With India's rising costs and employee turnover encouraging information technology executives to look beyond the subcontinent for offshore outsourcing providers, a country like Kenya could be poised to win more IT services business from abroad. The East African nation boasts a big pool of English-speaking professionals and its government has invested millions to improve its telecommunications infrastructure.

However, recent events have conspired to slow Kenya's growth potential in the near term.

Most dramatically, a disputed election at the end of 2007 ignited two months ethnic tensions and violence in the country, leaving hundreds of citizens dead and hundreds of thousands more displaced. In late February 2008, former United Nations Secretary General Kofi Annan negotiated a power-sharing deal between the two presidential candidates that established a coalition government. But uncertainty about the new government continues. "Kenya has a young democracy that will result in more growing pains," says Ralph Schonenbach, president of Zurich-based sourcing consultancy Trestle Group.

Geopolitical concerns are never good for IT services business. "Outsourcing has risks, offshore outsourcing even more, offshore destinations with political instability even more," Schonenbach explains. "Kenya's disputed presidential election, post-election violence and civil unrest raised a significant red flag for decision makers considering outsourcing to Kenya. Watching riots and chaos broadcast around the world makes a very tough sell inside the board room."

"(Political instability) has derailed the Kenyan economy from its growth momentum," agrees Eugene M. Kublanov, CEO of San Ramon-Calif.-based sourcing consultancy neoIT. Early estimates put the cost of the political crisis to the Kenyan economy at $1 billion, with some revising Kenya's 2008 economic growth projections from 7 percent down to 3.2 percent. The economy is expected to recover in the mid-term, says Kublanov, with growth estimates for 2009 nearing 5 percent.

And the IT services sector may be poised to persevere.

Once the political issues are addressed, Kenya could be one of the world's fastest developing outsourcing destinations due to its large English speaking population, low costs, and near shore status for European and Middle Eastern companies, says neoIT's Kublanov, putting it on par with its IT services competitors on the continent including South Africa, Mauritius, Egypt and Ghana. The East African nation could become a preferred destination for call center and smaller business process outsourcing contracts. Thus far, the local call center industry employs 3,000 professionals and has grown to $5 million since the first call center opened a few years ago, says Kublanov, leaving plenty of room for growth. The most established local providers include Skyweb Evans, Kencall, and Preciss, who serve customers in the United States, Canada, and Europe.