Business Process
Outsourcing (BPO) is a concept that involves contracting of operations and
services of specific business operator to a third party provider of services.
It primarily refers to replacing in-house services with labor from an outside
firm.
The reasoning
behind this concept is that various businesses have various needs which can be
handled efficiently and cost-effectively by hiring another company to provide the
services.
BPO is distinct
from IT outsourcing which focuses on hiring a third party firm to do IT related
activities such as application management, data centre operations or testing
and quality assurance.
The concept of BPO was
originally associated with manufacturing firms that outsourced large segments
of their supply chain.
Often, BPO is also
known as ITES-Information Technology Enabled Services. Since most business
processes include some form of “automation”, IT “enables” these services to be
performed.
The various
categories of outsourcing include internal business functions such as human
resources or finance and customer-related services such as contact centre
services.
The most commonly
outsourced services are those of ICT (Information Communication Technology)
given that it is less costly to contract a firm to install and maintain a
company’s computers, networks and hardware.
The BPO industry
across the globe is growing at a phenomenal rate; in Kenya for example the industry
employed about 500 people in 2006. It has since grown to over 3500 and is
expected to grow even more.
What is offshoring?
The BPO subset of
outsourcing is split mainly into two, offshore outsourcing and nearshore
outsourcing. BPO that is contracted
outside a company’s country is referred to as offshore outsourcing. Put simply,
offshoring , is a type of outsourcing
that involves having the business functions done in another country, mostly
this is done to reduce labour expenses . While other times it is done for
strategic reasons such as entering new markets.
The other dimensions of offshoring
The other dimension
of offshoring is nearshoring. This involves taking the outsourced work to a
nearby country. The model is popular
with firms that don’t want to deal with the cultural, language, or time zone
difference associated with offshoring.
Importance of BPO/ITES to youth
BPO/ITES is
important for job creation to the youth, as a result governments in Africa are
keen to take up youth skills development initiatives to impart training to the
large number of students in Africa for employment in the BPO/ITES industry.
BOP/ ITES the Kenyan case study
Outsourcing has been
identified in the Vision 2030 (Kenya’s development blueprint covering
the period 2008 to 2030) as a
key pillar and driver of social and economic improvement through job and wealth
creation.
The Kenya ICT Board was
established in 2007 with a key mandate to market the country as a global
outsourcing destination.
The government has developed
a roadmap that will see Kenya take advantage of its unique geographical
position and it is well developed ICT human resource base to become the
preferred destination for outsourcing in Africa. The 2006 Kenya ICT Strategy,
Collaboration and Outsourcing, launched by the president of Kenya, created the
framework for Kenya to focus on global business process outsourcing as a way of
generating jobs for young people and generating wealth for local entrepreneurs
and investors.
Africa on the fast track
It now seems that Africa is
on the fast track to economic growth, propelled by the breeze of technology.
In the last few years Africa
has witnessed innovative IT-Enabled services, prominent is such countries as
Tanzania, Ethiopia, Malawi and Rwanda. Significant presence has also been observed
in Zambia, Uganda and South Africa. It is notable that the social, economic and
political expansion in these countries has been accelerated by the strong
forces of Information Technology.
The flourishing IT segment
that consist of BPO (Business Process Outsourcing) and ITES (IT-enabled
services) are the core sectors that are driving the continent into the
epicenter of transformation.
This expansion in Africa can
be credited to leading IT companies like Techno Brain which is a third-party
service provider and dominates the African BPO/ITES market. Africa is therefore
grabbing its share as a preferred destination for offshore outsourcing.
Services offered by BPO/ITES
The different kinds of
services offered by BPO/ITES include customer support, technical support,
telemarketing, data processing, insurance processing, internet research and IT
helpdesk services. The cheap labour cost
and pool of English speaking Africans have always been the two leading factors
contributing to BPO bang in the continent.
The others are the strong quality
orientation among players, ability to offer round the clock-services based on
the continents unique geographic location. The other is a positive policy
environment that encourages investment.
Why you need to outsource your services
You need to outsource your non-core tasks and get access
to specialized skills and services.
Outsourcing saves you money, time and infrastructure. These
benefits emerge from the time zone advantages. It gives your business the
competitive advantage enabling you to enjoy high-quality services that are delivered
fast to your customers and you see your business grow.
Africa’s stake in
outsourcing
In Africa, South Africa, where Techno Brain has
significant presence, leads the effort to expand business process outsourcing
on the continent.
Kenya, besides boosting financial service companies as
well as strong tourism sector, has its IT sector doing increasingly well.
In 2006, Kenya had close to 4,000 agent positions this number
is projected to increase to 12,000 by end of 2012.
Kenya is said to be in a unique position as an
alternative to South Africa.
Within the last 12 months, several companies have been
visiting Kenya with a view to locate facilities there.
The resiliency of BPO
In the face of global recession, the BPO/ITES industry remained resilient with companies
across the world paying enormous attention to discovering new markets. This has
been accelerated by the demand for domestic markets for BPO services.
This demand for domestic markets, in various African
countries, is expected to develop the BPO/ITES sector in the coming years.
