Outsourcing: the missing piece in Kenya's job creation puzzle

The manufacturing sector suffers from serious global competition.

In Summary

•A key factor behind this is mostly as a result of Africa’s key resources and investment structure, which are predominantly capital intensive and not labour intensive, resulting in few jobs created per unit of capital infused into the economy, for example the mining sector. 

•The manufacturing sector on the other hand suffers from serious global competition, resulting in Africa importing more than it exports, again, not a situation that stimulates jobs.

Youths during a rally.
Youths during a rally.
Image: FILE

African governments have been constantly struggling to create employment for their 1.2 billion people. With high population growth, meaningful jobs are increasingly becoming a scarcity and people have got genuine reasons to worry.

While most African countries have made huge strides in educating their young population, the same success cannot be said of job creation. Being one of the richest continents in terms of resources, this has not transformed into job creation.

A key factor behind this is mostly as a result of Africa’s key resources and investment structure, which are predominantly capital intensive and not labour intensive, resulting in few jobs created per unit of capital infused into the economy, for example the mining sector.

The manufacturing sector on the other hand suffers from serious global competition, resulting in Africa importing more than it exports, again, not a situation that stimulates jobs.

To try and combat youth unemployment, most Governments have embarked on initiatives and programmes that encourage self employment. While self employment is a great strategy, not everybody is entrepreneurial. So what else can be done? This is where Business Process Outsourcing comes in.

Through BPO Asian countries and easter European countries have actually created another layer to protect their people from unemployment while playing their part in global commerce. This is something that African governments can adopt and take advantage of since it plugs directly into the service industry. Through BPO, asian countries such as the Philippines and India have managed to create hundreds of thousands of jobs through this.

According to Nexford University, The Philippine BPO industry contributes nearly $30 billion to the economy each year. It is estimated that 1.3 million Filipinos were employed in over 1000 BPO companies in 2019, and that figure is showing 8-10% growth every year.

It is estimated that the country holds 10-15% of the global BPO market. Its services are oriented to its former colonial power, the USA, and also serve Europe and nearer neighbours, such as Japan, New Zealand, and Australia. Currently, the Philippines earns much more from BPO than foreign remittances from Filipinos working abroad.

So, what is Business Process Outsourcing and is Kenya a good candidate for the industry ? Business process outsourcing, commonly referred to as BPO, is the practice of hiring a third party to take care of specific work processes for your organisation or business. Such include things like your payroll, training, Digital Marketing content, accounting, customer support amongst many others. BPO is mostly used to manage supplemental business functions, rather than the core business functions of the client business.

For a country that intends to create jobs, developing as an Outsourcing Hub for foreign companies is usually the way to go, especially now that the world has become a global village, thanks to advancements in technology

BPO is usually classified into Front Office BPO or Back Office BPO, depending on the business process it takes care of. While Front Office BPO refers to customer facing tasks such as customer service or support, marketing and sales, Back office BPO is usually focused on internal business functions that customers do not usually see or interact with.

Companies usually outsource for two main reasons. The first is to reduce costs and the second is to take advantage of expertise that they don’t have so that they can focus on their core business. There are, however, several reasons including the need to navigate unfamiliar territories, especially when setting up services or operations in a foreign country.

Kenya, and Africa as a whole, is ripe for BPO. Why do I say this? First of all, Kenya has got the talent, thanks to the free Primary education and the upscaling of universities under the recent governments, growing the number of public universities in the country from 7 in 2005 to 30 as of last year .

According to Statista.com, nearly 130,000 students enrolled for university education in 2021 in public universities compared to less than 13,000 in 2005, which is pretty commendable. Labour, without a doubt, is available.

Secondly, compared to Western countries, labour in Kenya is very cheap, thanks to the comparative low cost of living. This drives down the operational costs of companies. A similar setup in the Philippines helped American companies save up to 70% of labour costs

Another advantage that Kenya enjoys is great internet penetration, with internet use currently at 46% according to the Kenya Media Establishment Survey 2022, making Kenyans key members of the global community.

English being an official language in Kenya is also a huge boost aside from the fact East Africans speak English without a heavy accent. In fact, their accent is easy on the ears, making them suitable for call centre jobs and other client facing outsourcing duties, without giving clients a hard time, especially if they are based in other countries or continents

There are definitely other advantages as well, including favourable time zones and East Africa’s tourist culture, making them naturally hospitable and great at people skills.

They had the first move advantage but this is a very long game

Already, the Kenyan BPO space is becoming vibrant. BrighterMonday, Kenya’s biggest online recruitment platform, has increased its focus on Outsourcing and has increased its capacity to handle the most complex needs in outsourcing.

The key goal is to build dedicated remote teams for innovative global and local companies. Indeed, BrighterMonday expects to use its knowledge of the Kenyan Market to create more opportunities for the Kenyan youth by expanding its Portfolio of Outsourcing clients. What we shall see in the near future is increased job creation and a very lucrative job space for unemployed Kenyans.

Erick Wilson Wafula - Head of Marketing, BrighterMonday East Africa