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Business Process Outsourcing Project


Background

In the world today, the convergence of Information Technology (IT) and CommunicationsTechnology (CT) has resulted into a new sector termed as Information and Communications

Technology (ICT). ICTs have now linked the entire globe through better and faster (digital)

communications networks thereby rendering time and distance irrelevant. As a result,

companies in developed countries have business models that capitalize on these global

communication networks. These business models cut costs and improve efficiency by

outsourcing 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 traditionally handled by internal staff and resources. This

releases the organization to focus more on their core businesses.

BPO is often divided into two categories: back office outsourcing, which includes internal

business functions such as billing or purchasing, and front office outsourcing, which includes

customer-related services such as marketing or technical support.

BPO that is contracted outside a company's own country is sometimes referred to as offshore

outsourcing. BPO that is contracted to a company's neighbouring country is sometimes called

near-shore outsourcing, and BPO that is contracted within the company's own country is

sometimes called onshore outsourcing.

The most common examples of BPO are Customer Support Services such as call centres,

Policy Maintenance/Management such as human resource, Data Process Services such as

payroll outsourcing, and Technical Support Services. BPO is dependent on Information

Technology; hence, it is also referred to as an Information Technology Enabled Service (ITES).

BPO is one of the fastest growing segments of Information Technology Enabled Services.

There are activities that require greater skill, knowledge, education and expertise to handle and

these form an offshoot of BPO known as Knowledge Process Outsourcing (KPO). An insurance

company might outsource data entry of its claims forms as part of a BPO initiative; it may also

choose to use a KPO service provider to evaluate new insurance applications based on a set ofcriteria or business rules. The KPO work would require efforts of a more knowledgeable set of

workers than data entry would. The current definition of KPO encompasses

Research and Development, Product Development and Legal Process Outsourcing, as well as

a number of other business functions.

BPO as a business model has gained rapid momentum and has grown to phenomenal market

levels estimated to be over US$1.1 trillion per annum. Many emerging economies have

engaged in this new industry. Countries like India Philippines and Mauritius of recently have

cashed in on this industry and have made billions of dollars through provision of ITES toAmerican, European and Asian companies. According to the Financial Times of February 15th

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2008, it is estimated that India will earn US$ 40 billion by March 2008. This is expected to grow

by 50% to US$ 60 billion by 2010. India now controls between 5-8 % shares of the world total

BPO Industry. Other countries like South Africa, Egypt, Kenya, China and Hungary are

positioning themselves to have a share in the global BPO Industry.

Business Process Outsourcing (BPO) can be technically defined as the delegation of one or

more IT-intensive business processes to an external provider that in turn owns, administers and

manages the selected process based on defined and measurable performance criteria. Few of

the motivation factors as to why BPO is gaining ground are Factor Cost Advantage, Economy

of Scale, Business Risk Mitigation, Superior Competency and Utilization Improvement.

Generally, in business terms, outsourcing is where an organization enters into a contract with

another organization to operate and manage one or more of its business processes. BPO

differentiates itself by either putting in new technology or applying existing technology in a new

way to improve a process.

Many developing countries with good communication infrastructure find BPO business lucrative.

It creates employment and generates substantial income for the citizens be it skilled or

semi-skilled, particularly the younger generation. In addition, the countries benefit from the

foreign exchange earned. BPO business is very competitive and companies that provide the

BPO business require very strict adherence to set standards as well as strict operating

procedures that cannot easily be met without support from the host governments.

Service Types

(a) Transactional PBO Services:

i. Customer Support Services

ii. Telemarketing Services

iii. Data Entry Services / Data Processing Services

iv. Data Conversion Services

v. Scanning, OCR with Editing & Indexing Services

(b) Skilled Value Added BPO Services:

i. Technical Support Services

ii. Employee IT Help-desk Services

iii. Insurance Processing

iv. Book Keeping and Accounting Services

v. Form Processing Services:

vi. Internet / Online / Web Research

(c) High-End Skilled Added Value BPO Services:

i. Software Development Servicesii. Legal Support Services

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iii. Medical services

iv. Engineering Service

Why BPO in Uganda?

There are a host of reasons why companies outsource, below are some of 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.

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 EAC and COMESA.

The following is a brief description of the profile of Uganda in terms of economical,

geographical, demographical and political characteristics as 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. 8,000,000

Fixed phone subscribers: approx 168,000

Economic situation: Developing

Political Situation: Stable

Uganda has also got the following advantages over its competition within the region;

Weather- Nature has been and is still friendly to Uganda with temperatures ranging from 16degrees to 32 degrees Cellisius throughout the year,

Location Uganda is located in the centre of Africa 3 hours East of GMT implying that

while Ugandans work, BPO source countries both in the West and East will be sleeping allowing

for processing of the information and submission in time for them to find it live on their systems

when the open for business the following day.

Political stability Uganda has generally enjoyed Political Stability since 1986 in most of

the areas and the democratization process has grown over the years.

The investment climate is favourable The tax, legal and regulatory frameworks have

been and are still revised to cater for the stringent requirements of BPO and incentives ranging

from accelerated depreciation to tax holidays are offered by the UIA and other governmentinstitutions to investors in BPO.

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The cost of labour is very competitive.

The skills base is solid the 27 Ugandan Universities produce over 10,000 graduates

annually who require a little tailored BPO training to be employed in the BPO industry.

The infrastructure is improving by the day.

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