World’s next outsourcing hub: Kenya?

Christian Science Monitor: World's next outsourcing hub: Kenya?

The government is pumping millions of dollars into improving the country's outdated telecom system in an effort to capitalize on Kenya's large pool of English-speaking graduates.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.

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Last week, the Kenyan government signed an agreement with French-US telecom group Alcatel-Lucent for a fiber-optic cable linking the Kenyan port of Mombasa with the United Arab Emirates.

More important, it will connect East Africa to the rest of the world's Internet capacity and replace the slow and costly satellite links that act as a brake on the country's fast developing industry in business process outsourcing (BPO).

At the signing, Bitange Ndemo, permanent secretary at the Ministry of Information and Communications, said the connection would allow more ordinary Kenyans to surf the Internet. But the real driving force behind the deal, he said, was the potential for creating jobs in call centers and the rest of the outsourcing industry.

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The $82-million cable will run from Fujaira, in the UAE, along the seabed of the Gulf of Oman and down the African coastline to Mombasa. It is expected to bring the cost of connectivity down to about $500 per month [per megabyte]  immediately on completion in January 2009.

In the meantime, the government will use $9 million from a World Bank loan to subsidize connections and kickstart the industry in the new year.

Two other cables are also being planned.

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In a report published last year, the group forecast that Africa would see the fastest growth in the number of call centers for the rest of the decade, and singled out Egypt, Botswana, Ghana, and Kenya for particularly rapid expansion.

Egypt already has a booming outsourcing industry with many Western companies operating there.

Meanwhile, Botswana, Ghana, and Kenya – all former British colonies – have the sort of linguistic skills and education systems that make them well placed for call centers, according to the report.

And signs of a shift in the global pattern emerged earlier this year as several Indian companies began looking to outsource their own outsourcing operations, as rising wages and crumbling infrastructure took their toll.