The biggest question by most businesses on outsourcing services from parties outside the organization is the expected value the model would have to their business. It is a question of how outsourcing would help reduce running costs and contribute to growing the margins.

Traditionally, businesses have been practicing outsourcing and especially in areas of marketing, advertising, and promotional services. With the surge of eCommerce, the services outsourced have expanded immensely to include digital outsourcing to even other functions such as operations, human resources, finance, and ICT among others. Once the businesses realize the value of outsourcing, they willingly invest in the strategy. One of the local companies explained how such a strategy has saved the company huge expenses citing the example of their logistics department which they digitally outsourced and have since managed to cut fuel costs, vehicle purchases, and other overhead costs like employment of the drivers. This business explained that outsourcing through digital platforms is proving to add value to them and is willing to further explore the existing services available through the local digital platforms that can be beneficial.

These are among the discussions and insights brought out during the ongoing validation meetings on the Ajira Digital Program National study on Digital Work Awareness and Private Sector Digital Outsourcing Practices in Kenya, the year 2022; a study commissioned by the Kenya Private Sector Alliance (KEPSA) and which will be launched soon.

The study indicated the top five tasks outsourced by businesses include ride-hailing services, food delivery apps, online procurement, courier services, repairs, and installation and maintenance services. However, there is a growing need for businesses to outsource professional micro-tasks. The digital platforms offer a marketplace for businesses to access profiles of freelancer candidates based on skills, experience, and such criteria. It is an opportune place for companies of all sizes to outsource work on projects that require specialized skills or additional manpower, freeing up full-time employees to focus on other business activities.

Some of the skills that could be outsourced through these platforms include photography and videography, data entry and transcription, virtual assistance, content writing, programming, and graphic design among others. In addition to solving capacity issues for businesses, digital outsourcing was also seen to be saving storage and space costs as there is no need to worry about traditional warehouses and working space. Hence, digital platforms can be what a business needs for a spectacular turnaround.

Aside from discussing the benefits of the platforms, the meetings have been instrumental in identifying support areas for these platforms. Currently, there are close to 2,000 platforms in Kenya offering different products and services. However, most of them are faced with commercial growth challenges based on weak regulations, inadequate capital, and maintaining quality workers.

Kenya’s current labor laws and regulations are still feeble concerning social protection, equal employment, and labor standards for gig workers. Most platforms are small organizations with a limited say in policy formulation and industry forums. Hence, creating a specialized industry association would provide a platform to improve outsourcing visibility and enable the industry’s structured growth. The associations can also act as an information resource center with readily available knowledge on the requirements of platforms, how to value the platform for fundraising, capacity building, and the right business model.  For gig workers on international platforms, it is not clear the laws that would be used when there is a labor dispute and this means that efforts to develop local guidelines would be welcome. There is high competition for international work from countries such as India and the Philippines as the international clients may not have a good understanding of the capabilities of Kenyan Platforms. In addition, international clients have stringent requirements that are expensive to roll out. Together with putting in place good policies, the platforms need to learn the best ways of marketing themselves to global platforms.

The platforms indicated that they are hiring very few gig workers because they lack enough capital to scale up operations. In addition, the platforms advised on some incentive policies that would help strengthen these start-ups. For instance, subsidies on telecom and infrastructure cite the government of India which provides a 50% capital investment subsidy after installation of the equipment/capital goods and a 50% subsidy on the internet and telecom post installation. Another incentive the policymakers could consider is tax rebates on earnings and other financial grants that can enable easy setup of the organization, such as capital incentives, procurement, and interest-free loans. In India, the government provides income tax holidays through 2022 and imposes no taxation on call center products. There was a proposal on establishing accreditation organs to qualify and certify platforms as well as assist them to vet digital workers. This will greatly help build trust from potential clients.

The insights of these very engaging meetings backed up by the national study will feed into the development of a favourable environment for platforms, digital workers, and businesses as well as a learning opportunity that will advise the gig economy in Kenya.