WRITER: THEMBELANI TUKWAYO

South African Government has identified the Business Processing Outsourcing as a growth sector that if approached properly will help create many employment opportunities in South Africa.

During his state of the nation address in 2003, President Thabo Mbeki indicated that the BPO industry is critically in promoting growth as part of government’s micro-economic reform program.

Currently various stakeholders in the sector are putting numerous measures in place to support the development of the Business Processing Sector which is driven mainly by the Call Centre industry.

According to a report by research firm Gartner, the Global BPO market will grow to 179 billion Dollars by the end of 2005.

The increased pressure on company executives in the first world to cut costs in an attempt to improve their bottom lines has resulted in companies shipping the business processing offshore to the developing world where labour is available for a fraction of the costs at home.

As more and more of our everyday transaction are conducted by web and telephony and there is a demand for services in travel, home shopping, health care, cellular telephony, financial services and the public sector and this is fueling the growth of Call Centre business.

The rapid pace is evident in the growth of offshore BPO industry in certain developing countries like India. Since 2000, a 3.5 billion Dollar offshore BPO industry has developed in India, which has 700 world class offshore service providers who collectively host approximately 300 000 Call Centre seats and employ more than 500 000 people.

Attempts by South African government to slug-it out for a piece of this global business has resulted in the formation of South African Call Centre Community (SACCOM). The recent appointment of Mfanu Mfeyela to be Chief Executive Officer of this organization has helped to galvanize into action both the private and public sector and imbued all stakeholders with renewed energy to attract Foreign Direct Investment in the Call Centre industry mainly from United Kingdom and United States.

Sound economic policies, cultural closeness particularly with the UK market, beautiful weather have placed the country in the threshold of an immeasurable opportunity to attract Call Centre investment to the country and in the process create much needed jobs. Currently there are 650 Call Centre in the country employing 54 000 people.

The industry is contributing only 0.92% to the GDP and industry players gleefully envision 100 000 news jobs being created by 2010. Though these are numbers are looking quite high local players are sanguine and bullish about growth prospects.

Mfanu believes that these are conservative estimates.

"If we are successful in getting Foreign Direct Investment in the country that will help to give confidence to the local companies and when they start outsourcing as well the growth will be enormous," explains Mfanu.

One of the successful outsourcing companies in South Africa is Dailogue which was established 2 years ago, CEO David Drew says growth of the offshore industry in South Africa will give impetus to the local market.

"If you have overseas companies locating their seats to South Africa the local companies will want to follow that and those numbers bandied about will be achieved and exceeded," observes Drew.

"Every week we get 2 UK blue chip companies visiting us to view the infrastructure and our industry sophistication and that clearly demonstrate a huge interest from these UK companies. Off course decisions to locate seats in South Africa will take long because companies need to conduct their proper investigation about the new location but when they do that will have a huge impact on the South African industry."

The industry in South Africa has been growing very fast in the last couple of years.

In 2002 there were 410 Call Centre operations employing 47 000.

Facts gleaned from a research by Datamonitor reveal that by 2008 there will be 939 Call Centre operators.

South African offshore growth has been led by United Kingdom which currently makes up 70% of our offshore market.

Western Cape was first off the mark and has had a head start. CallingtheCape which is a section 21 company funded by the provincial government and the City of Cape Town have had a CEO, Luke Mills for 2 years and have cornered the UK market.

Western Cape Premier Ebrahim Rasool has told stakeholders in the province that his government wants to use the industry to drive job creating. "The degree of cultural proximity with major international markets, competitive costs, customer services and financial services industry skills and time zone compatibility with Europe gives us some unparalleled advantages as we position ourselves as the Call Centre location of choice for the international markets," Rasool has said to stakeholders and prospective investors. Western Cape currently employs 11 000 people and growth expectations for the next two years average 40%.

Gauteng has followed suit with the establishment of ContactinGauteng which is tasked to promoting the province to international Call Centre operators. The appointment of Keryn House as the CEO recently will help the province to chase a piece of the international pie. House says her appointment demonstrate the province’s determination to attract Call Centre FDI’s. "My current focus at ContactinGauteng is to immerse myself in our Gauteng Call Centre industry, listen to stakeholders and put all the necessary plan into place and once I have done that we are going to aggressively market the province under the umbrella of SACCOM," says House who has enormous experienced which she picked up whilst working at the Department of Trade and Industry as a Director for Textiles, Clothing, and Footwear. To ensure co-ordination of marketing strategy ContactinGauteng is housed at the Gauteng Economic Development Agency.

Stakeholders are keen to eschew any unnecessary competition amongst the 3 main regional bodies which include KZNonSource when trying to lure international business.

Mfanu says that the top priority is get business in South Africa first. "Its going to be important that any international marketing is done through SACCOM and once a potential investor has decide to locate to South Africa then the different regional bodies can showcase what they have to offer," says Mfanu.

House concurs with Mfanu: "We will take one country one voice approach in any case I think because we offer multi urban centers that will help investors to mitigate risk. So I see it as an advantage."

The key growth enablers for South Africa are excellent skills base, technology know-how, infrastructure and quality of life. Also a research conducted by an international research firm found out that South Africa rates highly in key productivity measures such as first call resolution, abandon rates, hours worked per agent and business uptime.

Despite these efforts from by South African stakeholders and the generally benign Call Centre environment in the country, India still pose a serious competition in the global outsourcing market.

India together with other traditional Call Centre locations like Philippines and Costa Rica offer the first world cheap locations as their key competitive advantages. Whilst near shore locations like Canada and Mexico for the US and Eastern Europe for UK offer close proximity and cultural affinity and also good services.

South Africa will slot in between these two different destinations.

Drew says South Africa must not try and compete with India.

"India as a Call Centre destination is very cheap. They charge about R70 per seat per hour whilst in South Africa it’s about R100. What I think should happen is we must work closely with India. They offer high volume low customer services and I think we should offer low volume high customer services," opines Drew. Drew is of the view that India can re-route some of the sophisticated calls to South Africa and "in that way we will be working together with India."

Mfanu says though India will continue to get a major piece of the pie "South Africa has a very unique selling proposition and that includes our customer services skills."

Though India has sufficient technology know-how their customer services skills are not the best one in the world. They have 450 000 software engineers and 70 000 are added every year. South Africa on the other hand has got generally a well educated unemployed workforce with tertiary institutions churning out 521 000 graduates each year.

People are key in the Call Centre business as they account for 55-60% of the total costs.

Another key growth enabler in the industry is the telecoms sector. Telecoms have stymied offshore Call Centre growth because of insufficient bandwidth and the telephony on its own has been prohibitively expensive. The deregulation of the South African Telecoms sector early this year is going to be a major catalyst for growth. Mfanu says that this is where government can help to spur growth. "I think we should be working with government to try and provide an affordable bandwidth and I think the arrival of Second Network Operator will give customers a choice," States Mfanu.

With the Mfanu at the help of SACCOM the industry is now organized and is girding up its loins for future growth. Three of regional bodies, CallingtheCape, ContactinGauteng and KZNonSource are all staffed with fulltime CEO and are marketing their regions under the umbrella of SACCOM. For South Africa the opportunities are real and prospects are good.

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