KenCall Again
Approximately nobody seems to have understood what I was trying to say about KenCall yesterday. In retrospect, that's because I didn't actually say what I was trying to say. What I was trying to say, however, was that it seemed to me that either the government of Kenya or else Tom Friedman was making a mistake about what the real obstacle was to Kenya becoming a major IT outsourcing destination. The problematic phrase, to me, was this: "the Kenyan government is now working feverishly to get connected to the global fiber-optic network, via an undersea cable, which would make bandwidth here cheap and plentiful enough for all sorts of outsourcing."
Friedman is portraying the issue as one in which Kenya needs to build better broadband access, and then the IT jobs would come. The counterpoint I meant to make was that the real chokepoint here seemed to me to be the Kenyan education system. Only a very small proportion of Kenyans are qualified for KenCall-style jobs. At the moment, only a small proportion of the qualified people can get KenCall-style jobs precisely because the physical infrastructure to easily set up competing firms isn't there, which makes wages low by world standards which makes Kenya an attractive outsourcing destination. Build more infrastructure, you'll get more firms, the labor market will tighten, wages will go up, and then growth will slow down as future outsourcers look to other, cheaper countries.
That's all fine as far as it goes. My only observation was that insofar as only a very small proportion of Kenyans are qualified for these sort of jobs, it won't actually go very far. Kenya not only needs more infrastructure, it needs more workers qualified for these sort of jobs. Dan Drezner writes that "market signals about the increasing returns to education would encourage an expansion of educated individuals."
This, to me, seems slightly backwards. As I see it, improving school systems is hard and education levels often don't improve even when market incentives to do so exist. Increasing internet connectivity is, by contrast, relatively easy to accomplish and relatively more responsive to market signals. I have no doubt that countries that produce large pools of workers well-suited to IT work that market signals will cause companies to invest in expanding the IT infrastructure necessary to employ those workers profitably. I'm not by any means certain that the mere existence of remunerative labor market opportunities for well-educated Kenyans will cause the number of such Kenyans to spontaneously increase.
Comments
I think Friedman mentioned that Kenya has a large English speaking population. Not knowing what KenCall is planning to do that might be all they really need (eg if it's just basic call routing or something like that).
Call center companies really don't employ that many people. It'll be quite a while before the labor market in Kenya starts overheating (and not like that's a bad thing).
I really think the bigger problem is cherry picking. Friedman discusses Kenyan call centers because: 1) few Americans miss those jobs, and 2) the jobs seem pleasantly white-collar. Indeed, it's worth noting that nobody proposes policies to keep this industry in the US.
Compare this with say, shoes, where off-shoring has displaced lots of well-paid blue-collar workers in New England while creating sweatshops, child labor, etc. in other parts of the world. If Friedman were an honest free trader, he'd defend factories in Thailand. But he's a hack propagandist.
AWC has a decent point; there are much better defenders of free trade than friedman. Paul Krugman's stuff from the 90's is still better than anything Friedman puts out.
Though from the little I read of Friedman it seems he is more of a technology fetishist than an ardent free trader. He mouths free trade rhetoric because it supports he positions on tech issues, but he doesn't seem very into it. and do note that Friedman supports software development jobs in India as well, jobs that workers would like to do in America. So, he doesn't just talk about politically unpopular jobs, but he does only seem to talk about one's that are tech related.
Much better post -- thank you for clarifying.
I don't think the fact that education is hard and IT infrastructure easy changes Friedman's conclusion. Companies like KenCall are good because they make education more valuable, therefore Kenya's government, individual Kenyans, and even corporations will be more likely to invest in it. And all this is a good thing.
Wow, great post; I find myself in complete agreement with you.
There are three important points to remember. First, the constraint on the number of calling center jobs in Kenya is not Kenya's technological infrastructure, but the lack of investment in human capital (education). Second, it will take a long time to correct this (one does not educate an entire populace overnight). Third, Daniel Drezner and right are wrong, market incentives to get an education will not be enough to cause a large chunk of the population to educate itself.
It will be up to the Kenyan government to publicly finance education. For the Kenyan population to benefit there need to be both incentives to get an education--in this case, calling center jobs--and a path to get an education--universal publicly financed education. Neither incentives nor subsidized education are sufficient conditions for an educated population, but both are necessary conditions.
That's a good point.
Remember, India spent tons of money over a long time on building a high-tech educational system, training lots of engineers and programmers. It wasn't the technical infrastructure, but the education that had already existed that allowed India's IT boom to happen.
Well, there weren't all that many computers or much high-tech business in Ireland in 1990 when that country started building up its technical services industry; just a lot of people with good classical educations who spoke good English - which I believe is also true of Kenya. The computers, equipment, training, etc. came with the business, not before.
Cranky
Having a few successful companies that bring in tax revenue that can fund more/better public education could start a positive feedback loop towards a better economy and education. So any labor shortages should be temporary (if the government manages things well - not a given).
Having spent some time as a volunteer school teacher in Kenya (admittedly thirty years ago) I would just add that while there are a lot of English-speaking Kenyans, the accent would make it very difficult for most of them to be comprehensible (to a foreigner) on a phone line; it would definitely be restricted to a small minority who would probably require a fair amount of training.
MikeN has a good point. I've worked with a couple of Catholic priests from Kenya, both superbly impressive men, but polyglot as I am I had to struggle to communicate at times, and unfortunately many in the congregation just drowned them out because of their accents.
Although I'd have to say neither of them was much of an enthusiast for the government of Kenya or the effects of globalization on the country. Interestingly, the analogy that occurred to them was the Roman Empire as shown in the Acts of the Apostles, notoriously the best source for the real lives of the ordinary people of the empire.
Friedman is an enthusiast for things that make shareholders of tech companies a lot of money. In this particular instance (and in most instances involving offshoring call centers), a company has found a way to cut labor costs by offering a lower quality of service (or so I persistantly hear about offshored call centers) at a much lower cost, which increases profits. If it eventually resulted in the standard of living increasing in Kenya, industries moving in, and increase in imports and exports, & etc. that would be grand, but as far as I can tell, it mostly won't. The dribble of money won't make any difference in Kenya (because of other factors), and in the long run, more stuff will not be produced. Instead, the same amount of stuff will be produced at a lower quality and a coupla guys will get lots of dough for doing this.
That's our tech revolution of 1990-now: nothing much changed, crappy production increased, quality production decreased but lots of money got shuffled around.
m, yay
As I see it, improving school systems is hard and education levels often don't improve even when market incentives to do so exist.
Actually, this isn't true. There are A LOT of unemployed university graduates in Africa, and have been since the '70s. That's because they were trained to do things for which there was no demand in Africa. There really weren't market incentives to get a good education in Africa for a long time; uni grads found themselves scrabbling for the few available sinecure government posts in which English competence and literacy were useful. To Friedman's credit, it's really true that call centers are an industry which provides an IMMEDIATE return for mastering English and basic computer and information management skills.
Basically, it turns book learning into an exportable commodity. There used to be a lot of Africans (and Indians!) who had written (bad) theses on Keats, but couldn't do anything that an African economy could use. Call centers suddenly create an export value for someone who's written a thesis on Keats.
I think the educational system might be more flexible than Matt thinks. Certainly improving the entire public school infrastructure will be a slow, difficult process. But in my experience traveling in developing countries, there often seems to be pretty brisk business in homegrown vocational schools that target specific job skills that are perceived by the local population to be the key to higher earnings. Obviously such schools are in no way a substitute for a public education system, but they might be perfectly adequate for producing call center employees. Point being, the educational system may be more responsive than Matt suggests.
On a different topic entirely -- max, your conception of the 90s tech boom is, em, wrong. In fact, the economic expansion was good for all sorts of people, not just tech shareholders.
Is there any evidence behind the snark about theses on Keats? My sense is that the wasted education was more in social sciences and third-rate economics, education schools, etc.
The idea behind free trade is to spread the wealth around as quickly as possible. When the standard of living world wide reaches a certain point, there will be sufficient demand for every country to have low unemployment.
The key problem with this premise is the time required. One could also include police states that prevent labor from organizing but that would include the United States. (If that is your definition of police state.) The way to deal with the first problem is to push wages up in service industries that cannot be exported. If one could make a living wage bagging groceries, that job would lose its stigma.
The way to deal with the second problem is probably through patience. Even dictators require some level of public support. In relatively free countries, labor will be able to organize once jobs are no longer as scarce. There may even be a point when "fair trade" provisions become practical in giving those last few bad regimes a push in the right direction.
Unfortunately, I do not expect to see anything like this in my lifetime. If we're lucky, living wage laws will become common for service industry jobs. The rest may happen in the lives of someone's grandchildren.
MY's carping seems to boil down to a claim that a fiber optic cable is a bad investment for Kenya. This may be (depending on how much it will cost) but MY hasn't made much of a case. Since Kenya has a monopoly state phone company the failure of private enterprise to provide the cable doesn't mean much.
Calling the US from Kenya would be a night-shift job, would it not? Does Kenya have the infrastructure to handle a large contingent of shift workers? Or maybe they're going to only call the UK, which is closer to their time zone.
Based on the comments so far i wonder how many of you have been in Kenya in the last 5 years. The days of a single state phone monopoly in Kenya are gone (with the entrance of multiple VSAT providers: broadband carriers ie KDN: Mobile companies MTC/Celtel and SafariCom) On the issue of education to sustain a call center job - which no known university offers degrees for Customer Service Reps- then Vocational schools have proven in multiple countries including India, Singapore that they can adapt and fill this gap. On the need for a technology or software programming trained base of workers then the experience of Ireland in the 90's with its classical trained base - like Kenya - can put this item to rest. On Tom Friedman let's not forget he is an influential writer who nevertheless just become a disciple to ICT in the last 3 years. Prior to this he was a seasoned political writer with a focus on Israeli/Palestinian issue and the Middle East in general NOT ICT. Kenya has the base of educated graduates-keeping in mind Fulbright Schloarship in most countries is offered at undergrad level while in Kenya due to competition it is offered at Graduate level. KenCall is a start but not the silver bullet to Kenya employment woes: That will be a smaller government, less regulation and YES Infrastructure -physical (roads, bridges etc) and in case of ICT the continued built-out by the private entities like KDN.
I am the General Manager of the Call center featured in the article. I originally come from Scotland and have been involved in the outsourcing/call center business for 14 years working in the UK and South Africa.
When I arrived in Kenya over 2 years ago I could not believe that it had not been "discovered" from an outsourcing point of view.
There is a large labour pool to draw from that is highly educated. We do not employ anybody without collage/Uni degree, when we place an advertisment in the local press we receive on=ver 1,500 responces, 200 people walk through the doors purely on referals.Kenyans LOVE education it as been drummed into them from an early age as the "only way out".
In regards to the comments that it wont make a difference to the employees I strongly disagree as would my staff. They get a higher rate of pay than traditional comapanies pay that perhaps dont deal or get western currency.
They get to interact with U.S. customers which in itself gives them a high level of job satisfaction.
We do not have the accents associated with other traditional outsourcing destinations and I can assure you that having your call handled by a polite, caring person who actually enjoys speaking to you is far nicer than the staff I have worked with in the "Civilized Western world"!!
We are a business NOT a charity, but by a large western company giving jobs to this part of the world they have an immediate impact to a large amount of people. My agents send money to their family in the remote parts of the country and of course the local economy benefits as they spend their salarys.
This part of the world has been raped and pilllaged for nearly 200 years ( I dont think anybody needs a history lesson) so give us a chance, nobody associated India with technology 10 years ago, lets hope it does not take that long till the western world changes its perception of Africa.
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