In 2001, the Uganda Government identified Business Process Outsourcing (BPO) sector as one ofthe high potential areas for stimulating growth through business development and employment creation. The government is actively involved in supporting the BPO sub-sector as it has a high potential for job creation.Consequently, efforts were directed towards developing this sector by putting in place an appropriate frameworks including development of the BPO strategy (in 2008) and model for Uganda, which focused on private public partnership for promotion of the national BPO industry. The strategy was reviewed and updated in 2012.
Value adding activities in the ICT /BPO sector range from research, design, production and marketing.In the case of Uganda, some activities are more prevalent and stronger than others. As a case in point, the IT equipment/hardware industry which is highly capital intensive and dominated by large multinational corporations, is barely represented in Uganda today.
On the other hand, IT services, particularly software development or outsourced services, which are more knowledge- and skill-intensive, have started expanding. The required capital investment, including hardware and software development tools necessary to support the IT services activities is comparatively low and does not constitute an entry barrier as in other parts of the ICT sector.
Although some progress has been registered since the development of the strategy, the BPO sector still needs more support majorly to make it visible both locally and on the international market. It is against this need that the Government considered the BPO sector for support under the Matching Grant Facility.
Definition of Business Process Outsourcing
Is a business strategy that involves contracting out specific business functions and responsibilities to a third-party service provider? Companies engage in business process outsourcing mainly to: cut costs by engaging cheap labor force; enable staff focus on core business competencies and to enable flexibility (time, cost) within the organization.
Application of the PBO Concept.
The BPO concept is applicable in various areas of business including:
a) Software publishing including the publishing of ready-made (non-customized) software such as operating systems, business and other applications, computer games for all platforms.
b) Computer programming, software development
c) Consultancy and related activities such as ICT technical support / Helpdesk
d) Call Center Services
e) IT enabled services such as finance and accounting, Payroll management, legal services etc.
Benefits of BPO to the Country:
1. Creation of employment: According to BPO Strategy, the ITES-BPO industry will create 20,000 jobsat an aggressive growth rate of 16,000 jobs per year by the end of year 5 assuming and 12,700 jobs at a low growth.
2. Increase in Government revenue; it is predicted that with approximately 20,000 jobs created, revenues of over USD 206.5 Million in 5 years will be generated.
3. Increased investment in infrastructure and skills development: As the demand for BPO services increase, it is assumed that more investment, in both infrastructure and skills, will be made to support the sector in order to meet this demand.
4. Increased Economic development: Increased BPO exports will attract high revenues which contribute to economic growth in form of higher taxes to Government.
Benefits of ITES/BPO to the Individual Firms
a) Lower costs of production by engaging cheap external labor.
b) Enable full concentration on firm’s core activities
c) Leverage on expensive/modern technology provided by the service provider.
d) Addresses the skill gap within the firm
e) Increased productivity (24/7) routine
f) Better customer service hence customer retention
Selected Past Interventions in BPO Sector
1. The Export Sector Competitiveness Programme
This project is funded by the Netherlands Trust Fund (NTF III) and is being implemented by NITA. The project started in August 2014 and will run for 35 months. The project aims to enhance export competitiveness in the IT&ITES sector in Uganda, leading to increased export revenues for enterprises. This will be achieved by delivering the following outputs:
• Validated export plan for the IT&ITES sector in place;
• Increased export capacity of IT&ITES SMEs;
• Improved TSIs capacity in providing services to export-oriented SMEs in the IT&ITES sector and
• Expanded business linkages and technical partnerships/collaborations.
2. Establishment of the BPO incubation Center by NITA
Government established a 240-seater state-of-the art BPO incubation centre to provide a breeding ground for the young BPO companies in the country. The centre is being run by three private sector Companies, employing over 300 agents. Indirect employment has also been created in the various sectors of the economy e.g. through provision of food, security, transport, cleaning services, accommodation.
3. Development and Implementation of the BPO Incentive Guidelines.
In 2012, the Government of Uganda, through the National IT Authority (NITA) developed guidelines for incentives towards the BPO sector. The objective of the incentives was to provide a mechanism of supporting the local BPO industry in Uganda to develop the relevant capacity that can generate local employment and attract off-shore BPO activities. Comprehensive proposals were put down including: skills development incentives, CAPEX and OPEX to support business development to be provided under the proposed BPO support fund, Subsidy incentives aimed at reducing the operational costs for BPO operators and Fiscal Incentives to provide for the medium and long-term development. Accordingly, eligibility criteria for each incentive was developed to ensure the correct players get the rightful support. However, information relating to the progress of implementation of these incentives is not readily available.