What you need to know:
With a more enabling environment for Business Process Outsourcing (BPO), more jobs can be generated as the BPO industry grows, translating into dignified work for more Ugandans.
When Business Process Outsourcing (BPO) was a buzzword in the country about 10 to 15 years ago, it was touted as the answer to the youth unemployment question. With the BPO concept gaining momentum, in January 17, 2011 Makerere University hosted the launch of the National BPO training programme with full support of the government.
The eight-week full-time training conducted at Makerere University Faculty of Computing and IT was looking at firming young Ugandans hands in the two BPO categories of back office and front office outsourcing once the BPO Centre opens shop.
Generally, back office BPO is the practice where a corporation hires outside experts to handle its essential business support functions, such as accounting, IT services, payment processing, human resources, quality assurance, and even quality assurance regulatory compliance.
And front office BPO refers to the outsourcing of client to third party vendor or external businesses to perform services, including marketing, sales, customer service, tech support or any business process requiring direct contact with customers.
Fast forward, the unemployment question described by some as a ticking bomb is still a problem, as young adults on a daily basis leave the country in droves to work especially in Middle East countries, sometimes under deplorable working conditions.
Even then, the Minister of State for ICT, Mr Godfrey Baluku Kabbyanga, in an interview with Prosper Magazine, still believes that BPO not only remains the answer to unemployment, but also the magic bullet that could account for the “death” of labour externalisation.
According to sector experts, Uganda’s domestic and international BPO and ITO market is still in a blossoming state, as it is still in the developmental stages of growth. NITA-U projects BPO sector organic growth at estimated 20 per cent between 2022 and 2023 alone.
National Information Technology Survey, 2022 (BPO Report 0f 2022) provides some interesting perspective about the nascent BPO industry in the country.
According the report conducted by National Information Technology Authority Uganda (NITA-U), a government agency in charge of coordinating and regulating Information Technology (IT) services in country, many BPO companies were difficult to locate, while many had purportedly closed down due to the Covid-19 lockdowns.
However, the biggest challenge identified by sector regulator was the unwillingness of domestic customers to take on BPO services. Further, even in this day and age – a time when talk of Fourth Industrial Revolution building on the Third, where the digital revolution is driving forward and upwards in focused economies, internet connectivity is still a challenge in the country!
“One in every two BPOs felt they had insufficient bandwidth to accomplish their business activities,” reveals the National Information Technology BPO Report, 2022.
Despite all that, 70 BPO companies operating in the country are providing some form of training to their employees, the report disclosed that sector players are aghast by lack of adequate skills among their employees and the strenuous resources needed to retrain new employees to the required industry-ready skills.
Most BPOs also felt that developing technology capabilities in data management and analytics was the most important area for them to remain relevant and competitive in future. This was closely followed by developing capabilities in cloud computing services.
Additionally, like the rest of the economy 90 per cent of the economic sectors, nearly eight out of 10 BPOs are typical SMEs employing between 10-49 employees, with just under only 15 per cent employing 250 or more employees.
The largest proportion of employees according to the 2022 BPO survey were Agents (48 per cent), followed by IT support staff (25 per cent) and team leaders (5 per cent) with employees falling between 25-34 age bracket affirming the importance of the BPO sector as a potential source of job creation for the youth even after the Covid-19 pandemic.
Approximately, there are 70 BPO/ITO operators in the country, 12 of which are Customer Service and Sales service providers, 14 providers of IT Outsourcing (ITO), 6 for Human Resource, Outsourcing (HRO), 2 Recruitment Process Outsourcing, 7 Finance and Accounting, 3 Learning Services Outsourcing, 1 Logistics and Supply Chain Management, then 3 Data Analytics Outsourcing and 2 Legal Process Outsourcing (LPO).
Estimated employment by BPO/ITES sector is in the range of 10,000 for both domestic and international workforce from a talent pool of over 200,000 with the approximately $131 million (about Shs475.2 billion) market size estimates.
Picking up again
Just recently, a new Business Processing Outsourcing Centre called Okapi Outsourcing was launched in Uganda with a target to create more than 1,000 jobs before the end of this year.
According to Okapi Outsourcing directors, Uganda, in their estimation, is the best destination for setting up a BPO Centre. This, they say is because of what Uganda offers in terms of friendly time zones, warmth of the people, impressive human resource and fluency in English, although industry analysts like Mr Niyitegeka says youth involved in the sector need to do more to improve their wanting comprehension.
“As compared to other locations be it Canada, USA, Asia Pacific where I have managed operations, Uganda has better potential for BPO because of their level of English and the talent that is possessed by many young people,” Elena Georgescu, director Okapi said during the launch.
Okapi joins about 70 more registered BPO businesses currently operating in the country. Although the government has been advocating for the establishment of BPO’s, much more needs to be done in terms of investments for these to be successful.
According to the state minister for Investment and Privatisation, Ms Evelyn Anita, Uganda stands high chances of benefiting from the BPO sector as compared to its counterparts like India who struggle with the English language. However, Uganda has not made deliberate effort to invest in this area.
Mr Kabbyanga, in a recent interview with Prosper Magazine, said government is developing a BPO policy to put in place a legal framework with which several BPO companies can operate in and create the much-needed jobs for the youth and avoid the challenges that come with external labour export.
“With supporting policies in place, we hope that more BPO companies can be established and create jobs for youth from within Uganda and the outside world without them having to travel and work in the outside countries,” Mr Kabbyanga said.
Which country is best in BPO?
The Philippines is among the finest nations in Asia for outsourcing services, along with India. The nation has long retained the moniker “The BPO Capital of the World.” Microsoft, IBM, and Wells Fargo are international businesses that outsource work to the Philippines.
In addition to operational flexibility, cost reduction there are several ways for firms to cut costs, thanks to India’s outsourcing sector. This is primarily due to the low average pay, low living costs, and surplus of trained workers in the nation. For instance, the average monthly salary for a software engineer in India is $664.53. In contrast, it would cost you, on average, $8742.25 per month to hire a software engineer in New York.
So to compete favourably in the space Philippines and India currently occupy, there are some key requirements that Uganda needs to meet to align with what NITA-U in a statement to Prosper Magazine refers to as “global buy-side criteria” and accelerate growth in the sector.
Some of these, according to the statement sent to this newspaper include: Skilling of the HR to make them industry ready, support the industry to implement standards that ensure the quality of the services is maintained, implement the digitisation agenda that government is currently focused on and work with the industry to formulate and implement a relevant incentives package for the growth of the industry.
Among the incentives, according to Mr Michael Niyitegeka, ICT sector expert, should include tax incentives and rendering ICT skills programmes as vocational courses so that it can be available to as many people as possible in the quest to solve unemployment.
Additionally, the statement noted that government will work with the industry and partners to grow both domestic and global demand for Ugandan services the industry offers, curb the high inflation and interest rates and render support on critical necessities for BPO and ITO growth in Uganda.
“With all these key interventions and strategic initiatives implemented by the industry stakeholders, Uganda could create over 100,000 additional jobs by 2030,” reads the NITA-U statement responding to Prosper Magazine question on the matter.
BPOs in the country were found to be largely supporting Telecommunications and IT services. Other areas where the BPOs saw opportunities included retail sector, banking, financial services and insurance. Others included E-government initiatives, education and content development, health care and manufacturing.