A survey of determinants of growth of business process outsourcing in Kenya

Abstract

Kenya, despite its strategic position, its advanced technology and its resources in terms of trained workforce with very good anglicized accents, has not been able to fully attract the big names in the outsourcing world. While this industry is one of the earmarked ones in the Kenya government vision 2030 paper as one of the greatest creators of jobs, wealth as well as kick starting the economy, it has not kicked of very well, because other outsourcing destinations such as India, Philippines, South Africa, and Ghana have more favorable terms for the outsources mainly due to the support offered by their government in terms of marketing and tax incentives (Altinkemer et al., 2005). The BPO sector in Kenya has constantly urged the government to come up with friendly tax structure that will make them competitive in the region. The current tax system is deemed to be hostile to the sector in comparison to other countries, thus foreign outsourcing companies thrive. The industry has the potential of employing tens of thousands of qualified persons if the conditions are favorable. Some of the incentives offered to other outsourcing destinations include: subsidized infrastructure, zero corporate tax status, 30% personal income tax rebate to employees working in the BPO sector, establishment of BPO parks, free zones, 100% exemptions on customs duty for equipment and goods imported for researcher and development and tax incentives for purchases (Machoka, 2008)

Kenya, despite its strategic position, its advanced technology and its resources in terms of trained workforce with very good anglicized accents, has not been able to fully attract the big names in the outsourcing world. While this industry is one of the earmarked ones in the Kenya government vision 2030 paper as one of the greatest creators of jobs, wealth as well as kick starting the economy, it has not kicked of very well, because other outsourcing destinations such as India, Philippines, South Africa, and Ghana have more favorable terms for the outsources mainly due to the support offered by their government in terms of marketing and tax incentives (Altinkemer et al., 2005). The BPO sector in Kenya has constantly urged the government to come up with friendly tax structure that will make them competitive in the region. The current tax system is deemed to be hostile to the sector in comparison to other countries, thus foreign outsourcing companies thrive. The industry has the potential of employing tens of thousands of qualified persons if the conditions are favorable. Some of the incentives offered to other outsourcing destinations include: subsidized infrastructure, zero corporate tax status, 30% personal income tax rebate to employees working in the BPO sector, establishment of BPO parks, free zones, 100% exemptions on customs duty for equipment and goods imported for researcher and development and tax incentives for purchases (Machoka, 2008)