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REPUBLIC OF UGANDA
BUSINESS PROCESS OUTSOURCING (BPO)STRATEGY AND MODEL FOR UGANDA
2008-2011
BY
THE MINISTRY OF ICTBPO-THINK TANK TEAM (TTT)
June, 2008.
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TABLE OF CONTENTS
1.1 BACKGROUND .........................................................................................................8
1.2 CATEGORIES OF BUSINESS PROCESSING OUTSOURCING SERVICES
.............................................................................................................................. 10
TABLE 1.0 CATEGORIES OF BUSINESS PROCESS OUTSOURCINGSERVICES .............................................................................................................10
1.3 REASONS WHY COMPANIES OUTSOURCE ............................................ 16
1.4 UGANDA - COUNTRY PROFILE .................................................................17
2.0 BPO STATUS IN UGANDA ..........................................................................18
2.1 INVESTMENT ENVIRONMENT ..............................................................................182.2 LEGAL AND REGULATORY FRAMEWORK ........................................................192.4 HUMAN RESOURCE DEVELOPMENT ..................................................................20
2.4.1 EDUCATION SYSTEM ...............................................................................20
2.4.2 ENGLISH LANGUAGE IN UGANDA ...................................................................222.4.3 PROFESSIONAL TRAINING IN IT ......................................................................222.4.4 TARGETED BPOSPECIFIC TRAINING ............................................................222.5 CURRENT INITIATIVES .........................................................................................23
TABLE 2.0 BPO INITIATIVES IN UGANDA - 2007 ....................23
2.6 LESSONS LEARNT FROM OTHER COUNTRIES ......................................25
2.6.1 KENYA ................................................................................................................252.6.2 SOUTH AFRICA ..................................................................................................262.6.3 EGYPT .................................................................................................................272.6.4 TUNISIA ...............................................................................................................272.6.5 INDIA ...................................................................................................................28
3.0 OPPORTUNITIES FOR THE BPO INDUSTRY ............................................29
3.1 ENTRY LEVEL REQUIREMENTS ..........................................................................30
3.2 REQUIRED SKILLS SET ..............................................................................31
FIGURE (A) CONCEPTUAL CONTEXT OF THE MODEL .......................34
4.1 ELEMENTS OF THE BPO MODEL ........................................................................34TABLE 3.0 ELEMENTS OF THE BPO MODEL ...........................34
4.1.1 SUSTAINABILITY OF THE BPO MODEL ...........................................................354.1.2 RISK ANALYSIS AND MITIGATION FRAMEWORK ..........................................36
............................................................................................................................37TABLE 4.0 RISK ASSESSMENT AND MITIGATION FRAMEWORK
...............................................................................................................................37
4.2 UGANDAS BPO STRATEGY .....................................................................39
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4.2.1 KEY ELEMENTS OF THE BPO STRATEGY .....................................................39TABLE 5.0 UGANDAS BPO STRATEGY ..................................39
4.2.2 GOVERNANCE MODEL ......................................................................................41
5.0 COSTS AND BENEFITS OF THE PROPOSED BPO INDUSTRY IN
UGANDA .............................................................................................................43
5.1 BENEFITS ..............................................................................................................435.1.1 JOB CREATION ..................................................................................................435.1.2 REVENUE ............................................................................................................44
TABLE 7.0 PROJECTED REVENUE OVER A THREE YEAR PERIOD...............................................................................................................................44
5.1.3 CAPITAL INVESTMENT: ....................................................................................445.2 MATHEMATICAL MODEL .....................................................................................44
.................................................................................................................45
5.3 COSTS ....................................................................................................................45
TABLE 8.0 PROPOSED BPO BUDGET FOR YEAR ONE ........46TABLE 9.0 FORECASTED BUDGET FOR THE SECOND AND THIRD
YEAR ..................................................................................................................... 48
Data Entry Operators 1,200,000,000 1440,000,000
1,728,000,000Managers 22,500,000 27,000,000
32,400,000 Training Of Trainers 22,500,000
27,000,000 32,400,000 Entrepreneur training
6,000,000 7,200,000 8,640,000 Entrepreneur training
72,000,000 86,400,000 103,680,000 Secretariat
6,000,000 7,200,000 8,640,000 Facilitators
12,000,000 14,400,000 17,280,000 Marketing Branding
500,000,000 600,000,000 720,000,000 Advertising
1,000,000,000 1,200,000,000 1,440,000,000 Public Relations
400,000,000 480,000,000 576,000,000
Exhibitions/Conferences 80,000,000 96,000,000
115,200,000 Sponsorship 160,000,000 192,000,000
230,400,000 Conference Participation 640,000,000
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768,000,000 921,600,000Hosting Annual BPO Conferences
600,000,000 720,000,000 864,000,000 Mentoring
Programme 100,000,000 120,000,000
144,000,000 Bandwidth4,320,000,000 5,184,000,000Utilities
1,036,800,000 Total 14,281,200,000
17,134,440,000 ....................................................................................................49
6.0 INCENTIVES FOR THE BPO INDUSTRY IN UGANDA ..............................54
7.0 CONCLUSIONS ............................................................................................ 55
7.1 KEY RECOMMENDATIONS .........................................................................55
8.0 REFERENCES .............................................................................................. 58
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LIST OF ACRONYMS AND ABBREVIATIONS
ICT Information and Commnucation TechnologyBPO Business Process Outsourcing
ITES Informtion Technology Enabled Services
PSTN Public Switching Telephone Network
SME Small to Medium Enterprises
ETS Education Testing Service
MoICT Ministry of Information and Communications Technology
E-Gov Electronic Government
EAC East African Community
COMESA Common Market for Eastern and Southern Africa
TOFEL Test of English as a Foreign Languag
UNIDO United Nations Industrial Development Organisation
MoJCA Ministry of Justice and Constitutional Affairs
NPA National Planning Authority
MoFPED Ministry of Finance Planning and Economic Development
UCC Uganda Communications Commission
BoU Bank of Uganda
MoES Ministry of Education and Sports
UEPB Uganda Export Promotions Board
MoFA Ministry of Foreign Affairs
MoTTI Ministry of Tourism Trade and Industry
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EXECUTIVE SUMMARY
This report provides an analysis and evaluation of the current andprospective profitability, liquidity, and the overall economic, social, andpolitical benefits and challenges of the Business Process OutsourcingIndustry in Uganda.
It has three major sub headings and these are;
Part 1: Background to Business Process Outsourcing (BPO)Part 2: Proposed Business Process Outsourcing Model for UgandaPart 3: Incentives for the Business Process Outsourcing industry inUganda
The first part looks at the various categories of BPO services, Ugandascountry profile and current initiatives put in place to support theindustry. It provides information on lessons learnt from countries likeIndia, Tunisia, South Africa and many more. This section also providesinformation on why companies outsource and provides information onopportunities for the BPO Industry in Uganda.
The second part proposes a conceptual model for the BPO Industry inUganda clearly defining the inputs and expected outputs. It looks atthe current strategies that are vital in the creation of an enablingenvironment and also proposes a governance model. This section alsodiscusses the sustainability and risk mitigation strategies.
The third part looks at the costs and benefits of adopting the BPOIndustry in Uganda, proposing a mathematical model of the benefitsbeing a function of inputs like Finance, Policy, Human Resource,Infrastructure, Entrepreneurship and Marketing, collectivelycontributing to produce the desired outputs. Some of the projectedbenefits include creation of 20,000 jobs and an estimated revenue of$345.6m in wages for employees over a forecasted period of threeyears
The last section of the report looks at the government incentivesavailable to prospective investors in BPO Industry and also highlightskey recommendations that will facilitate the growth of this industry inUganda. This section has forms which are to be filled by prospectiveinvestors in the Industry to enable government determine the kind ofincentives it can offer dependant on the needs of the business.
The report emphasizes;
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The English Language
High Levels of Skilled man power
And a conducive investment environmentAs being the key drivers for BPO Industry in Uganda.
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PART ONEBACKGROUND TO BUSINESS
PROCESS OUTSOURCING(BPO)
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1.0 BUSINESS PROCESS OUTSOURCING
1.1 BACKGROUND
In the world today, the convergence of Information Technology (IT) andCommunications Technology (CT) has resulted into a new sectortermed as Information and Communications Technology (ICT). ICTshave now linked the entire globe through better and faster (digital)communications networks thereby rendering time and distanceirrelevant. As a result, companies in developed countries havebusiness models that capitalize on these global communicationnetworks. These business models cut costs and improve efficiency byoutsourcing services to a distant skilled work force.Business Process Outsourcing (BPO) can be defined as the strategic
use of a third-party services provider to perform activities traditionallyhandled by internal staff and resources. This releases the organizationto focus more on their core businesses.
BPO is often divided into two categories: back office outsourcing, whichincludes internal business functions such as billing or purchasing, andfront office outsourcing, which includes customer-related services suchas marketing or technical support.
BPO that is contracted outside a company's own country is sometimesreferred to as offshore outsourcing. BPO that is contracted to a
company's neighboring country is sometimes called near-shoreoutsourcing, and BPO that is contracted within the company's owncountry is sometimes called onshore outsourcing.
The most common examples of BPO are Customer Support Servicessuch as call centers, Policy Maintenance/Management such as humanresource, Data Process Services such as payroll outsourcing, and Technical Support Services. BPO is dependent on InformationTechnology; hence, it is also referred to as an Information TechnologyEnabled Service (ITES). BPO is one of the fastest growing segments ofInformation Technology Enabled Services.
There are activities that require greater skill, knowledge, educationand expertise to handle and these form an offshoot of BPO known asKnowledge Process Outsourcing (KPO). An insurance company mightoutsource data entry of its claims forms as part of a BPO initiative, itmay also choose to use a KPO service provider to evaluate newinsurance applications based on a set of criteria or business rules. TheKPO work would require efforts of a more knowledgeable set of
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workers than data entry would. The current definition of KPOencompasses
Research and Development, Product Development and Legal ProcessOutsourcing, as well as a number of other business functions.
BPO as a business model has gained rapid momentum and has grownto phenomenal market levels estimated to be over US$1.1 trillion perannum. Many emerging economies have engaged in this new industry.Countries like India Philippines and Mauritius of recently have cashedin on this industry and have made billions of dollars through provisionof ITES to American, European and Asian companies. According to theFinancial Times of February 15th 2008, it is estimated that India willearn US$ 40 billion by March 2008. This is expected to grow by 50% toUS$ 60 billion by 2010. India now controls between 5-8 % shares of theworld total BPO Industry. Other countries like South Africa, Egypt,Kenya, China and Hungary are positioning themselves to have a sharein the global BPO Industry.
Business Process Outsourcing (BPO) can be technically defined as thedelegation of one or more IT-intensive business processes to anexternal provider that in turn owns, administers and manages theselected process based on defined and measurable performancecriteria. Few of the motivation factors as to why BPO is gaining groundare Factor Cost Advantage, Economy of Scale, Business RiskMitigation, Superior Competency and Utilization Improvement.
Generally, in business terms, outsourcing is where an organizationenters into a contract with another organization to operate andmanage one or more of its business processes. BPO differentiates itselfby either putting in new technology or applying existing technology ina new way to improve a process.
Many developing countries with good communication infrastructurefind BPO business lucrative. It creates employment and generatessubstantial income for the citizens be it skilled or semi-skilled,
particularly the younger generation. In addition, the countries benefitfrom the foreign exchange earned. BPO business is very competitiveand companies that provide the BPO business require very strictadherence to set standards as well as strict operating procedures thatcannot easily be met without support from the host governments.
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1.2 CATEGORIES OF BUSINESS PROCESSINGOUTSOURCING SERVICES
a) TRANSACTIONAL LEVEL BPO SERVICES
TABLE 1.0CATEGORIES OF BUSINESS PROCESS OUTSOURCING SERVICES
TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIES1.Customer
SupportServices
A virtual customerservice center tomanage customerconcerns and queriesthrough multiplechannels includingvoice, e-mail and chaton a 24/7 and 365days basis.
Customers calling tocheck on their orderstatus, customers callingto check for informationon products andservices, customerscalling to verify theiraccount status,customers calling to
check their reservationstatus etc.
- Basiccommunicationskills
- Basic IT Skills (e.g.Keyboardhandling,browsing, troubleshooting)
- Knowledge ofproduct
- Fluency oflanguage (English)
- Articulate &pleasantpersonality
- Accuracy anddiligence
2.
Telemarketing Services
Interaction withpotential customersfor generating interestin products andservices online orcomplete the sales
process online.
Calling households to sellleisure holidays, callingto existing customers tosell a new rate card for amobile service provider,etc.
- Basiccommunicationskills
- Basic IT Skills (e.g.Keyboardhandling,
browsing, troubleshooting)
- Knowledge ofproduct
- Fluency oflanguage (English)
- Articulate &pleasantpersonality
Accuracy anddiligence
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TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIES3.Data Entry
Services /Data
ProcessingServices
Data input/entry fromroutine hard-copy/paper-based
documents toelectronic storagemedia for furtherprocessing, archivingand/or generaldatabase operations.
Data entry fromPaper/Books with highestaccuracy and fast turn
around time (TAT) - Dataentry from Image file inany format- Business TransactionData entry like sales /purchase / payroll.- Data entry of E-Books /Electronic Books- Data Entry : YellowPages / White PagesKeying- Data Entry andcompilation from Website- Data Capture /
Collection- Business Card DataEntry into any Format- Data Entry fromhardcopy/PrintedMaterial into text orrequired format- Data Entry intoSoftware Program andapplication- Receipt and Bill DataEntry - Catalog DataEntry.- Data Entry for Mailing
List/Mailing Label.- Manuscripting typing into word processor- Taped Transcription into word processor.- Copy, Paste, Editing,Sorting, Indexing Datainto required format etc.
- Basiccommunicationskills
- Basic IT Skills (e.g.Keyboardhandling,browsing, troubleshooting)
- Excellent typingspeeds
- Good knowledgeof English
- Functional literacyof data handling
- Accuracy anddiligence
4.DataConversionServices
Document conversioninvolves transformingan electronicdocument from onestorage mediaspecification toanother type(s).
Conversion of dataacross various databaseson different platforms- Data Conversion viaInput / Output for variousmedia.- Data Conversion for
databases, wordprocessors,spreadsheets, and manyother standard andcustom-made softwarepackages as perrequirement.- Conversion fromPageMaker to PDF
- Basiccommunicationskills
- Basic IT Skills (e.g.Keyboardhandling,browsing, troubleshooting)
- Additionalunderstanding ofspecialized ITsoftware e.g. Forscanning,conversion, etc.
- Fluency oflanguage (English)
- Articulate &
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TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIESformat.- Conversion from Ms-Word to HTML format -
Conversion from Text toWord Perfect.- Conversion from Text toWord to HTML andAcrobat- Convert Raw Data intorequired MS Officeformats.- Text to PDF and PDF toWord / Text / Doc- Data Compilation inPDF from SeveralSources.- E-Book Conversion etc.
pleasantpersonality
- Accuracy and
diligence
5.Scanning,
OCR withEditing &IndexingServices
Transcribing
hardcopy/paper-baseddocuments to imageson electronic media.
High speed Image-
Scanning and Datacapture services- High speed largevolume scanning- OCR Data FromScanned page / image- Scan & OCR paper Bookin to CD.- ADOBE PDF ConversionServices.- Conversion from paperor e-file to variousformats
- Basic
communicationskills
- Basic IT Skills (e.g.Keyboardhandling,browsing, troubleshooting)
- Knowledge ofproduct
- Fluency oflanguage (English)
- Articulate &pleasantpersonality
- Accuracy anddiligence
b) SKILLED VALUE ADDED BPO SERVICES (KNOWLEDGEBASED PROCESSING)
TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIES1 .Technical
SupportServices
Round-the-clocktechnical support andproblem resolution forcustomers andcomputer hardware,software, peripheralsand Internet
Customers calling toresolve a problem withtheir home PC, customerscalling to understand howto dial up to their ISP,customers calling with aproblem with their
- Basiccommunicationskills
- Midlevel IT Skills(e.g. Knowledge ofhardware &software systems)
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TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIESinfrastructure.. Theseinclude installationand product support,
up & running support,troubleshooting andUsage support.
software or hardware. - Knowledge of otherspecialisedsoftware
applications/products- Fluency of
language (English)- Articulate &
pleasantpersonality
- Accuracy anddiligence
2.EmployeeIT Help-deskServices
Technical problemresolution and supportfor corporateemployees.
System problemresolutions for staff relatedto PCs, connectivity,printers etc., officeproductivity tools supportincluding browsers and
mail, new service requests,IT operational issues,product usage queries,routing specific requests todesignated contacts andremote diagnostics etc.
- Basiccommunicationskills
- Midlevel IT Skills(e.g. Knowledge ofhardware &software systems)
- Knowledge of otherspecializedsoftwareapplications/products
- Fluency oflanguage (English)
- Articulate &pleasantpersonality
- Accuracy anddiligence
3.InsuranceProcessing
Specialized solutionsto the insurancesector and support forcritical businessprocesses applicableto the industry rightfrom new businessacquisition to policymaintenance to claimsprocessing.
New Business / Promotion:Inbound/outbound sales,Initial Setup, CaseManagement,Underwriting, Riskassessment, Policyissuance etc. PolicyMaintenance /Management: RecordChanges like Name,Beneficiary, Nominee,Address; Collateralverification, SurrenderAudits AccountsReceivable, Accounting,
Claim Overpayment,Customer care service viavoice/email etc.
- Basiccommunicationskills
- Basic IT Skills (e.g.Knowledge ofhardware &software systems)
- Knowledge of otherspecializedsoftwareapplications/products for Insuranceprocessing
- Fluency oflanguage (English)
- Knowledge ofInsurance sector
- Articulate &pleasant
4.BookKeepingandAccountingServices
Professionalaccounting/book-keeping services.
General Ledger- Accounts Receivables andAccounts Payable- Financial Statements- Bank Reconciliation- Assets / Equipment
- Basiccommunicationskills
- Basic IT Skills (e.g.Knowledge ofhardware &
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TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIESts for varioussectors
- Fluency of
language (English)- Knowledge ofresearchmethodologies
- Articulate &pleasantpersonality
- Accuracy anddiligence
c) HIGH-END SKILLED VALUE ADDED SERVICES
TYPE OFSERVICE
DESCRIPTION EXAMPLE(S) LEVEL OFSKILL/TRAINING &
COMPETENCIES1.Software
DevelopmentServices
Development ofsoftware productsas final end-usersystems ormodules/inputsinto largersoftwaresystems..
Financial AccountingsoftwarePayroll ProcessingSchool ManagementSystemsEducational SoftwareHealth ManagementSystemsERP SolutionsRecreational software(games),Etc.
- Basic communicationskills
- Highly specialised ITSkills (e.g. Softwareengineering, computerscience, InformationSystems, SystemsAnalysis, etc)
- Knowledge of varioussoftware developmentlanguages
- Fluency of language(English)
- Knowledge of researchmethodologies
- Accuracy and diligence2.Legal Support
ServicesProvision of legalresearch andanalysis services
Legal research on casestudies, precedents, etc.
- Basic communicationskills
- Basic IT Skills (e.g.Keyboard handling,browsing, etc.)
- Knowledge of legalsystems
- Fluency of language(English)
- Knowledge of researchmethodologies
- Excellent writing skills- Accuracy and
diligence3.Medicalservices
Provision ofmedical diagnosisservices.
Remote diagnosis ofmedical cases.
- Basic communicationskills
- Basic IT Skills (e.g.Keyboard handling,browsing, etc.)
- Knowledge of medicalsystems
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- Fluency of language(English)
- Knowledge of researchmethodologies
Excellent writing skills4.Engineering
Service
Designs for parts;
Architecturaldesigns and Billsof quantities
AutoCAD - Basic communication
skills- Basic IT Skills (e.g.Keyboard handling,browsing, etc.)
- Knowledge ofengineeringsystems(Engineeringgraduates)
- Fluency of language(English)
- Knowledge of researchmethodologies
- Excellent writing skills- Accuracy and diligence
1.3 REASONS WHY COMPANIES OUTSOURCE
There are a host of reasons why companies outsource, below are someof the reasons;
Increasing the overall company effectiveness by outsourcing some
activities to firms with specialized expertise.
Expanding technological advantages and manufacturing
capabilities.
Cutting managerial costs.
Improving technical support and customer service.
Concentration on core activities.
Lack of qualified personnel.
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1.4 UGANDA - COUNTRY PROFILE
Uganda has a great potential for becoming a preferred BPO destination
in the East and Central African region. It is a member state of the EACand COMESA.
The following is a brief description of the profile of Uganda in terms ofeconomical, geographical, demographical and political characteristicsas of 1st April 2008:
Location: Eastern Africa, 1 00 N, 32 00 E Area: 241,551 sq km Population: est.30.9 million People; annual growth rate is 3.2% Official Language: English GDP: USD 11.14 billion (Dec 2007) Main industry: Agriculture 31.7% Mobile phone subscribers: approx. 5,800,000 Fixed phone subscribers: approx 168,000 Economic situation: Developing Political Situation: Stable
Uganda has also got the following advantages over its competitionwithin the region;
Weather- Nature has been and is still friendly to Uganda withtemperatures ranging from 16 degrees to 32 degrees Cellisiusthroughout the year,
Location Uganda is located in the centre of Africa 3 hours Eastof GMT implying that while Ugandans work, BPO source countriesboth in the West and East will be sleeping allowing for processingof the information and submission in time for them to find it liveon their systems when the open for business the following day.
Political stability Uganda has generally enjoyed PoliticalStability since 1986 in most of the areas and the democratizationprocess has grown over the years.
The investment climate is favorable The tax, legal andregulatory frameworks have been and are still revised to caterfor the stringent requirements of BPO and incentives rangingfrom accelerated depreciation to tax holidays are offered by theUIA and other government institutions to investors in BPO.
The cost of labour is very competitive.
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The skills base is solid the 27 Ugandan Universities produceover 10,000 graduates annually who require a little tailored BPOtraining to be employed in the BPO industry.
The infrastructure is improving by the day.
2.0 BPO STATUS IN UGANDA
2.1 INVESTMENT ENVIRONMENT
In 2001, the Government of Uganda recognized the potential ofInformation Technology Enabled Services (BPO in particular) and tookpositive steps by providing a number of interventions. The Governmentsetup the Strategic Intervention Program focusing on 6 sectors of the
economy including ICT which were considered key for quick economicdevelopment and job creation. Incentives were offered to attractinternational technology companies like. HP, DELL, IBM, Microsoft,CISCO and Oracle setup operations in Uganda. In 2002 the governmentreduced and also waived taxes on computers and computer relatedequipment to encourage the growth of the ICT sector and its services.The tax advantage has helped reduce the price of PCs by more than50% to approximately $700 for branded models and $500 forunbranded models.
Similarly under the General Incentive Regime computers and Data
Handling Equipment enjoy a Deductible Annual Allowance of 40percent.
Further to all the above, the government through the UgandaInvestment Authority (UIA) commissioned studies by PerwittInternational a Canadian company to assess Ugandas readiness forBPO. A study was carried out which found Uganda to be very suitablefor BPO given the advantages that were identified at that time. Due toa number of constraints existing at the time, the project did not pick upas expected. Today, Uganda is just ripe for BPO and there are alreadysome Ugandan companies providing BPO services to foreign and local
companies.
Some of the driving factors are;
Since liberalization of the business environment 10 years ago,there is competition which allows the thriving of BPOs. This hasprovided opportunities to create linkages in order to accessmarkets.
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Good policies and the legal and regulatory environment havebeen evaluated to ensure that the environment is right andmatches with what is offered by the competing countries for BPObusiness.
The legal and regulatory framework like laws governing e-transactions are being put in place to ensure confidence andtrust.
The government is working on removal of non-tariff barriers likethe cost both in time and money of setting up a BPO operation inUganda. Issues like setting up industrial clustering like Mauritiusand India are in advanced stages. An example is the NamanveIndustrial Park.
The Uganda Investment Authority is working to attract more
organized private sector local and international BPO operators toattract BPO business into the country.
The incentives are currently under review by the UgandaInvestment Authority (UIA) and the Ministry of ICT where issueslike purchasing of bandwidth in bulk for sale to BPO companies tosignificantly reduce its cost are being considered among others.
2.2 LEGAL AND REGULATORY FRAMEWORK
The existence of ICT Laws and regulations that support ICT areessential to the BPO industry. The Uganda Law Reform Commission
drafted ICT related laws referred to as Cyber Laws based oninternational standards and norms as set-out in the following:
United Nations Commission on International Trade Law(UNCITRAL) Model law on electronic Commerce
World Intellectual Property Organization (WIPO) CopyrightTreaty(WCT)
WTO Basic Telecommunications Agreement.
Other regulatory Issues that are addressed in the draft Cyber Lawsinclude;
Intellectual Property for software development, etc
Privacy and Integrity laws
Policy issues for usage of Internet resources
Regulation and standards of Computer hardware equipment andaccessories
Capacity building and
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Software standards
To date, the principals and objectives of the Electronic TransactionsBill, the Digital Signatures Bill and the Computer Misuse Bill have beenpassed by Cabinet.
The following Sector Policies, Laws do exist;
National ICT Policy Framework (2003)
Communications Act
Draft Postal Policy
Revised Telecommunications Policy 2006
National Information Technology Authority- Uganda (NITA-U)
2.3 TELECOMMUNICATION INFRASTRUCTURE
Ugandas liberation policy of the telecommunication sector hasresulted into a non discriminatory access and nationwideavailability of telecommunications services. The communicationsinfrastructure network put in place by the major communicationsservices providers (MTN, Uganda Telecom, Celtel, Warid, HitsTelecom and others) today covers almost all the districts in thecountry. And to ensure good quality service delivery more than80% of all the Public Switching Telephone Network (PSTN)switching systems in the country are digital.
There is a huge BPO industry worldwide but very competitive.The cost of Bandwidth is still very high compared to competition(i.e. $5K compared to $0.5K in India and now Kenya withgovernment intervention). It poses a significant challenge.
A National Fibre Optic Backbone is being built by theGovernment and expected to be completed by 2010. Its roll-outis in three (3) phases; Phase 1 linking Kampala, Bombo, Entebbeand Jinja already in place; phase 2 linking to the boarder withKenya and extending up-to Mbarara in the West; Phase 3 will linkthe North and North West and Masiindi. It will ensure Ugandasreadiness for connection to the sub-marine cable systems that is
being laid from the East African coast to take advantage of theHigh Speed Band Width.
2.4 HUMAN RESOURCE DEVELOPMENT
2.4.1 EDUCATION SYSTEM
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Training and Education is a critical enabler for the BPO industry.Ugandas education system attracts tens of thousands students everyyear and from neighboring countries. Uganda is termed as an EastAfrican Regional Education Hub. Ugandas 27 Universities andnumerous tertiary institutions churns out over 10,000 graduatesannually of whom 5,000 are IT graduates and other with different skillsand professions such as; Human Resource, Law, Medicine, IT,Computer Science and Technology, Statistics and Mathematics, appliedeconomics, Public Healthy and Nursing, Management, LeadershipCommunication and Customer Services, Business, Hospitality, Finance,Accounting, Banking, Engineering, Sales and Marketing, Languages,Theology, Islamic studies, Secretarial studies, etc.
The strong education system positions Uganda to become a significantBPO player that can supply and sustain low-cost labour pools for someof the types
of business processes categories and jobs that can be outsourced oroff-shored which include;
Back office processes; (Administration, data entry/preparation,scanning & archiving, Document management, E-Translation &Transcription service, Forms and report generation),
IT Services; which require Certified IT Agents and IT qualitymanagers in (Cisco with 4,700 graduates, Microsoft with 1,006Microsoft Certified Professionals (MCPs), Oracle, Intel) forNetwork management and maintenance, Software design, webdesign and development).
Human Resource Functions such as; payroll administration,Recruiting and termination and Training
Contact Centers which can offer (Inbound customer service,Inbound helpdesk, Inbound sales, Inbound technical support,medical transcriptionists, Legal transcriptionists, Outboundtelemarketing/sales, e-translations, Outbound debt collections,Outbound customer interview, Research & surveys, Web sales &marketing, Marketing research services).
Finance and Accounting Services such as; Loan processing,
Portfolio management, Financial reporting, Treasury & financialmanagement, Tax consulting & compiling, Tax management,Auditing , Accounting services, Accounting preparation andreconciliation, Asset management, Corporate claims processing.
Engineering services such as engineering researchdesign.
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2.4.2 ENGLISH LANGUAGE IN UGANDA
English is Ugandas official language and the language of instructionsin the school system right from Kindergarten for at least 15 years of
education. Good-English speaking and good-communication skills aregained from long school experiences through Primary, Secondary, Highschool levels to University or tertiary Institutions. Such experiencespolish the students written and verbal proficiency, wordspronunciations and clear accent during their long education paths.According to Education Testing Service (ETS) an organization thatconducts Test of English as a Foreign Language (TOEFL) program, in its June 2005-July 2007 average score, placed Uganda with the highestscore in the region. Source: ETS www.ets.org/toefl. This is one of theindicators used to choose BPO destinations and further position thecountry with a polished English speaking Critical Mass as one of the
strategic tools to brand Uganda as a preferred BPO destination.
Ugandas strong ties through cultural exchange and learning of French,Germany, Russian and religious ties with Arabic speaking countrieshave exposed foreign languages to Ugandan for the last 40 years,therefore building a Critical Mass in such languages which further putUganda at an advantage to offer BPO services in those languages aswell as e-translation in any one of the International languages.
2.4.3 PROFESSIONAL TRAINING IN ITAccording to records at Cisco Headquarters, Uganda has the largestnumber of CISCO graduates in the region after South Africa givingUganda an edge over other countries in the region to handle CiscoSystems and other communication related jobs. The number ofMicrosoft and Oracle Certified Professionals has increased steadily inthe last three years and more training institutions are increasinglyaffiliates to IT Academy programs for IT certifications.
2.4.4 TARGETED BPOSPECIFIC TRAINING
The Government through Ministry of Education and Sports embarkedon a BPO pilot training and sensitization program in Universities to re-tool graduates for job-skills for the industry.
Computer-based online-training at;http://campus.easylearning.org/uganda has been established to accessbasic level job-skills in Customer Care, Call Center related courses, ITskills, Human Resources etc, at a more affordable cost of UGX 12,000
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per module to enable quick build up of a Critical Mass required tosustain the BPO industry in Uganda.
Universities have been designated as learning centers and are willingto provide their computer labs for trainees and potential BPOemployees to create this critical Mass. Skill-sets for; Call Center agents,Call Center operation Managers and Supervisors, PC Technicians,Network Administrator have been provided to Universities by theMinistry of Education and Sports and recommend that such coursesshould be part of their curricula.
2.5 CURRENT INITIATIVES
The Google initiative to link Universities in Uganda is a public-private sector project that is on-going coordinated by the MoICT.
The Microsoft initiatives for Schools with Computer AidInternational; e-parliament; the District Business InformationCentres jointly with UNIDO to build 20 business information centreswith government intervention, where 8
have been built so far; Microsoft Innovation Centre in Uganda Software economy to setup software standards; Re-furbrishment ofPCs mainly addressing SMEs
Phase 1 of the National Data Transmission Backbone/E-Government
Infrastructure project being implemented by Huawei Technologiesunder a Concessionary Loan from the Chinese government to theGovernment of Uganda is already completed. It consists of voice,data and video transmission leading to video conferencing facilitieswhich have been installed in all government ministries connectedthrough the fibre optic cables. Subsequent phases shall have thefibre optic cable installed to cover the country.
The following table highlights some other initiatives and investments inthe BPO industry in Uganda.
TABLE 2.0BPO INITIATIVES IN UGANDA - 2007No
Service CurrentPlayers
Skills available Remarks
1 Contact CallCenters
TechnologyCentre
16 take 9months tosetup
Setting up aTraining Centre
RokeInvestments
A 25-seater CallCentre
Currentlyterminating 2mil
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No
Service CurrentPlayers
Skills available Remarks
minutes/month
Jinja Call
Centre
300 call centre
operators
Setting up a
Training CentresTailored to meetthe specificoperators needs
Faculty ofComputingandInformationTechnology
300 call centreoperators
Putting up12,000 m2 callcentre
ComputerFrontiers
International
Operates 6 callcentres in
Africa based onopen-source in-house builtplatform
Handles USEmbassy visa
appointments for10 countries
2 Data Entry CaymanConsults
500 Data Entryoperators
Takes 6 monthsto train a skilleddata entryoperator
DataSolutionsInternational
CurrentlyEmploys over180 people
Digitalizing ofmachinegeneratedinformation
Specialised services3 Software
developmentCrystal ClearSoftware
8 Visual Fox ProProgrammers
Sold in 53countries to 356clients in English,French, Spanish& Russian
HelikaInformationSolutions
15 Websitedevelopers
Has clients inUganda & abroad
4 IT andTechnicalServices, e.g.,Networksystemadministration
Faculty ofComputingandInformationTechnology,MakerereUniversity
The Facultyproduces over250 graduatesevery year
Setting upsoftwaredevelopmentstandards basedon differentlevels of theCapability
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No
Service CurrentPlayers
Skills available Remarks
Maturity Model(CMM ISO 15504)
5 MobileApplicationSoftwaredevelopment
Faculty ofComputingandInformationTechnology,MakerereUniversity
Both atUndergraduateand MastersLevel, MobileApplicationDevt is in itsinitial stages
Nokia and SonyEricsson haveoffered to workwith faculty tooffer training andsupport
6 Engineeringand Design
Faculty ofTechnology,MakerereUniversity
100 specialists& 60 graduatesannually
on Boeings SolidEdge & Uni-graphicssoftware & takes18 to train.
7 Medicaltranscription
Makerere andMbararaMedicalSchools
A combinedtotal of 250graduatesannually
Graduates inscience ormedicine with atleast 3 months
training inmedicaltranscription
8 Legaltranscription
LawDevelopmentCenter(MakerereUniversity
Law graduatewith at leastthree monthstraining in legaltranscription
2.6 LESSONS LEARNT FROM OTHER COUNTRIES
2.6.1 KENYA
Identified competitive advantages
The Kenyan economy is also blessed with a dynamic and vibrantprivate sector with many industries and has been a tourist destinationsince its independence.
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Harmonious Industrial relations-The Kenya government has putin place the industrial laws and provided incentives like taxexemptions for industrial investors.
Preferential market access- Kenya is located along the EastAfrican cost and has one of the biggest commercial ports (Mombasa)
Convenient time zone
Kenya has over 50 universities that produce many graduateshence easy access to highly qualified individualsThe Kenyan political environment and good will has played a positiverole in encouraging investors in to the country for last two decades. There was Government intervention to establish competitive BPOsector through;
Reduction of bandwidth cost from $5,000 to $500 per 1 MB.
Provision of subsidy to BPO operators for consolidated / groupparticipation at international ICT fora and PR and advertising.
Provided appropriate legislation for BPO-drivers i.e. ecommercelaws, data privacy and protection, cyber taxation, etc.
Supported strengthening of BPO Private Association & and theICT industry association to mobilize private sector and increasecompetitiveness.
Supported strengthening of BPO Private Association & and theICT industry association to mobilize private sector and increasecompetitiveness.
Enhanced BPO Public-Private Partnership.
2.6.2 SOUTH AFRICA
Most BPO hubs are located in the urban centres of Johannesburg,Cape Town and Durban. The City of Johannesburg in the provinceof Gauteng has the highest number of call centres at more than360 employing some 35,000 call centre agents in outsourced andcaptive (in-house) call centres in ICT, financial services, banking,tourism, hospitality and business-to-business.
South Africa has long invested in its own brand, both inside thecountry and internationally.
"The success of creating and consolidating the South Africanbrand has been its comprehensive and people-centric approachto country branding". So the South African brand emerges astangible as Coca-Cola or Nike and it is the sum of all its parts -tourism, economic potential, and human diversity andtogetherness."
South Africas strengths in the BPO sector play to the USsneeds. South Africa offers a high quality, value-based destination
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for off-shoring business processes, in a stable investmentenvironment supported by world class infrastructure.
The South African Business Process Outsourcing (BPO) sectorcontinues to seek increased investment from the USA.
The government has provided a big investment incentivesbudget over the next five years to lure international businessservices to South Africa.
Through participation in international fora and expos throughBPO Seminars local & International.
2.6.3 EGYPT
This is the country that we dont know much about, however it ismaking major strides in the BPO arena. Egypt is already unparalled inthe Arab world in BPO and is now targeting the likes of India.
The competitive edge of the BPO industry in Egypt is the direct resultof many factors;
Plentiful workforce with more than 200,000 University graduateseach year growing at 28% annually.
88% of relevant workforce enrolled in secondary schools.
45% of population is of age 15-39
Egypt ranks among the best in average wages and the lowest ininfrastructure cost-A.T Kearny.
Rich with talented, skilled and multi-lingual labor.
Major foreign universities reside in Egypt such as the American,British, Canadian, German and French Universities.
Internationally accredited language institutions exist in Egyptteaching English, German, French .Italian, Spanish and otherlanguages.
Due to its historic, touristic and geographic heritage, Egyptsculture is open and used to westernized cultures.
Egypt is centrally located between US, Europe and Asia with afavorable time Zone of GMT+ 2 allowing it to serve the globeround the clock.
Egypt possesses a healthy commercial atmosphere that isbacked up by international country agreements.
2.6.4 TUNISIA
Tunisia is exceptionally placed as a destination for IT business. Withmodern facilities and a highly educated workforce, it offers all the
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opportunities of the developing world on the door step of thedeveloped world. It cites the following strengths.
Tunisias GDP is comparable to the income of a smallAmerican state.
Average GDP growth of 5% during the last 10 years
In the next 10 years, I million new students will graduate fromTunisian Universities.
Large number of graduates ensures 1) an adequate supply ofskilled resources and 2) a relatively stable or diminishing salarybasis
With a sound theoretical grounding, requiring minimal training tobecome excellent R& D and engineering resources.
An impressive Diaspora with a high international educationstandard, looking for any opportunity to do business in Tunisia
with an International partner Central position between Europe, the Middle East and Africa.
The Government of Tunisia has committed its support by establishingan enabling environment for the development of a world-classknowledge-based outsourcing industry, allowing duty free imports ofcapital goods and providing tax exemption on export of IT-enabledservices.
Establishing Software Technology Parks with state-of-the-art ITinfrastructure and telecom facilities providing a single-window
clearance for all regulatory compliances have helped Tunisia emergeas promising outsourcing hub in Africa.
Free Trade Agreements
Tunisia has free trade agreements with several economic zonesincluding;
Arab Magreb Union
European Union
Targeted African countries
2.6.5 INDIA
India is the market leader for the BPO industry with projections ofrevenue in excess of US$80 billion by 2015; last year revenue was inexcess of US$ 30 billion.
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Indias government strategically markets India to create the IndiaBPO Brand equity through the following:
Use of Government diplomatic missions for marketing.
Use of International Expo through group participations; country
delegations; Hosting International BPO expo annually; IndiaSoft.
Indias Key Selling points:
Critical mass of targeted skill-sets
English speaking
Geographical-location advantages
Excellent infrastructure
Investment incentives in the sector
Strong Industry support
Strong supportive BPO Association (NASSCOM) Electronics & Software Exports Promotion Council (provides
marketing function)
The key to success in ramping up talent in a BPO environment is arapid training module. Since ICTs are so dynamic, these trainingcomponents require constantly re-engineering.
In general a person with any education level can join any of the BPO.Some BPO's like to take people with MBA but then again thespecialization of an individual hardly makes any difference. Again, thisis the industry; where there are no reference checks and very oftenpeople don't even specify their exact age. Therefore Outsourcing isbecoming one the largest job creating innovations as education leveldoesnt matter, BPOs offer good working environment and one canwork from home. There is flexibility of time and attractive life style
3.0 OPPORTUNITIES FOR THE BPO INDUSTRYThere are a number of factors that should be considered in establishinga BPO Industry, that include among others:
Language in particular, English (However, we should alsoconsider that there are a number of Ugandans that are fluent inFrench, German, Russian, etc. There is need to liaise with the Instituteof Languages at Makerere University to assess this potential)
Costs of establishing a BPO facility (in both time and setup costs)
Costs for running BPO facility
Telecommunication costs
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Telecommunication regulation
Location (for client convenience, employee convenience,strategic convenience and cost of operations)
3.1 ENTRY LEVEL REQUIREMENTS
In this section we consider the entry level requirements for potentialemployees as well as the required skills sets that Uganda needs totake into consideration as it sets to become the preferred BPOdestination in the region.
Unlike the IT industry, BPO reaches out to the masses. Any universitydegree and good communication skills are enough to enter theindustry, and there can be plenty of opportunities for employment forgraduates who have some aptitude, and are willing to work hard. It
should however be noted that the initial unfamiliarity with clientprocesses, stiff metrics, need for quality all translate into a verysignificant training requirement. All new BPO employees need toundergo rigorous training and certification.
In Uganda, we could emulate what some states in India have donewhere they have taken measures to determine a candidates suitabilityfor the BPO sector. In general, irrespective of the level at which oneseeks to enter the BPO area, the first prerequisite is excellent writtenand spoken English skills. They have also gone ahead to introducecareer-oriented courses and training modules to asses a candidates
communication skills, accent, clarity and grammar besides his/herpersonality and aptitude.
Aptitude is a key issue as the BPO sector in general experiences a highrevolving door phenomenon. Questions potential employees couldask of themselves include:
Do you like to perform repetitive tasks, without getting bored?
Are you a people person, meaning do you like making newcontacts, conversing with new people, etc.?
Are you a patient listener, unlikely to get hassled if the person on
the other end is rude or aggressive? Do you want to start earning early and plan for a mid-career
break to pursue higher studies?
Are you an independent person with strong family ties and enjoygood support from your family?
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An example that highlights the wide-ranging entry level requirementsfor the BPO industry is drawn from a South African survey of 13 BPOcompanies in Western Cape. The survey found that the most commoncompetencies required
by contact centre and BPO&O employers in entry level staff in theWestern Cape include:
Good communication skills
Confidence
Problem solving
Telephone etiquette
Interpersonal skills,
Customer focus, adaptability
Planning and organizing Pro-activeness
Target, money driven
Ability to work under pressure
Positive attitude
Decision making
Attention to detail
Being productive
Understanding various English (language) accents
3.2 REQUIRED SKILLS SET
Except for the specialised services, any university degree together withgood communication skills are typically the minimum requirements foremployment in the BPO Industry. Nevertheless, training potentialemployees to meet all the entry-level requirements for the BPOindustry is key.
As an example for what additional input is required, we can considerthe JFK Business Process Outsourcing Training Program. While thisprogram is tailored for BPO opportunities in the United States, it still
serves to show the set of skillsthat would be required for the BPO industry. The basic BPO trainingprogram for those interested in employment includes:
How to Access Available Job Opportunities
Overview of Careers in BPO Industry (with emphasis onrequirements for different sectors, e.g., Human Resources, Insurance,etc.)
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Effective Resume Writing and Interview Skills
Business and Office Etiquette
Financial Literacy
Goal Setting
Leadership Values
Problem Solving and Decision Making
Multi-tasking Skills
Basic Telemarketing Skills
Fundamentals in Customer Service
Telemarketing Skills
Confidence, Self Esteem and Assertiveness
USA Culture, Geography
The training program has also made available online its course outlinesat: http://www.jfkcenter.org/bpo.htmIt was further observed in India that one of the steps large BPO firmswere taking to beat the high attrition rates is to hire retired people whoare in the 40-55 age bracket as well as those who are outside theformal working sector, like housewives. Advanced age workers couldbe a good source of higher-level supervisory BPO tasks and/orspecialised tasks due to their work experience. This is also another
opportunity the Uganda BPO sector could consider.
With the ever increasing numbers of graduates from Ugandanuniversities of whom only 40 percent are absolved in the formal jobmarket coupled by our use of English as the language of instruction,the BPO industry would be able to engage a large number of graduates both for basic routine functions as well as for specialised services.However, assessing for aptitude, work ethic and good personality aswell as training for the BPO industry will be key factors in ensuring therequired skills
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PART TWOPROPOSED BUSINESS
PROCESS OUTSOURCING(BPO) MODEL FOR UGANDA
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4.0 MODEL DEFINITION
A Model is a representation of a system that allows for investigation of
the properties of the system and, in some cases, prediction of futureoutcomes.www.investorwords.com.
THE PROPOSED CONCEPTUAL CONTEXT MODEL FOR THE BPOINDUSTRY IN UGANDA
FIGURE (A) CONCEPTUAL CONTEXT OF THE MODEL
From the Figure (A) above, we conceptualise the BPO Model startingwith the real world that interprets the salient inputs like infrastructure,policy framework, entrepreneurship, finance and human resource thatcan be transformed to produce required results like employmentopportunities, revenue and investments that are verifiable andquantifiable in the real world as benefits.
4.1 ELEMENTS OF THE BPO MODEL
THE BPO MODEL INCLUDES INPUTS AND OUTPUTS AS INDICATED INTHE TABLE BELOW
TABLE 3.0 ELEMENTS OF THE BPO MODEL
INPUTS OUTPUT/BENEFITS
FinancePolicy FrameworkHuman Resource/SkillsInfrastructureEntrepreneurMarketing
Employment/JobsRevenueInvestment
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The figure (B) below further clarifies the BPO contextual concept modeldiscussed in figure (A) showing the relationships between the desiredinputs needed to produce the desired output/benefits.
FIGURE (B) UGANDA BPO CONCEPTUAL MODEL
4.1.1 SUSTAINABILITY OF THE BPO MODEL
The Model stipulates that the government is going to support theindustry through an incubation system that is expected to last overthree years. The companies that qualify for the intial support areexpected to up be fully operational and able to run on thier ownwithout any government incentives. The sustainability loop shows thatinvestment, revenue and Jobs created within this period are translatedinto commercial viable entities allowing opprotunities to otherentrants. In the long term, the Government will consider technologyparks that are adquately serviced with infrastructure to support thegrowth of this industry beyond the initial 3 years.
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Policy Framework
Infrastructure
Entrepreneurship
Human Resource
Marketing
INPUTS
PROCESSES
OUTPUTS/BENEFITS
JOBS
REVENUE
INVESTMENT
Finance
Sustainability(Loop)
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The money (Finances) saved from income during the first 3 years ofgovernment support should be used as additional working capital torun the
business. Further, the customers of BPO operators will continue to payfor the services.
The supportive Policy Framework will have been tested during theyears of government support and will have been improved on toensure its suitability for future survival of BPO business in Uganda.
Proper Human Resource capacity will have been built within the
supported companies. Other human resource developmentorganizations will have come into play to fill the gap of providingthe required human resource for the BPO industry.
The infrastructure built during the government support period withbe used to further develop the industry.
New BPO operators will come into the business based on theentrepreneurial capacity that will have been developed in thesector.
The markets developed during government intervention willcontinue to provide business to the operators as well as newmarkets that will be acquired based on the reputation developed
during the government support period and the right markingstrategy are employed to ensure sustainability of BPO operations.
In the next 3 years, Uganda is expected to be enjoying servicesfrom fibre submarine marine cables that should have reached thehinterland. These include SEACOM, ESSAY, UHURUNET and TEAMSwhich will substantively reduce the cost of Bandwidth and henceimprove the profitability of investing in the BPO Industry.
4.1.2 RISK ANALYSIS AND MITIGATION FRAMEWORK
In the business of outsourcing, customers take risks when they puttheir faith in contractors who oversell their capabilities, negotiateincomplete contracts, or do not properly manage their outsourcingrelationships. The negative outcomes from these risks include excesscosts, poor service, loss of competitiveness, loss of revenues, and lossof customers.
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There are risk mitigation strategies that have proven to be useful by alarge number BPO companies worldwide. However, business managersfind that best practices cannot be mimicked effectively in everysituation. Instead, each company must decide for itself appropriate riskmitigation tactics.
Below are some of the risks and their recommended mitigationstrategies. Assessment and Mitigation Framework
TABLE 4.0 RISK ASSESSMENT AND MITIGATION FRAMEWORK
RISK MITIGATION STRATEGY1. Unrealistic customer expectations. Align stakeholder expectations through
detailed contract negotiations; disseminatecontract highlights to entire user community
2. Inflexible contracting
Short-term contracts that include mechanismsfor change; use performance-basedcontracting where possible.
3 Inexperience and lack of maturity in theBPO Industry
Source incrementally start small to gainexperience with capabilities required tosuccessfully outsource.
4. Reputation riskErrors, delays, oromissions in information technology that
become public knowledge or directly affectcustomers can significantly affect thereputation of the serviced institutions
These can be overcome by having asupportive policy framework that ensures
clients are protected from that happening.Further, having the right human resource tocarry out the transactions correctly isimportant as provided for the Uganda BPOStrategy.
5. Oversold contractors capability.
Vetting contractors, making sure they haveproven track records; demand customerreferences that illustrate turnaround cases.
6. Security breaches
Cyber laws and a strong BPO Policyframework emphasizing data encryption andsecurity controls to avoid any securitybreaches.
7. Slow response time and Applicationunavailability
Negotiating service level guaranteesfor response time variables within the
contractors control; restrictapplications to thin client versions forInternet delivery.
Negotiating service level guaranteeswith penalties for non performance forcontractors- caused failures.(Contractors cannot be heldaccountable for Internet failures.)
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8. Contractors going out of business Select contractors with sound financialposition, stable customers, and stablestrategic partners; understand howcontractors earns a profit; require notificationof premature termination of contract; requiretransfer clause to facilitate moving the
activity back to the client or to anothercontractors
9. Contractors inability to manage the clientrelationship(s)
Ensure contract monitoring, coordination, andclient-contractors liaison capabilities
10. Compliance (legal) riskOutsourcedactivities that fail to comply with legal orregulatory requirements can subject theserviced institution to legal sanctions. Forexample, inaccurate or untimely consumercompliance disclosures or unauthorized
disclosure of confidential customerinformation could expose the servicedinstitution to penalties or litigation.
BPO operators have to agree to comply with
the regulatory framework and comply with set
benchmarks as stipulated in the law
governing BPO operations.
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4.2 UGANDAS BPO STRATEGY
4.2.1 KEY ELEMENTS OF THE BPO STRATEGY
TABLE 5.0 UGANDAS BPO STRATEGYInput Description Proposed Action Plan for
Government of UgandaResponsi
bility
Policy Framework National ICT Policy
Cyber Laws
Revise ICT Policy to incorporateBPO modelUpdate Cyber Laws bill toincorporate strong Dataprotection and privacy laws.The laws should be enforced andawareness on the laws spreadacross all key stakeholdersEstablish guidelines forinvestment in the BPO industry
MoICTMoJCANPA
Finance Financial support forstartups in form ofGrants, Incentives
Support should be extended toBPO operators to meet start upcosts of the following
Infrastructureo Telecommunications
costso Bandwidtho Computer hardware
and related softwareo Furniture and fittingso Power backup
systems Skills development
Premises rentals andConstruction
Provide incentives such as taxholidays,
MoICT
MoFPED
UIA
UCC
TelecomOperators
Infrastructure Bandwidth andTelecommunications infrastructure
Electricity
Premises
Accessibility
Water Supply
The National TransmissionBackbone to be connected tothe submarine cable system;
Provision of sufficient powersupply should be ensured;
Set up well servicedInformation Technology Parkswhere premises can beprovided at subsidized rates.The IT parks would alsoenable defining SpecialEconomic Zones (SEZ) forfirms that operate withinthese IT parks.
Allow and encourage privatesector to develop, build andoperate IT parks as PPP or aspurely privately ownedventure .this would helpGovernment in avoid heavyinvestments in the
MoICT
MFPED
UIA
PrivateSector
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Input Description Proposed Action Plan forGovernment of Uganda
Responsibility
development of the facilities
Entrepreneurship EntrepreneurshipdevelopmentProgramme
Potential Entrepreneursshould be sensitized andencouraged to invest in BPOindustry.
The Banking sector as wellshould be brought on boardand offered training tounderstand how BPO industryoperates and encouraged toextend equity financing.
MoICT
PrivateSector
BoU
Commercial Banks
HumanResource/Skills
Training for bothManagerial CategoryandOperator Category
HR Training should be ofhighest priority, as it is apeople intensive business.
Training courses to bedeveloped and arranged tomeet major segments of theBPO industry.
The HR training should besubsidized by the GoU foremployees and thecompanies by:
o Providing grants for
BPO Trainingso Training of Trainers
o Accrediting Centres to
offer training in BPO
MoICT
MoES
TrainingInstitutions
Marketing A marketing strategytaking care of thefollowing components
Branding
Advertising
Public relations
Participation inInternationalExhibitions &Conferences
Hosting AnnualBPO Conference
InvolvingUgandans in the
Diaspora to helpwith the marketingof the BPO industryin Uganda. Alsoencouraging themback in the countryto make use oftheir internationalexposure(globalisation)
Carry out an aggressivemarketing campaign including thefollowing
Have a clear strategy onattracting the BiggestPlayers in the BPOIndustry World Wide e.g.(GENPACT,ACCENTURE, HCL, IBM)
Branding the Uganda BPOIndustry
International and LocalAdvertising campaigns
should be conducted toattract investment andvendors. The local mediacampaigns would boostlocal investorsconfidence.
Marketing should beundertaken throughparticipation in targetedinternational exhibitions
MoICT
UIA
UEPB
OP
MoFA
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Input Description Proposed Action Plan forGovernment of Uganda
Responsibility
and conferences.International conferences shouldbe held in Uganda forinternational vendors as well as
local investors.
Subcontracting To Kick start theindustry in Uganda, thePublic/Private sectorcan subcontractbusiness fromcountries like India,Israel and Irelandwhich havesubcontracted tocountries likeMauritius, Ghana and
India.
The Government shouldsend out teams to thesecountries to study andattract subcontractedbusiness to Uganda.
MoICT
UIA
MoFA
4.2.2 GOVERNANCE MODEL
The governance of the BPO industry in Uganda shall be defined atthree levels as follows:
a) Governance Tier 1
This consists of an Inter Ministerial Committee composed of:
Minister of Information and Communications Technology;
Ministers of State or their representatives of the following subsectors Investment, Higher Education, Industry and Technology,Presidency.
The Minister of ICT will be Chair of the committee with the PermanentSecretary of the Ministry of ICT as the Secretary to the committee.
b) Governance Tier 2
This will consist of a multi sectoral technical team appointed byMinister responsible for BPO composed of the following:
BPO Technical Committee
The BPO technical Committee is proposed to comprise the following:
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1. Permanent Secretary, Ministry of ICT - Chair2. Executive Director, Uganda Investment Authority (UIA)3. Executive Director, Uganda Export Promotion Board (UEPB)4. Commissioner responsible for Investment, in the Ministry of Finance,
Planning and Economic Development (MoFPED);5. Commissioner responsible for Information Management Services
(IMS) or Information Technology (IT) in the Ministry of ICT;
6. Commissioner responsible for Higher Education, Ministry ofEducation and Sports (MoES)
7. Commissioner responsible for Trade and Industry, Ministry ofTourism, Trade and Industry (MoTTI)
8. Representative from the Office of the President;9. Representative from the MoFA10. Representative from the Private sector;11. Representative from the Academia at a level of Dean faculty with
BPO related training ;12. 2 Representatives from the Business Process Outsourcing
Association; and Project Manager/Coordinator responsible for theBPO project in the Ministry of ICT.
BPO Project Management Unit/Office
The BPO Project Management Unit /Office should be set up in theMinistry reporting to the permanent Secretary. It should be headed bya competent Project Manager with skills in Business Administration,Information Technology, Project management, among others. Theproject manager is the secretary to the technical team in tier2 (b)above.
Other
The BPO Technical Committee in tier 2(a) should consist of thefollowing subcommittees:
- Promotion and Marketing Subcommittee- Finance and Planning Subcommittee
- Compliance and Control Subcommittee
C) Governance Tier 3This level consists of the operators of the BPO industry and relevantservice/facilities providers under the umbrella of the BPO association.The association will nominate 2 (two) representatives to be appointedto the BPO technical committee.
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Proposed Roles/Duties.
Tier 1 - To act as an advocacy and lobbying committee for the wholeBPO Industry and its activities in Uganda. An example is the steeringcommittee for the National Backbone project.Tier 2 - This is the board for Policy guidelines and approval of BPOprojects in the country.
BPO Project Management Unit/Office - Responsible for the OperationalLevel for the BPO Industry like receiving and Vetting of bids.Tier 3 - Representing needs and grievances for the BPO operators andService providers in the country.
It is recommended that all consultations between the different tiersshould not last for more than 14 days and action on grievances to takea maximum of 30 days.
5.0 COSTS AND BENEFITS OF THE PROPOSED BPOINDUSTRY IN UGANDA
5.1 BENEFITS
The envisaged benefits of the BPO industry in Uganda once the Modelis implemented include the following but not limited to; job creation,increased revenue to the country and additional capital investment inthe economy.
5.1.1 JOB CREATION
The Model suggests that initially Government supports 30 BPO firmsthrough an incubation period of 3 years, each with a minimum capacityof 200 call centre agents/data entry operators, per shift working fortwo shifts per day. The minimum operating area of 5000 sq. metreswould be required to achieve this. Total number of jobs created will be30 firms x 200 agents x 2 shifts = 12,000 jobs in the first year.
Supporting 10 more firms in two subsequent years yields 4000 morejobs each year as indicated in the table 6.0 below.
TABLE 6.0 PROJECTED JOBS CREATED OVER A THREE YEAR PERIOD
Year 1 Year 2 Year 3
No of jobs 12,000 16,000 20,000
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5.1.2 REVENUE
For the low end BPO transactions such as call centre services and dataentry, agents and operators in countries where the Industry hasdeveloped earn a minimum of $8 per hour. In order for Uganda to becompetitive in the BPO industry, each agent/ operator is envisaged toearn $6 per hour.Consider an 8hours day work at a rate of $6 per hour for eachagent/operator working for 30 days per month, for a period of 12months, i.e. one year. Then
revenue earned from 12,000 jobs created by the BPO industry in thefirst year is given by $6 x 8hrs x 30days x 12months x 12,000jobswhich totals to US$ 207,360,000. However, it is proposed that due tostart up arrangements, in the first year only 6 months would be utilised
by BPO firms effectively. This yields to total revenue of about $103million in the first year. In the subsequent 2 years the amount willincrease to US$276.5million and US$276.5m respectively as in thetable 7.0 below:
TABLE 7.0 PROJECTED REVENUE OVER A THREE YEAR PERIOD
Yr1(1/2 yr) Yr2 Yr3
No of agents 12,000 16,000 20,000
AnnualRevenue
$103.68m US$276.5m US$345.6m
Revenue projections are based on the assumption of average earningsof US$ 6 per agent per hour for an 8-hours shift. However it should benoted that the projections will change when BPO work is done over a24/7/365 cycle as is the norm in other countries. This will imply thatthe revenue projections double especially from year 2, hence(US$276.5m x 2) and (US$345.6m x 2) respectively.
5.1.3 CAPITAL INVESTMENT:
For every centre opened:- Computers- Furniture- Internet connections- Relevant software
5.2 MATHEMATICAL MODEL
A Mathematical model has also been developed showing the benefitsof the BPO Industry as a function of the required inputs. as follows:
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B = f (F, P, H, I, E, M)
= 1F + 2P + 3H + 4I + 5E + 6M +
= 1; i 0 B=Benefits, f=function = Random Events
where;Partnership
F - Finance Public/PrivateP - Policy framework Public/PrivateH - Human resource Public/PrivateI - Infrastructure Public/PrivateE - Entrepreneurship Public/PrivateM - Marketing Public/Private
FIGURE (C) UGANDA BPO MATHEMATICAL MODEL
For the BPO Industry to succeed, from lessons learnt from othercountries, none of the coefficients should equal to zero as all the coreinputs are vital in insuring the overall success the industry.
5.3 COSTSThe Table 7.0 has the first year estimated costs of setting up the BPOindustry and it is followed by Table 8.0 that has an estimated costprojected over the period of the two subsequent years.
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TABLE 8.0 PROPOSED BPO BUDGET FOR YEAR ONE
BPO BUDGET FOR YEARITEM QTY/DESCRIPTIO
NUNIT COST ANNUAL TOTAL(Shs)
A.Premises
Rental 5000 Squaremeters
$13/sqrmetre
13 x2000 x5000x12months
1,560,000,000
B.HR Skills 1 MonthsTraining for 30firms/ year
Call CentreAgents
200 pple @ firm 200,000= 200 x 30 x200,000
1,200,000,000
Data EntryOperators
200 pple@ firm 200,000 200 x 30 x200,000
1,200,000,000
Manager 3 pple @firm 250,000 3 x 30 x250,000
22,500,000
Training OfTrainers
3 pple @firm 250,000 3 x 30 x250,000
22,500,000
BANDWIDTH 1 MB/Sec @ firm $5000/MB 5000x2000x30x12month
3,600,000,000
UTILITIES (electricity&water@ firm)
$1000/firm 1000x2000x30x12month
720,000,000
C.EntrepreneurshipDevelopmentprogramme
6 Sessions peryear for 200participants
Venue Hire Conference/trainin
g space
1,000,000 6x1,000,000 6,000,000
LogisticalSupport
Refreshments,meals duringtraining sessions,for 1 day
60,000 @
60,000x200x6
72,000,000
Secretariat 1,000,000per session
1,000,000x6 6,000,000
Facilitators (ofinternationalrepute in BPOIndustry training)
2,000,000per session
2,000,000 x 6 12,000,000
D.Marketing
Branding Developing aBrand for theUganda BPOindustry
500,000,000 500,000,000 500,000,000
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Advertising International Media(Print, Electronic)
1,000,000,000
1,000,000,000
1,000,000,000
Public relations 400,000,000 400,000,000 400,000,000
Participation inInternationalExhibitions &Conferences
20 participantssupported toattend at least 4sessions in a year
8,000,000@ 20x8,000,000x4
640,000,000
Acquisition spacefor Ugandanexhibitors. (20sq.mtr) for 4events
$500/sq.m 500 x 2000 x20 x4
80,000,000
Sponsorship atinternationalconferences
$20,000@event
40,000,000x4events
160,000,000
Hosting AnnualBPO Conference
Support to hostinginternationalevents in Uganda.
600,000,000 600,000,000 600,000,000
MentoringProgramme
Support toUgandanIndividuals(professional,Academia, BPOentrepreneurs to
present papers,etc)
100,000,000 100,000,000 100,000,000
TOTAL (Yr 1) 11,901,000,000
Costs for Policy Framework, Infrastructure Development and BPOGovernance are covered under the Ministry of ICT Budget.
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TABLE 9.0 FORECASTED BUDGET FOR THE SECOND AND THIRD YEAR
ACTIVITY COST20% Increase, 2ndYear
20% Increase, 3rd
Year
Incubation Center
premises
1,560,0
00,000
1,872,000,00
0 2,246,400,000
-
-
Training Subsidies
Call Center operators1,200,000,000 1,440,000,000 1,728,000,000
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Data Entry Operators 1,200,000,000 1440,000,0001,728,000,000Managers 22,500,000 27,000,00032,400,000 Training Of Trainers 22,500,000 27,000,00032,400,000 Entrepreneur training 6,000,000 7,200,0008,640,000 Entrepreneur training 72,000,000 86,400,000
103,680,000 Secretariat 6,000,000 7,200,0008,640,000 Facilitators 12,000,000 14,400,00017,280,000 Marketing Branding 500,000,000 600,000,000720,000,000 Advertising 1,000,000,000 1,200,000,0001,440,000,000 Public Relations 400,000,000 480,000,000576,000,000 Exhibitions/Conferences 80,000,000 96,000,000115,200,000 Sponsorship 160,000,000 192,000,000
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230,400,000 Conference Participation
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000 768,000,000 921,600,000Hosting Annual BPO Conferences600,000,000 720,000,000 864,000,000 Mentoring Programme100,000,000 120,000,000 144,000,000 Bandwidth4,320,000,0005,184,000,000Utilities 1,036,800,000 Total 14,281,200,00017,134,440,000
PART THREEINCENTIVES FOR THE BPO
INDUSTRY IN UGANDA
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6.0 INCENTIVES FOR THE BPO INDUSTRY IN UGANDA
In order to boost the Business Process Outsourcing Industry,Government of Uganda through the Ministry of Information andCommunications Technology in its financial year Budget should allocatefunds for incentive grants to up-coming and existing BPO companieswith the aim of creating employment opportunities and investment. Theincentive program is proposed to position Uganda as a preferredlocation for BPO operations, alongside the sector skills developme