Uganda has many businesses which have outsourcing listed as part of their services. According to a report, the Ugandan BPO industry has about 30 companies, most of which are small, having approximately 50 employees. Improvements in technology, infrastructure, and legislation have made Uganda a strong contender for the next lucrative destination for business process outsourcing, drawing interest from many countries, including South Africa, India, and some European countries.
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According to Grand Review research, the global business process outsourcing industry will reach upwards of USD 435 billion by 2028. The Ugandan government has developed a strategy to make the ‘Pearl of Africa’ the preferred BPO destination in East and Central Africa to tap into this lucrative industry.
What makes Uganda stand out from its fellow Sub-Saharan countries as a prime contender for the next BPO destination in Africa? There are plenty of reasons, but first, let’s take a closer look at the meaning of business process outsourcing.
What is Business Process Outsourcing (BPO)?
Business process outsourcing is a common practice involving contracting an external service provider to perform essential business activities, processes, or tasks. This process involves the transfer of some if not all, activities to an external service provider. This comes after entering a contractual agreement that defines the services rendered.
This process starts by identifying an important business process that affects the core position of businesses in a given market. Businesses often perceive little value in having their staff perform such processes and opt to have specialists deliver results.
BPO can trace its roots to the manufacturing industries. It is common to see third-party vendors handle some aspects of a given supply chain. Whatever form of process, outsourcing is meant to bring more skills, speed, cost efficiencies, and better results than what an in-house team could deliver.
The concept of outsourcing has been used in many European countries. However, this concept is fairly new in Uganda, with its applications in the early stages. However, as new as this concept is, many experts and industry analysts believe that outsourcing could positively affect Uganda’s overall economy.
What is Business Process Outsourcing Used For?
There are many reasons why companies decide to outsource some if not all of their business processes. However, a study by Deloitte in 2020 found that companies used BPO to meet the following organizational objectives;
- To reduce the cost of production while saving a lot in resources and revenue.
- To increase organizational flexibility
- To gain access to special tools and businesses processes.
How Does BPO Work?
Business process outsourcing (BPO) is a process that involves subcontracting business-related operations to third-party entities. Organizations might choose to adopt BPO practices in two main areas; back office and front office operations. Front office operations involve customer services such as tech support, sales, and marketing. In contrast, back-office operations refer to those operations engraved in an organization’s core, such as accounting, IT services, payment processing, human resources, and quality assurance.
Third-party HR solution providers may offer help with these services for a fee. BPO services are classified into three groups based on the service provider’s location. They include;
- Offshore Outsourcing- This option occurs when an organization contracts a BPO service provider based in a foreign country.
- Onshore Outsourcing- Also known as domestic outsourcing. This occurs when your BPO service provider operates in the same country as your organization.
- Nearshore outsourcing- As the name suggests, this occurs when you contract a BPO service provider based in a neighboring country.
It is worth noting that BPO services fall under information technology-enabled services because they rely on technology/ infrastructure to run efficiently.
Companies outsource certain business processes for different reasons, as indicated above. For instance, start-up businesses outsource business functions because they might lack the resources to perform in-house services. On the other hand, established companies might choose to outsource their business function to third-party entities to save costs. They might also choose to do so to allow them to focus on other areas of their operations.
Why You Should Consider Uganda as Your Next BPO Destination
Businesses turn to business process outsourcing to network with talented professionals while reducing the overall cost of their overheads. In doing so, delegating these tasks to outside experts, organizations can redirect their efforts on business development to perfect their core offerings.
There are many credible reasons as to why you should consider African countries, especially Sub Sharan countries like Uganda and Kenya, for BPO services. For one, Africa is home to a wide array of top talent professionals.
For one, Sub Sahara has incredible potential. According to the World Economic Forum’s Human Capital Index, Sub Sahara Africa is currently operating at 55% of its human capital compared to the global average of 65%. In addition, this region of the world has 60% of its population under the age of 25, making it the youngest region globally. Not only that, but Sub-Saharan countries such as Uganda, South Africa, and Kenya are home to 13% of the world’s working population.
Additionally, trending professions in this part of the world include creative industries, 3D designers, education, data center workers, and food technologists. However, analysis by both the World Economic Forum’s Human Capital Index and LinkedIn suggest strong growth in hard and soft infrastructure, the ICT sector, and green jobs.
Speaking of jobs, the Sub-Saharan region has 15 to 20 million well-educated young people looking to join the African workforce every year for the next three decades. These individuals are expected to become part of an ecosystem, delivering quality jobs with future skills to match.
Uganda’s BPO Background
The Government of Uganda identified the BPO industry as a long-term solution to employment and other workforce opportunities. The Ugandan Government also identified business process outsourcing as an opportunity to increase the capital investment made in information technology-enabled services (ITES). The Ugandan government has developed strategies to take advantage of this multibillion-dollar industry.
Not only that, but the Kampala-based National Information Technology Authority (NITA) has developed BPO Standards and Accreditation Guidelines for the promotion and growth of this industry. All these efforts have been made to ensure that Uganda is the next destination for BPO services.
At the time of writing, several international companies have already expressed their interest to set up BPO investments in the Pearl of Africa, including HTMT Global Solutions and Quest Holdings of South Africa.
Uganda is one of the top destinations for BPO investments, especially for those considering Sub Sahara Africa for BPO services. With that said, consider the following perks associated with BPO.
Advantages of Business Process Outsourcing in Uganda and other Sub-Saharan Countries
Here are some benefits of BPO services in Uganda
1. You Get to Save on Time and Money
Is this your first business endeavor in Africa? If so, you should be wary of administration systems in Africa. Let’s face it; administrations in Africa can be very frustrating. And while Sub Saharan states are making considerable progress towards the vision of just, peaceful and democratic governance, there are still considerable levels of corruption and frustrating administration processes.
Research has also shown that this part of the world features as the most corrupt of any region. How is this related to business? Corrupt practices are intertwined with poor governance, which lead to frustrating processes that could affect your business’ activities. Frustrating administrations also tend to take a toll on businesses and their finances.
You should consider BPO services for such reasons, especially when setting up shop as a foreigner in this part of the world. As procedures are prone to complication and corruption, they could take up a lot of time and effort.
But by utilizing BPO services in Uganda or neighboring countries such as Kenya. Such personnel are well versed with these systems and know-how to maneuver while following the right procedures.
2. You get to Focus on Business Development and Growth
One of the main perks of outsourcing is that owners get to focus on the core of business development and growth. Let’s face it; setting up a business in a foreign economy has its own challenges. However, outsourcing certain business processes allows you to focus on successfully establishing your presence in the current marketplace.
3.BPO in Sub Sahara Africa Leads to Better Performance and Efficiency
A study published in the Journal of Global Entrepreneurship Research back in 2017 found a direct relationship between outsourcing and increased financial performance in small and medium-sized enterprises. However, there is a strong need for effective BPO strategies for this realization to occur. Regardless, business process outsourcing leads to better financial performance.
BPO also leads to increased efficiency. Outsourcing service providers tend to have industry experience with specific business processes. As a result, handing over these activities to a reputable third-party service provider is almost guaranteed to increase your efficiency and output in that area.
Business Process Outsourcing (BPO) Risks That You Should Know About
Outsourcing the core functions of your business to third-party entities also comes with justifiable risks. Here are some potential risks you should consider when outsourcing business processes.
1. Unanticipated Costs of BPO
Organizations tend to underestimate the cost of outsourcing services. There are many hidden costs of outsourcing that you should be wary of. Such costs include;
- Cost of management and coordination of contractors.
- Cost of unplanned logistics activities and premium freight
- Cost of subpar inventory performance
- Cost of inappropriate sales and operations.
- Cost of warranty returns and allowances.
- Cost of unplanned and unforeseen risks.
2.Relationship Challenges Including Cultural Barriers
Cultural dimension is a great idea as it involves inclusion and cross-cultural communication regardless of an individual’s background. However, if you settle on offshore outsourcing, you should be aware of the different communication styles that exist. For this reason, you must be ready to adapt to other people’s cultures and build a productive relationship for BPO to work.
Verdict
Yes, Uganda is a top business process outsourcing destination. Efforts by the Ugandan government have increased the region’s marketability in regard to BPO. In addition, the country is developing a strong labor force tipped to become pioneers over the next few decades.
However, there are some justifiable risks that you should be wary of before considering such services. Most organizations tend to underestimate the cost of outsourcing such services. Additionally, cultural differences and relationship challenges might make it challenging to outsource such services.
With that said, there are always positives associate with business process outsourcing, especially when setting up your business in a foreign market such as Uganda. For instance, you get to save on time and costs while redirecting your efforts to establishing market dominance.
Are you looking For Business Process Outsourcing Services?
Business processes involve a ton of activities; arguably, none more important than those performed by HR (human resources). HR demands in Africa and regions like Uganda are constantly changing, making it challenging for companies to nail their HR solutions accurately.
It would be in your best interest to consider an experienced solutions provider with resolute knowledge of the Sub-Saharan market for such reasons. Flexi Personnel has mastered the complete process of HR solutions in Africa.
Our expertise and in-country knowledge of over a dozen African countries, including Uganda, has enabled us to cover the full spectrum of HR services. We offer a wide array of HR-related services, including staff outsourcing, payroll and tax administration, executive search, interim management, recruitment, training, and HR consultancy, just to mention a few.
Our experience and professionalism have led us to work with top organizations from all over the world. We are constantly adapting to the changing and competitive markets in Uganda and Africa as a whole. We would like to work with you on your next project. Please feel free to contact us for more information at Flexi Personnel.
