Low operating costs enhance BPO prospects in Tanzania

After Kenya, Tanzania is showing prospects of fast developing into a flourishing outsourcing location in East Africa. As competition among the different business sectors in Tanzania escalates, it is estimated that an increasing number of firms will outsource majority of their non-core operations with a view to become cost-effective.

A website report said that this forecast was made by a group of academy members during a recent policy debate at the University of Das es Salaam in the Tanzanian capital keeping in view the outcome of the implementation of the East Africa Common Market from July 1, 2010. During the discussion, academicians argued that increasing business activity in the country would prompt many firms to outsource a number of their operations, such as technological assistance contracts and administration services agreements to third parties. In fact, the country has been witnessing enhanced BPO activities in the wake of the Bank of Tanzania’s issuing parameters regarding outsourcing to the entire banking and financial sector in the county in 2009.

The forecast comes in the wake of an official statement issued by the Tanzanian government a couple of months back that the present situation in the country has necessitated that the mining companies outsource a few of their jobs to third parties. Keeping this in view, an academician pointed out during the policy discussions that such a situation would eventually help the country to develop into a new BPO destination.

It is envisaged that major outsourcing locations, such as India, China as well as the Philippines would not be in a position to fulfill the ever increasing global requirement for staff needed to provide BPO services and products by 2030. The academicians at the University of Dar es Salaam also predicted that by 2013 the present favorite global BPO locations would face a scarcity of approximately 200,000 to 500,000 BPO staff and this is likely to offer vast business prospects for nations, such as Kenya and Tanzania. These counties would then emerge as new BPO hubs like Ghana, South Africa and Mauritius.

At the same time, a number of academicians proposed that the government should offer tax incentives or widespread investment, training as well as cutback in the proportion of corporate tax. They suggested that the government devise a new tax format that would enable the BPOs avail relied in corporate taxes as well as labor tax relief with a view to persuade the country’s youth brigade to join the BPO sector in future.

Discussants called on East African governments In addition to urging the government to usher in a tax structure that will help the BPO firms to be competitive and prosper in the region, several participants argued that Tanzania had little choice, but to endorse the BPO sector simply because this industry possesses huge potential for generating new employment prospects in the country.