From the outside it looks like another of the anonymous blocks of flats that are springing up all over Nairobi's quieter suburbs.

But inside is the hub of an IT revolution that the Kenyan Government hopes will create 100,000 jobs in the next five years and rival India's outsourcing industry.

Young, suited graduates tap at keyboards as they compile databases of websites. Others are making phone calls to Mozambique and Angola, trying to identify clients for a multinational software company.

They work for Preciss, an outsourcing company set up five years ago by Mugure Mugo. Back then Mrs Mugo had one employee and a dial-up internet connection that failed when it rained. Next year her ten-seat call centre will move to a 100-seat facility.

“We have everything it takes to compete with India,” said Mrs Mugo, in a bedroom converted into an office, complete with fitted wardrobes. “The only thing is that we are a new destination that is unknown, but we have educated, young people, who have good English skills.”

Employment costs are higher here - wages start at about $4,000 (£2,000) per month for an entry-level job, compared with $2,500 in India — but Mrs Mugo says her skilled staff have already won contracts ahead of Indian companies based on a stronger grasp of English. Her company has produced subtitles for the BBC television comedy My Family and the game show QI.

The only thing limiting her growth, says Mrs Mugo, is East Africa's poor communications infrastructure. “Most of the time we are in a situation where our clients are asking us how much work can we take. So if we can get more bandwidth cheaper then we can expand areas of our business.”

Earlier this month the Kenyan Government signed an agreement with Alcatel-Lucent for a fibre-optic cable linking the port of Mombasa with the United Arab Emirates. More importantly, it will connect East Africa to the internet, replacing the sluggish and expensive satellite links that are a bottleneck for the country's young business process outsourcing (BPO) industry.

At the signing, Bitange Ndemo, Permanent Secretary at the Ministry of Information and Communications, said that the connection would bring the internet to more ordinary Kenyans. But he said the real driving force was the potential for creating jobs in call centres and the rest of the outsourcing industry. “A year ago we started pushing ourselves as a BPO centre,” he said. “But if you look at the price and compare it with our competition, we are simply not competitive.”

Typical monthly charges are $7,500 for a one megabyte-per-second connection. Elsewhere in the world it would cost no more than $400. “If we can get it below $500 for that megabyte we can make ourselves more competitive,” said Mr Ndemo.

Work on the 5,000km East African Marine System [] cable is due to begin early in the new year. The $80 million cable will run from Fujaira, in the UAE, along the seabed of the Gulf of Oman and down the African coastline to Mombasa. It is expected to bring the cost of connectivity down to about $500 per month immediately on completion in January 2009. Two other cables are also being planned.

Mr Ndemo said the cost would continue to come down as Kenya becomes a hub for East Africa, selling bandwidth to its neighbours such as Tanzania, Uganda and Sudan. His aim is to turn a 3,000-job industry into one that employs 100,000 by 2012, rivalling India's success.

The vision is backed by analysts at Datamonitor. In a recent study, they forecast that Africa would see the fastest growth in the number of call centres for the rest of the decade and singled out Egypt, Botswana, Ghana and Kenya for rapid expansion.

Signs of a shift emerged this year when Indian companies began looking to outsource their own outsourcing operations, as rising wages and crumbling infrastructure took their toll.

Mark Kobayashi-Hillary, off-shoring director of the UK's National Outsourcing Association, said Kenya was putting itself in a strong position to capitalise — but would struggle to compete on price alone. “In Kenya and the East African region they have quite a good recent history of democracy, so it is a stable region and there are lots of well-educated people,” he said. “That's a good start but what they don't have is the infrastructure, and I guess that's the importance of this fibre-optics deal.”

Across town from Preciss stands a vision of what the Kenyan outsourcing industry could become. Kencall employs 500 people in a converted avocado warehouse on an industrial estate.

Nicholas Nesbitt, its chief executive, said there was a ready pool of investors looking to enter the Kenyan industry, particularly from South Africa where labour costs are much higher. “As long as we can keep the drumbeat of Kenya as a good and positive place to invest, then when the time comes people will move in,” he said.

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