It appears that you have a lot of context switching - that is why the kernel is active.

You may want to look at how priorities are set on the processes that are getting moved in/out. If the processes are not stuck in a loop, you can clear the traffic by letting one or two processes get through a little faster.

Your system does not appear to be I/O bound, so it has to be CPU contention.

FWIW - It also looks like your swap is pretty close to being maxed out as well, like 95% of it is used.