Uganda develops BPO strategy

Eager to tap into the multi-billion dollar global BPO (business process outsourcing) industry, the Ugandan government has developed a BPO strategy that should allow the country to become a preferred BPO destination in the East and Central African region.

The draft strategy, which has been discussed by the Presidential Investors Round Table task force, is now before Cabinet.

"Cabinet has to approve it, and then it will go before the president, but operationally, its implementation under this ministry is already ongoing," Lawrence Mulinda, a senior systems analyst in the Ministry of ICT, said in an interview.

The strategy is expected to be adopted before the end of the year, Mulinda said, at which point requisite funding will be provided for implementation.

Uganda's current BPO industry is made up of only 30 small players, none of whom have more than 50 employees, due to a lack of government direction and challenges the strategy will aim to address.

On an international level, however, several companies have expressed interest in setting up BPO investments in Uganda, including Quest Holdings of South Africa and HTMT Global Solutions, a subsidiary of the Hinduja Group of India.

"Quest has combined facilities in Cape Town and Johannesburg of 2,500 seats, while HTMT is really big, but both these companies have expressed willingness to invest in the BPO industry here," Mulinda said.

In Uganda today, BPO businesses established by the private sector deal mainly in contact call centers, data entry, software development, and technical services like network system administration, engineering and design.

This begs the question, what makes Uganda a potential destination for BPO?

According to the BPO draft strategy and model, Uganda has a solid skills base, good location in regard to time zones, a well regulated ICT sector, a favorable investment climate, competitive labor costs and improving infrastructure.

In order to sustain the BPO industry, the strategy proposes revising the current ICT policy to incorporate the BPO model, creating awareness of laws and law enforcement, and establishing clear guidelines for investment in BPO. It further proposes that incentives such as tax holidays be extended to BPO operators, as well as grants to cover startup costs.

The strategy provides for the establishment of low-cost connectivity through fiber-optic cabling nationally and internationally and the creation of subsidized, well serviced ICT parks. It also addresses human resource training, marketing and branding, and encouraging investment by local entrepreneurs and financial institutions.

According to the draft document, an initial investment in 30 firms over an incubation period of 3 years would create over 20,000 jobs and more than US$345.6 million in wages in Uganda.

"This will attract big players in the business, and Uganda will become known as a BPO destination," said BPO veteran Abu Luwaga of the strategy.

However, Luwaga cautioned against Ugandan players diving into the deep end of the BPO global industry, noting its competitiveness

It is important to start at the lower end of the scale and move slowly into high-end projects, he said.

The IDG News Service is a Network World affiliate.