As I sip my chai and read the news, a sense of unease creeps up my spine. The specter of former US President Donald Trump’s potential return to the Oval Office in 2024 looms large, and with it, the chilling prospect of a renewed assault on India’s crown jewel – the bustling business process outsourcing (BPO) industry.
You see, during Trump’s previous term, his administration unleashed a barrage of measures aimed at curbing outsourcing, making life difficult for the Indian companies that dominate this lucrative field. From targeting the coveted H-1B visa program to threatening tax penalties, the message was clear – Trump wanted to bring those jobs back home and transform the US into a manufacturing powerhouse.
Now, with Trump’s latest campaign platform openly declaring his intent to “stop outsourcing” if re-elected, the mood in India’s BPO boardrooms has turned decidedly grim. After all, the US accounts for a staggering 62% of the business that Indian outsourcing firms receive globally. The thought of losing that lifeline is enough to keep even the most seasoned executives awake.
But the ripple effects of this outsourcing crackdown could extend far beyond India’s borders. Kenya, for instance, has emerged as an increasingly attractive destination for global BPO services in recent years. With a young, tech-savvy workforce and a relatively lower cost base compared to India, Kenya has managed to capture a share of the outsourcing pie, particularly in the areas of customer service, IT support, and back-office operations.
In 2023, Kenya’s BPO industry generated $1.2 billion in revenue, with the US accounting for nearly 40% of this business. A significant portion of this American-bound work is actually handled by Indian BPO firms that have established a presence in Kenya, leveraging the country’s favorable business environment and talent pool.
If Trump succeeds in throttling the flow of outsourced work from the US, it would deal a devastating blow to India’s BPO sector, potentially leading to the loss of millions of jobs and wiping out a substantial portion of the industry’s revenue. This, in turn, could have a domino effect on the Kenyan BPO market, as the Indian firms that have set up shop there may be forced to scale back or even withdraw their operations.
The Kenyan government, which has actively courted foreign investment in the BPO sector as a key driver of economic growth and job creation, would be faced with the unenviable task of diversifying its customer base and finding new sources of outsourcing revenue to offset the potential loss of American business.
In the face of this looming crisis, both India and Kenya must explore innovative strategies to strengthen their BPO industries and reduce their dependence on the volatile US market. This could involve deepening regional and South-South cooperation, investing in upskilling and automation, and cultivating new demand within their domestic and international client bases. The future of millions of jobs and billions in economic output hangs in the balance.
What else do you suggest should be done in order to remain afloat ?
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