Call Centres Set to Benefit From Cheaper Bandwidth in Kenya

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Call centres are set to benefit from official subsidies to ease the high cost of bandwidth, helping them to compete against global rivals on an equal footing. The Sh630 million support will be channeled through the Kenya ICT Board and will benefit companies in operation that have been on a sustained growth path for at least three months.

About half of the country's 50 Business Process Outsourcing (BPO) firms have applied for the subsidies which will be given out soon, board deputy chairman Victor Kyalo told Business Daily.

Bandwidth in Kenya is accessed via satellite links, making it several times more expensive than in countries like South Africa and India, which use fibre optic cables.

In South Africa for instance, one megabyte of bandwidth costs US$300 (KSh21,000) while in Kenya, the cheapest dedicated one megabyte of bandwidth costs $4,000 (KSh280,000). The cost is, however, expected to come down tremendously in late 2009 when the submarine fibre optic cable comes to Kenya. (The bandwidth figure reported here for South Africa seems improbably low.) BPO players estimate that fibre-optic cable can reduce bandwidth costs by 60 per cent.

To qualify for the subsidy, the board requires companies to come up with proposals on how they would improve services were the cost of bandwidth at par with international prices.

The level of support will be pegged on a company's ability to increase its number of employees or its infrastructure. The subsidy is likely to see many companies venturing into the sector. "There is a lot of excitement in starting outsourcing business here and more people want to get into it," said Skyweb Evans managing director Gilda Odera.

The board will pay vendors the difference between the cost of bandwidth at the current market rates and what the bandwidth is likely to cost when the sub-marine cable starts to function. Popular services among Kenya's BPOs include financial services, data transcription, call centres, insurance services, and software development.

An earlier estimation based on interviews on BPO players by Business Daily revealed that every month that passes without Kenya having a fibre optic cable link to the rest of the world, the country loses an opportunity to create 5,000 jobs.

The board said plans are at an advanced stage to develop a technology park and an incubation park at the Kenya College of Communication and Technology (KCCT) to let companies grasp the concept before investing in it.

Some institutions like the Jomo Kenyatta University of Agriculture and Technology have partnered with Wiseman Trainers to offer BPO specific courses.

Industry players say Kenya is well positioned to become a preferred BPO hub because of its competitiveness in terms of human resource and local accents that are popular with the Americans and the Europeans. South Africa is still the most prefered BPO destination in Africa with at least 640 companies by end of last year. The industry has creatd at least 200,000 jobs.

Research indicates that countries which do well in BPO business have efficient legal and financial infrastructure, have reliable and cheap electricity supplies, high level of domestic outsourcing and high quality of output.

The entry of Safaricom as an outsourcing customer and a mobile telephone operator in Tanzania are expected to boost domestic outsourcing.

Business Daily