BPO: A game changer for Uganda’s employment, economic growth

by Business Times writer
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Uganda grapples with high levels of unemployment and slow economic growth. This was exacerbated by the outbreak of the COVID-19 pandemic which caused massive job layoffs across all sectors and crippled the economy.

However, with the rise of global digitalization and the increasing demand for outsourced services, Uganda finds itself at a pivotal moment where Business Process Outsourcing (BPO) could significantly impact its employment landscape and overall economic trajectory.

BPO involves contracting specific business functions to a third-party provider, often in another country, to take advantage of cost savings, efficiency, and expertise.

Companies around the globe are increasingly embracing Business Process Outsourcing (BPO) to handle their non-core functions. Whether it is customer service tasks like call centers or back-office functions such as managing claims, payments, finance, and procurement, BPO has become standard practice for improving efficiency. This approach enables businesses to focus their resources, energy, and innovation on enhancing productivity.

According to Grand View Research, the BPO market is valued at over US$260 billion and is forecast to surpass $500 billion by 2030. Notably, a significant portion of this revenue flows to countries such as the Philippines, India, Ukraine, Poland, Mexico, and Brazil, which host thriving BPO sectors employing hundreds of thousands of youths.

In Africa, nations like Egypt, Morocco, Tunisia, South Africa, Ghana, Ethiopia, Kenya, and Rwanda are experiencing rapid expansion in their BPO sectors.

Uganda is adopting this trend as well. The country’s potential to create a vibrant BPO industry is defined by various strengths, including; a large pool of potentially good English speaking population, competitive labor costs differential to U.S. and U.K. companies, and stable geo-political environment in comparison with neighboring as well as other countries worldwide.

Additionally, the BPO sector is identified as a focus area for economic development by the Government, availability and penetration of telecom and Internet services are rising, and cyber laws to protect BPO investors have been promulgated.

The Ministry of ICT and National Guidance drafted an extensive BPO policy 2023 with the goal of generating numerous employment opportunities for youth, increasing efficiency and effectiveness in the delivery of private and public services, and making a substantial contribution to Uganda’s economic growth through optimal labor utilization.

The Policy aims at enhancing efficiency and effectiveness through ICT-enabled innovative solutions to support business processes and promote the BPO industry in the country for sustainable development.

Additionally, the Policy is intended to encourage the export of BPO services by private sector operators.

With its young and educated population, competitive labor costs, and strategic location, the ICT Ministry says Uganda is well-positioned to become a leading BPO destination in Africa. The Government recognizes the potential of this industry to create jobs, increase exports, and contribute to the country’s overall economic development.

“The policy is a product of extensive consultations with stakeholders in the BPO industry, including Government agencies, private sector players, and development partners. Their inputs have helped to ensure that the policy is relevant, practical, and responsive to the needs of the industry and the country as a whole,” says the ICT and National Guidance Minister, Dr Chris Baryomunsi.

He adds: “I am confident that implementing this policy will contribute to the growth of the BPO industry in Uganda and the creation of new job opportunities for the country’s youth.”

 The BPO sector is vital for economic growth, global competitiveness and gainful employment creation while leveraging technology.

For more than 20 years, companies in developed nations have increasingly outsourced parts of their business processes to developing countries like India, the Philippines, Indonesia among others.

This has led to increased employment opportunities in developing countries and subsequently contributed to the growth of their economies.

According to Grand View Research, the BPO market is valued at over US$260 billion and is forecasted to surpass $500 billion by 2030.

Business Process Outsourcing in Uganda is premised on the strategic objectives of the Government, which emphasize the use of ICT to create jobs and improve livelihoods to reduce poverty in the country. These are outlined in the National Development Plan III (NDP III); Uganda Vision 2040 among other development programs.

The pioneer services in Business Process Outsourcing internationally, include; Banking, Financial and Insurance Services. The Uganda Government says the country has a potential opportunity in providing customer services, telemarketing, and data entry in the Banking and insurance sectors covering policy setup, maintenance and claims management.

The Government also says that Uganda has a potential opportunity in providing BPO services in education requiring updating, transcription and collection of information related to student progress records, application cycle, fees collection and enrolment which are essentially call centers, data entry and scanning services.

Furthermore, Uganda has opportunities to provide Business Process Outsourcing health services, telecommunications services, utilities and essential services, digital transformation initiatives among others.

However, Angella Kakumirizi, the General Manager, Africa – Helpware – a company that provides BPO services, specializing in customer service, technical support, back-office operations, digital marketing, cyber security, software development among others, says that the BPO industry in Uganda faces numerous challenges that hamper faster growth.

These include high internet costs, excessive taxation, and limited digital skills.

“These issues need urgent attention for our BPO industry to thrive and compete with countries such as the Philippines or Mexico, which benefit from tax breaks due to the importance attached to the sector,” she says.

“At Helpware, we are actively addressing these challenges by investing in local talent and infrastructure and innovating with AI and technology solutions that enhance our global service offerings. Our recent acquisition of eTeam in Kyiv, Ukraine, and the development of technologies that adjust accents are testaments to our commitment to excellence and adaptability to serve various markets around the world,” she adds.

Despite the existing challenges, Ms. Kakumirizi says that the BPO industry in Uganda is poised for significant expansion.

She emphasizes that unlocking this potential necessitates a joint endeavor involving government, industry, and educational institutions. She highlights the need for policy reforms aimed at lowering internet expenses, offering tax incentives, and ensuring that educational initiatives are better aligned to the digital and communication competencies required by BPO markets.

As the global economy continues to evolve, Uganda’s embrace of BPO can position it as a hub for business outsourcing not only in East Africa, but on the African continent, unlocking new opportunities for economic growth and development.

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