Outsourcing firms may lose Sh632 million funding


Published on 21/12/2008

By James Ratemo

The high cost of bandwidth should no longer be an impediment for business processing and outsourcing (BPO) in Kenya.

However, for more than a year now since the World Bank granted Kenyan BPO players $8 million (Sh632 million) to subsidise their bandwidth costs, no company has benefited.

This is the situation, two months after the World Bank finally released funds to the ICT Board.

And the response from BPO operators has been slow, with most claiming that the requirements are unachievable, punitive and stringent.

According to the Kenya ICT Board’s Head of Communications Lucy Odhiambo, so far only four companies have completed the application process and audited, and their records forwarded to World Bank for approval.

Some three companies are undergoing audit, and out of the 19 companies who have so far filled registration forms, only seven attached the required documents to facilitate reimbursement processing.

This triggers the possibility that much of the money could finally be recalled, and diverted to other sectors as per the Transparency and Communications Infrastructure Project (TCIP), under which the grant was given.

Requirements

In an interview with Tech Insight, Kenya BPO Society Chairperson Gilda Odera, was also worried that most BPOs are shying away from the subsidy because of the strict requirements in the vetting process.

“Most companies are uncomfortable that the information the Government and World Bank demands is stringent and personal. They are not sure who else will access the information, and they feel exposed if they comply,” she said.

Odera, who owns a BPO, however, said companies who want to benefit must not fear to divulge their operations because the Government and World Bank want to ensure transparency and accountability.

“Some of our members have raised concerns that the information required is too personal and the ultimate exposure too much. Some have argued that the reimbursement is not worth the exposure and have opted not to divulge their operations,” she said. Ms Odera regretted that many companies could have been operating without proper documentation and are lacking necessary licences and fear exposure.

“If any company is operating without proper documentation and structure then such is not a serious business. A BPO must be professionally run like any other business with well kept bank statement, pay rolls, NHIF and NSSF details. These are necessary details that the Government demands for a company to merit for a grant,” she advised.

Since not many players have applied for the subsidy, a huge chunk of the money will remain in the bank unused, and even if the few companies that have applied are granted funds, not even a quarter of the money will be touched.

Implications

According to the Kenya ICT Board Deputy CEO in charge of Marketing Eunice Kariuki, if part of the money remains unused by the time the fibre optic link is fully operational, and no more BPO companies seek reimbursement, the board will have to request the World Bank to revert the money to other ICT sections like digital villages and bandwidth for institutions, as per the guidelines in the TCIP.

She, however, allayed fears that information given by companies in the process of application could be divulged to third party assuring the industry of strict confidentiality as spelt out in the TCIP agreement. A clause in the agreement reads: “KICTB will not disclose or use or cause to be disclosed or used, at any time during or subsequent to this agreement, any secret or confidential information of the BPO or any of its employees or clients or customers or any other non-public information relating to the business, financial or other affairs of the BPO acquired by it except as required in connection with its performance of the Agreement or as required by law.

According to the agreement between Kenya ICT Board and the BPO companies, the money was supposed to subsidise bandwidth costs starting July last year to July next year when the Teams cable is expected to be operational.

Vetting

This means companies that would not have successfully completed the vetting process by the time the cable lands, would miss out on the subsidy.

This is a sorry state of affairs bearing in mind the Government declared the BPO sector a key pillar in the Vision 2030. But what could be holding back some of the known BPOs from applying for the subsidy? Kencall CEO Nicholas Nesbitt attributes the slow response to the many requirements needed by World Bank and Kenya ICT Board in the vetting process saying most companies could still be compiling all the required attachments.

Kencall, with more than 300 seats is one of the leading BPOs in the region and is eyeing to expand even further with the subsidy and forthcoming optic fibre.

Details required from all BPOs eyeing the subsidy include proof of bandwidth expenditure and type of operations.

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