CAPE TOWN, 30 September 2005 — India’s days as the premier international call center service location may be numbered if the South African Contact Center Community (SACCCOM) has its way. The organization, a nonprofit professional body for the contact center and BPO (business process outsourcing) industry in South Africa, predicts that within two years, the country will be among the top three offshore locations providing high value call center services.
Already, according to a recent survey conducted by the London-based Ion Group, who canvassed some 1,000 UK firms, South Africa has overtaken India as the most liked contact-center location in the world for UK firms.
Companies from all industries from travel and transportation, financial services to IT and telecommunications are increasingly looking at offshoring their call centers to achieve financial and service benefits and economies of scale.
The global business process outsourcing and call center offshoring market is currently worth about $10 billion. This is set to expand to $55 billion by 2008, creating more than three million jobs worldwide in the process. According to SACCCOM, South Africa’s share of this market could reach $800 million and create between 60 000 and 100 000 jobs over the next few years.
The South African call center industry currently employs about 80,000 people, second only to India with 250, 000 employees — the single largest call center services employer. According to eQuals, one of the largest BPO firms in South Africa, the number of call centers in the country is likely to reach 939 by 2008 with about 100,000 jobs being created over the same period. Not surprisingly, SACCCOM executives including CEO Mfanu Mfayela, and Luke Mills, Executive Director, Calling the Cape, and Keryn House, CEO, ContactinGauteng, will be out in full force at this week’s Call Center Expo exhibition in Birmingham in the UK. The organization this week will sign a trade agreement with NASSCOM; release its growth predictions for the industry and its impact on the UK market; and discuss initiatives including job creation in South Africa for UK people in the industry; and both inward and local investment in the sector in South Africa.
The vision of SACCCOM is to promote the growth and development of the contact center and BPO industry in South Africa under one unified industry body that will ensure South Africa becomes a preferred offshore location for international investment, and at the same time actively promote the delivery of best practice throughout the industry.
SACCCOM is established as a conduit for building new relationships with other professional bodies, government departments, overseas agencies and other agencies that have an interest in the successful development of the contact center and BPO industry in South Africa. South Africa, according to British companies, has several advantages including a favorable time-zone (the UK time difference is only one hour, for instance); English language; an affordable labor force; first world transport and telecommunications infrastructure, and sound business practice. But it has one crucial disadvantage compared to India.
South Africa’s telecom costs, like its banking charges, are amongst the highest in the world. The South African telecoms providers have been operating on a culture of excessive prices, profiteering and severe job cuts. South African Deputy Communications Minister Ray Padayachie at a conference in July 2005 warned that “increased globalization has resulted in the requirement to communicate and transmit timeously, vast amounts of data to suppliers, industry customers and international affiliates. What is very important ... is that the services should be available at a cost that does not make it prohibitive to communicate or, as in the case of business, the cost of services should not put them at a competitive disadvantage to firms in other countries. The availability of world-class communication services at a reasonably competitive price is what is needed most, for an economy to grow.”
According to one report, the country recently lost out in the outsourcing business of 32 international companies because of the high telecoms costs. For instance, the local Telkom’s ADSL service is a staggering 148 percent higher than the average price elsewhere in the world.
Telkom charges is currently being investigated by the industry watchdog, the Independent Communications Authority of South Africa (Icasa). According to Icasa councilor Tracy Cohen it is vital for South Africa to continue attracting foreign direct investment as well as becoming a business processing outsourcing (BPO) or call-center environment hub. However, this could only be done through a reduction in costs compared to rival countries such as India and the Philippines.
