges of Business Process Outsourcing Sector in Kenya

Abstract

The initiatives to make Kenya a leading Business Process Outsourcing (BPO) destination in Africa has been one of the key objectives of Kenyan Government. However, despite the efforts not much has been realized from investments in this sector.  This research was set out to explore the current status of the developments in this sector, the challenges faced in setting up and operating BPO investments and the necessary requirements for setting up and operation of BPO business in Kenya. The research was conducted among the companies which offered BPO and Information Technology Enabled Services (ITES) in Kenya. Further information was also sought from their umbrella association, Kenya BPO and Contact Centre Society (KBPOCCS) and also the ICT Authority which is the Kenyan government agency tasked with promotion of BPO and related investments.

The study found out that majority of the companies (95%) were located in in Nairobi and the entry into this sector by companies started at high rate and later dropped down mainly because of lack of attractive returns contrary to the expectations. Despite the incentives of bandwidth subsidy by the government a meager 30% of companies took the advantage. Main BPO activities included mainly data entry (67%) followed by transcription (50%).

Key challenges facing investors in this sector included lack of readily available human resource with the relevant skills, high staff turnover which was partly attributed to low remuneration, lack of proper policy governing the sector and high taxation. According to the study, successful development of this sector required government intervention.

Keywords: Business Process Outsourcing, BPO, ICT, Information Technology Enabled Services, Kenya Vision 2030.