Spanco eyes Kenya's lucrative BPO sector
As African countries promote low-cost labour and build up their IT infrastructure Spanco Raps Kenya Ltd, a Business Processing Outsourcing (BPO) company has set up shop in Africa with Kenya as its headquarters. This is after taking over all call centre operations of Kenya’ s second largest mobicom - Airtel. In an exclusive interview Pravin Kumar, company CEO and Director, tells Biztech Africa Correspondent Carole Kimutai what plans the company has for Kenya and Africa as a whole.
Spanco CEO Pravin Kumar has been in Kenya for barely six months. But seated in his second floor office in an office block in the centre of the Kenyan capital Nairobi, Kumar clearly knows what his mission to Africa, and particularly Kenya, is.
In November 2010, India’ s Spanco Ltd won a five-year contract with Indian owned company Airtel Africa that saw Spanco taking over Airtel’ s BPO operations including inbound and outbound calls handling, back office work, and running the showroom operations in Kenya, Tanzania, Burkina Faso, Chad, Niger, and part of Nigeria.
Initial estimates indicate that the contract is valued in the range of USD220 to 230 million. In Kenya, Airtel is Kenya’ s second largest mobicom by subscriber base after Safaricom with over 16 million subscribers.
Introducing Spanco Raps
And just who is Spanco Raps Kenya Ltd? The company is a locally incorporated joint venture company between Spanco BPO, the BPO arm of Spanco Ltd and Raps Outsourcing, a member of the Mara Group Company. The Mara Group delivers IT products, service and support in 13 countries and is actively involved in Telecom Passive Infrastructure provisioning in Africa.
“ We want to use Kenya as the headquarters for our onshore and offshore BPO services,” reveals Kumar. But why Kenya? I prod. “ Kenya is the business hub of Eastern Africaand everyone seems to speak English pretty well with some people speaking French as well. And the world is currently focusing on Africa,” he says adding that the advantage Kenya has over Francophone countries is that while they can only provide French speakers, Kenya has the bilingual benefit.
According to Spanco, some of the factors evaluated by international agencies that make African countries a favoured international location for business process outsourcing are: World-class service levels of call centre staff, time-zone compatibility with Europe, high rates of fluency in English coupled with neutral English accents, a favourable exchange rate, an advanced telecommunications industry, service provider expertise in the local industry, and depth of local financial services expertise, particularly in insurance, mortgage and loan processing and collection.
BPO opportunities in Africa
In April, Spanco Ltd announced that they had forayed into Africa, putting together a comprehensive strategy to tap the BPO opportunities on the African continent. Africa is witnessing rapid transformation from an area of seemingly low potential, to an area of great opportunity and economic growth. It is estimated that, after India and China, Africa has the next one billion people ready to enter into the global marketplace.
According to statistics from Spanco, in the last five years, cellular market grew by 5000% – 400 million being telecom subscribers, while internet penetration grew 630%, making Africa the fastest growing ICT market worldwide.
The 50% year on year growth is largely dominated by mobile telephony.“ Our formula is based on taking our capabilities in services, operations and technology to new markets,” says Kumar. This comes at an opportune time as ICT and high-tech business is on the agenda of many African governments.
The company has been in the BPO business for over a decade and is one of the largest in India with more than 14,000 employees, operations across four continents. Spanco has also built strong onshore business in Middle East with presence in Qatar and Oman, the UK and US, and also offers offshore BPO business out of their facility in Mumbai, India, catering to global customers. Kumar says the company now wants to use Kenya as its base for conquering the African market.
“ We see several opportunities and challenges in Africa, similar to the ones India has faced and we hope to be part of organizational and institutional building on the continent. We look at our relationship with the host countries as lifelong and we intend to grow and prosper with Africa,” says Kumar.
Kumar says Spanco Ltd understands the telecom business extremely well. “ We avoid handling transactions and focus on business processes. At Airtel, we are attending to customer complaints and monitor usage. When we notice the customer is not an active user, we call and ask them why they are not using the service. Ours is an end to end service,” Kumar says.
For clients looking to outsource, Kumar says “ a company can monitor their BPO Company’ s performance by its client growth.”
Aaron Jones, the CEO of Jones Consulting, a customer service company in Kenya, says more often than not, Kenyans have such awful experiences that we can’ t even call it poor customer service. “ In fact, lack of competition has kept many businesses in Kenya profitable. More often than not, businesses fail when it comes to customer service,” says Jones.
Airtel, Kumar says, has grown through customer service. “ We want customers to get a feeling of being heard.”
By outsourcing, Airtel is now concentrating on growing its subscriber base and is engage in a vicious price war with market leader and publicly listed telecom Safaricom. After rebranding from Zain in 2010, Airtel entered the Kenyan market with a bang. The contract with Spanco is seen as one of the ways of growing its subscriber base.
As one of the largest most recent investors in Kenya, Kumar is appealing to the Kenyan government to address issues of interrupted power, quality of infrastructure and security and transport. “ The government needs to be very keen about providing a conducive environment to investors,” he says.
The deal with Airtel will see the creation of more than 2 000 jobs and development of capacity. “ Careers in the call centre business are the most progressive. Once you join, you are trained and after a few months you start supervising people. This promotion comes with perks and additional responsibility providing job satisfaction and growth.”
Kumar says Spanco Ltd is very keen on building local capacity of Kenyans. “ Out of the 2,500 employees we have employed, we only have 28 expatriates. We will also be sending our employees for training in India and other markets where we have our operations so they can learn the business and bring the knowledge back to Kenya.”
Spanco Ltd, the parent company also has plans to pursue business opportunities in the fields of e-Governance, Power Reforms and Power Distribution in Africa. The group has been involved in the modernization of key sectors, in the past 15 years and are known in India as a technology infrastructure company, working closely with regulators and policy makers in improving governance efficiency.
Kenya’ s BPO sector
Kenya made an entry to the BPO sector with the launch of KenCall EPZ, the first international call centre. The BPO sector has been identified as one of the six pillars of economic growth underpinning Vision 2030 – Kenya’ s economic strategy. The plan is to create at least 7,500 direct BPO jobs and grow the industry's GDP contribution from almost nothing to KSh10 billion (USD 133 million) by 2012.
According to a report by the international consulting firm McKinsey, the BPO sector has the potential to generate KSh45 billion (USD 600 million) and 20,000 direct jobs by 2014.Vision 2030 predicts that India, China and the Philippines would be unable to meet the expanding global demand for BPO services.
Kumar says technology is Kenya’ s main hurdle. Call centre operators in east Africa’ s biggest economy rely on an out-dated satellite systems where echoes caused by latency – the time gap created when calls travel some 36,000 km through space and back – spoil call quality.
India, usually the first stop for western companies looking to increase profits by outsourcing some of their business processes, earned USD 39.6 billion in the last financial year from call centres, back office operations and software development.The sector employs 1.5 million people and contributes 5.2% to the nation’ s gross domestic product.
Carole Kimutai is an Business Editor and writer based in Nairobi, Kenya.
Email: [email protected]