Business Process Outsourcing; An Idea for 2007/08

Over the weekend amidst my weekend escapades i managed to squeeze time and attend a talk by some of the creme-de-la-creme of our society who have been instrumental in their areas of engagements. The weekend saw me attending a business and investments forum addressed by The Investments Secretary Mrs. Esther Koimett, PS ministy of Planning Dr. Edward Sambili, Top CBK Directors, Business Moguls, Entrepreneurs, Young Upcoming Business leaders amongst others.

At the end of the forum i thought it would be prudent if i share the same with my avid readers.

Highly potential sectors:

In their address the emphasis was on the key sectors that are likely to rake in millions in the next few years and any proactive business minded person may wish to venture. These encompass the Information Communication Technology (ICT) sector, Tourism, Financial Services Sector, Service sector, Construction, Agriculture, Capital Markets, Business Consultancy and Supplies and Services/Procurement.

Today i wish to talk about the new craze in town-Call Centers- Otherwise under the umbrella of Business Process Outsourcing. It is noteworthy that the advent of the ICT technology has seen the emergence of various technologies that are expected to change the way business will be conducted and correspondingly enhance economic growth and development. The issue of Business Process Outsouring (BPO) cannot be gainsaid as this was instrumental in the rapid growth and turn around of the Asian economies expecially India, Phillippines, Eastern Europe as well as in South Africa and Egypt.

Business Process Outsourcing (BPO):

Business Process Outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in the marketplace. BPO is often divided into two categories:

-Back Office Outsourcing, which includes internal business functions such as billing or purchasing, and

-Front Office Outsourcing, which includes customer-related services such as marketing or tech support.

BPO in India:

The BPO industry in India refers to the Services Outsourcing Industry catering mainly to Western operations of Multinational Corporations.The sector witnessed considerable activity during 2004–05, including a solidifying of operations by major Indian and MNC players and stepped up hiring. The domestic BPO market, catalyzed by demand from the telecommunication and Business Financial Services segments, matched the growth of BPO exports. The market experienced maturity and consolidation, a result of numerous mergers and acquisitions taking place within the sector. There were over 400 companies operating within the Indian BPO space, and third-party services providers. The key enabler for this has been cheaper bandwith leading to low telecom costs for leased lines and availability of educated English speaking workforce in India.

India's Challenge:

India’s BPO sector is facing increasing challenge from Kenya and other East African countries. South Africa also plans pose a strong challenge. The main daunting problem for India especially in Bangalore and Chennai is low quality in BPO services.

Other Emergent BPO Centers:

India has revenues of $6.4 billion from offshore BPO and $36 billion from IT and total BPO. Apart from India, other locations like the Eastern Europe,Phillippines, and South Africa have emerged to take a share of the market. China is also trying to grow from a very small base in this industry. However, while the BPO industry is expected to continue to grow in India, its market share of the offshore piece is expected to decline.

Call Centers:

Africa's call center industry is set for major growth and are deemed to gain popularity and preference over Indian operators, with South Africa and Egypt leading the charge thanks to cheap labor, good language skills and time zones that chime with Western Europe. South Africa, which is favored by British companies for its cultural affinity with Europe, call center positions are expected to more than triple to 7,400 by 2010. Egypt also continues to impress western investors with its mix of savvy and linguistically-talented agents.

Indeed, countries that have made improving IT and telecommunication a priority, like Botswana, Kenya, Senegal and Ghana, are ripe for growth.

Kenya--impeded in the call center industry to date by poor communications links to the rest of world--is banking that the first fiber-optic cable in east Africa to be laid by mid-2008 will boost its status as the region's top economy. Many Kenyan entrepreneurs hope that this, plus cheap labor, clear accents, and customer fatigue with Indian call centers could help the African country hook into the burgeoning call center and outsourcing Industry, worth $130 billion worldwide.

Fiber Optic Cables in Kenya:

The laying of the fiber optic cable has been on with Telkom having unveiled the long haul Mombasa-Nairobi fiber optic cable measuring nearly 500 km as the state-owned company readies for stiff competition from other players as Kenya Data Network (a company associated with the billionairre Naushad Merali and his Sameer Group) that is also eying the under sea fiber optic cable system. Telkom has introduced a new broadband wireless platform -- Kenstream Wireless -- to complement the already existing Kenstream services.

Kenya Call Centers:

Kenya's endeavor to drive down telecommunications costs to tap into the multibillion dollar outsourcing industry and make Kenya an information technology hub is welcomed in bringing Kenya into the fiber optic loop. Kenya's nascent call center business has grown from employing 200 people last year to 3,000 this year, despite relying on expensive satellite-based communications. To get more companies to give their business to Kenyan call centers, the country needs to increase its bandwidth up to 500 megabits per second by year's end and subsidize the cost until a submarine fiber optic cable is working.

Kencall:

Kencall is a premier call center established in Kenya that is already making inroads into the highly competitive Business Process Outsourcing industry despite the infrastructure challenges to their efficient operations. KenCall, being one of the country’s premier call centres, has defied the odds to win a global award in back office operations business, beating rivals from the infrastructure-enabled markets such as India and the Philippines.

Kencall has 500 agents and 5 international clients and has been at the forefront of an emerging outsourcing industry in Kenya, and is hungry for more growth.

Future 0f Call Centers:

Statistics shows that some 3,000 Kenyans now work in call centres, with the outsourcing sector encompassing about 30 companies. KenCall and 3 others dominate, industry players say. KenCall wants to treble its number of agents by the end of 2008. more

The future of call centers is bright with possible reduction in telecommunications costs. Further, with intense maketing likely to go on and a new focus by western companies on Africa (Kenya Included) It is time we take the responsibility to invest in call centers and MAKE MONEY!!!!!

Chindia- The Emerging Economic Clout

Today i was feeling 'global' and thought why not check the other world economies and the influence on our stock market as well as other emerging markets. Upon extensive research i realized that some of the top four rapidly expanding economies have a bearing on our Sub Saharan developing economies.

G8: Alongside the other developed countries of the G8 with massive economic clout and global political influence China, India, Russia and Brazil are attracting massive Foreign Direct Investments. This new influence by China and India is what i would call Chindia.

India:

India was one of the world's poorest economies when it won its independence from Britain in 1947. Incredibly, 60 years later, the country's emerging economic clout has made it Asia's top spot for billionaires.

India's emerging economic clout: This has made it Asia's top spot for billionaires with its 40 richest businesspeople worth a collective $170 billion, up from $106 billion last year, according to leading American business magazine Forbes.

India's Stock Market:

India's hot stock market, up 39 per cent this year, and its robust real estate market helped swell most fortunes. In the last three years, the Bombay Stock Exchange's benchmark Sensex index soared from 6,000 to more than 15,000 recently.

Indian Billionaires: The collective wealth of Indian billionaires jumped six fold from $32 billion to $191 billion in that time. The notable 2004 elimination of capital gains tax on the sale of equity shares, encouraged entrepreneurs to list their companies.

Rising Stocks: If the stock market keeps rising, the tide of good fortune will continue to create many more of the newly rich.

Corruption: Now that India is playing a larger role in the world economy the issue of corruption in public and private sector is slowly coming to a sharp focus. One wonders however whether corruption will slow growth or growth will slow corruption. [More].

China:
The last two decades has seen the emergence of new and rapidly growing world economies that are slowly emerging as the top and fastest growing economies with good investment prospects for foregin investors.

The Chinese economy grew at 11.9% in the last quarter and could probably be growing at its fastest in 12 years.

China's Quality Fade:Despite the increased net exports of the Chinese Exports to Africa, America and other markets, there have been increasing concerns of quality fade in most of its products branded made in China.

China stock market:

Chinese shares have continued rising at a breakneck pace, pushing Shanghai's main stock index through the 4,000 mark for the first time in May 2007. Shanghai's benchmark CSI 300 index had closed up 2.6% at 4,090.57. The index has doubled in value this year and quadrupled since the start of 2006.

China's stock markets: The markets are almost going mad, actually, with the leading Shanghai market continually rising as ordinary Chinese flock to buy equities in breathless, record numbers. The bull market is so dramatic — the Shanghai index has hit record highs with slight falls on the way as others warn againstt "blind optimism." and "Irrational exuberance."
College students, yuppies, retirees and others are buying individual shares or investing in China's swelling mutual funds.

Brazil:
Along with China, India and Russia, Brazil is a country overflowing with opportunities to attract foreign capital. Brazil is the leading the way in Latin America’s economic development. In 2006, it was the 3rd largest economy in the western hemisphere and the 11th largest in the world. The economy has stabilized, the legislative reforms of the Lula Da Silva government are boosting cooperation between the public and private sectors, imbalances are improving, and the high valuation of markets is attracting the attention of foreign investors.

Brazilian Stocks:

Barely four years ago, the largest Latin American stock markets were on the black list of investors in emerging markets. The economic crisis in Argentina, along with the arrival of Lula as president of Brazil. Now, the Brazilian currency, the real, as well as the country’s stock market are both at all-time highs.

“If you want to be in Latin America, you have to be in Brazil,” notes Rafael Pampillón, professor of economics at the Instituto de Empresa business school in Madrid.

Emerging Economy: Because Brazil is an emerging economy, there are many sectors where investors can make the most of the gold mine contained in Brazil’s economic develop

Stock Market Appeal:

For more than 20 years, Brazilian capital markets were characterized by protectionism and underdevelopment. Following the improvement in the economy, capital markets began to modernize. Lately, Brazil has been benefiting from a favorable external environment. On a global level, it has significant liquidity. In a broad range of financial markets, prices have risen at a brisk pace and the country has growing economic ties with developed economies.More...

Global Markets Calm:

Despite the calm down, investors are bracing themselves for fresh stock turmoil in the coming week after riding a roller-coaster on world markets in recent days, amid fears that US home loan woes could trigger a credit crunch.The pumping of tens of billions of dollars by central banks in US, EU and Japan into the markets on Thursday and Friday helped to ease the panic and stave off fears of a global economic crisis.

The short-term money markets have also eased after efforts by central banks to keep money flowing through the system. [More]