Mobile companies outsource services to reduce costs

The huge market share has helped Safaricom generate outsized profits, a move that partly explains the deeper cost-cutting measures by its rivals--Zain, Telkom Kenya and Essar Kenya.

The firms have found it difficult to penetrate the market despite offering lower tariffs compared to Safaricom.

Apart from outsourcing its Network management to Nokia Siemens, Zain Kenya has also outsourced the operation of its customer care outlets and customer care services.

More competitive

Outsourcing the services, Michael Okwiri, Zain Kenya corporate communications director says helps the organisations to concentrate on their core functions.

“As a company we don’t have to think about technology issues or the kind of technical staff to recruit,” said Mr Okwiri.

Telkom Kenya, on the hand, has outsourced its customer care operations to local BPOs Horizon and Kencall in an effort to keep its employee costs low.

The Kenyan mobile market became dramatically more competitive in 2008, when two new operators, Orange Kenya (formerly Telkom Kenya) and Econet Wireless, joined incumbents Safaricom and Zain.

This has led to a price war, with operators slashing tariffs and offering various airtime promotions.

“But rather than fighting over a dwindling pool of increasingly poor mobile subscribers, Kenyan operators are looking toward convergence to increase their market shares and protect their ARPUs,” indicates a report by Pyramid Research released last year.

Safaricom, for example, will launch new services for corporate clients, including broadband, video conferencing and voice, in order to boost its ARPU’s and its market share among high-value subscribers.

The company expects to see the share of its revenue that comes from Internet services to increase from 13 per cent to 20 per cent as a result of its converged-services strategy.