Outsourcing on Safari
By Stephanie Grimmett
Taipan Group's Dynamic Market Alert
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Outsourcing on Safari
By Stephanie Grimmett, Managing Editor, Taipan
I’m a bit of an India junkie. I love the culture. I love Bollywood. And I loved watching the country stake out a claim in the world economy as an outsourcing center for cheapskate U.S. and European companies in the ‘90s.
Since the early days of the outsourcing phenomenon, India has grown from a dumping ground for call center companies into an economy of technology and services catering to the West.
India’s economy has evolved from a structure based on European socialism into one that welcomes competition, entrepreneurialism and new development. And it’s exploiting its British-inspired education system and the widespread use of English to take full advantage of its cheap exchange rate.
But India has come a long way since it first started taking low-paying, no-benefits jobs away from Americans. The country has a viable service industry in technology and accounting, and its economy is growing like a weed, as my mother would say.
Because it started with a healthy base of British-Raj economic theory to build on, the country’s growth has been more stable than that of China. It doesn’t have the violent dips and jumps, instead growing steadily at an average rate of more than 6% in the last five years.
And now, as India moves beyond the unskilled labor market of call centers and into the skilled information technology and accounting side of the BPO (business process outsourcing) sector, another former British colony is taking its place.
Kenya. Yep, the land of the oh-so-popular-with-the-tourists Masai tribesmen and thousands of lions, rhinos and wildebeest, has one of the most dynamic economies in East Africa.
The country’s call-center businesses have grown by more than 1,000% in the last 12 months. Granted, they started out employing only 200 people last year, but the industry has bloomed to 3,000 employees this year. And that’s a sizable increase for a country with only 37 million residents.
Just like India, Kenya is a former British colony. And just like India, English is used to bridge the many tribal and regional languages in the country. In fact, the African nation still counts English as its official language.
Kenya plans to increase its telephone bandwidth up to 500 megabits per second by the end of 2007 in order to support its call center industry. And the country is promoting the industry, comparing it to India’s first customer service outsourcing companies and even subsidizing the bandwidth increase to support the industry.
Right now the country’s BPO industry is too small for us to consider investment, and Kenya’s government isn’t the most stable at the moment.
Kenya declared its independence from Great Britain in 1963 and instituted a democratic government based on the English model. But like many African nations, corruption, kickbacks and an enduring and often blatant tradition of officials dipping into the public coffers plague the country’s government.
The current administration in Kenya is attempting to correct past corruption, while being accused of similar corruption by its politic opposition and the British representatives to the country.
But those of you who’ve just gotten used to a lively Hindustani accent on the other end of the phone when you call customer service might have to readjust to a sonorous Kenyan accent in a few years.
We’ll keep you posted on Kenya’s development, along with all other emerging markets in the Taipan monthly newsletter.
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CSK Auto upgraded by Credit Suisse from Neutral to Outperform.
Forest Labs upgraded by Matrix Research from Buy to Strong Buy.
CEC Entertainment upgraded by Matrix Research from Sell to Hold.
Genentech upgraded by Deutsche Securities from Hold to Buy.
Nordstrom upgraded by Bear Stearns from Peer Perform to Outperform.
McDonald’s upgraded by Deutsche Securities from Hold to Buy.
Tellabs downgraded by Cowen & Company from Outperform to Neutral.
Dean Foods downgraded by Stifel Nicolaus from Buy to Hold.
Lowe’s downgraded by Matrix Research from Strong Buy to Buy.
Nike downgraded by Banc of America from Buy to Neutral.
Foot Locker downgraded by Banc of America from Buy to Neutral.
Panera Bread downgraded by Deutsche Securities from Buy to Hold.
Brought to you by Taipan Financial News
http://www.taipanfinancialnews.com
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