The Rise of AI-Powered Outsourcing in Kenya
In a quiet neighborhood in Nairobi, a Kenyan company is making waves by offering a range of AI-driven services to international clients. Cloudfactory, which was established in 2014, has evolved from handling basic tasks like transcription to providing advanced AI-powered solutions. This transformation has not only expanded the company’s capabilities but also sparked optimism about Africa’s potential to become a significant player in the global digital outsourcing market.
Cloudfactory has taken on various projects that leverage artificial intelligence. For instance, it has helped a US-based robotics firm train its AI systems to identify whales, ensuring that autonomous vessels avoid collisions. In other cases, the company analyzes medical X-rays, assists insurance companies in detecting roof damage, and measures forest cover to evaluate the effectiveness of carbon-offsetting initiatives. These efforts involve a team of 130 full-time employees and 3,000 freelancers.
Festus Kiragu, the director of Cloudfactory Kenya, highlights the importance of human oversight in AI operations. “We still need people to tell machines what to do and verify their outputs,” he explains. “This is creating a lot of jobs.”
Kenya faces significant challenges in job creation, with approximately one million young people turning 18 each year. Many end up in informal, low-paying jobs, contributing to social unrest and even violent protests. The traditional outsourcing sector is already booming, with companies like CCI operating in Tatu City, a new town on Nairobi’s outskirts. Here, around 5,000 employees handle customer service for US airlines, banks, and retailers. The company aims to double its workforce by 2030 and continues to attract hundreds of applicants weekly.
Rishi Jatania, CEO of CCI Kenya, acknowledges that these roles are entry-level but emphasizes the potential for career growth. “You get a chance and can build a real career,” he says, adding that he himself started on the phones.
Mental Health and Ethical Concerns
Despite the positive developments, the outsourcing industry is not without its challenges. Africa currently accounts for just two percent of the world’s business outsourcing, but rising wages in traditional hubs like India and the Philippines are pushing companies towards the continent. Kenya is leading the charge due to its educated, English-speaking youth and reliable internet infrastructure.
However, the expansion of the sector has raised concerns about working conditions and mental health. Last year, a court ruled that Meta could be sued in Kenya over the working conditions at Sama, an outsourcing firm responsible for moderating content on Facebook. Critics have long pointed out that such work can be psychologically taxing for employees.
Additionally, some overseas firms have faced criticism for exploiting cheap labor while investing little in the development of their local workforce or the economies of host countries like Kenya. Meta argued that it was not the direct employer, and many in the sector worry that the Sama case might deter potential clients. However, Kiragu notes that content moderation jobs remain highly sought after due to their competitive pay.
“Content moderation is still critical, and our workers want those jobs because they pay a premium,” he says. “But that work needs to be on a rotational basis—do it for two months and then do something else.”
A Long-Term Vision
The newly formed Outsourcing Association of Kenya is advocating for policies that would make the country more competitive, including cheaper work permits and tax breaks. However, negotiations with the government have been challenging, especially given Kenya’s financial constraints.
Kiragu believes that the government should promote Kenya as an outsourcing hub, similar to how it markets tourism. “Sometimes that means changing outdated perceptions of Africa,” he adds. He recalls being asked, “Are there giraffes and lions outside your window?” with a chuckle.
AI remains a central factor in the evolution of the sector. While it has created new opportunities, it also poses a threat if education and training do not keep pace. Betty Maina, a former Kenyan trade and industrialisation minister now with Genesis consultancy, warns that customer experience jobs in call centres are particularly vulnerable to automation.
“Reskilling people for the new demand is going to be critical,” she says. For now, however, there is still a strong demand for human workers. Jatania insists, “If you miss your flight… the last thing you want to do is talk to a bot.”
