South African Call Centres most favoured
According to a recent survey by UK marketing services specialist, Ion Group, South Africa is now the most favoured offshore contact centre location in the world for UK companies, beating former leader India into second place.
Offhsore call centres are part of a rapidly growing trend in the developed countries of Europe and North America, as companies seek to gain competitive advantage by moving their non-core businesses to centres with lower costs.
Ion Group’s researchers asked senior marketers from 1000 top UK companies to rate the best locations for offshore call centres. Ion Group Managing Director Graham Ede said, “Locations which have been popular for offshore outsourcing in the past primarily due to their low operating costs are now facing increased demands from clients and their customers for high quality call handling standards, a robust technological infrastructure and multi-lingual capabilities. Increased competition has seen emerging locations such as South Africa not only able to meet these demands, but offer the advantage of having a similar time-zone and culture to the UK.”
South Africa scored 51.1%, while India came in second at 44.9% and Mexico took third with 40%. Other countries popular with companies looking to send contact centres offshore, like the new Eastern European members of the EU, the former Soviet countries and the Philippines, all scored far lower in terms of quality of call handling.
Call Centres in South Africa, and particularly the Western Cape, have become increasingly aggressive at positioning themselves as an offshore alternative for European companies. In addition to English (with an accent that is easy for the British to understand), contact centres in Cape Town also offer services in Dutch, German, French, Italian, Portuguese and Spanish for the European market.
Contact Centres have become an important source of investment and employment in the province, with several hundred million rands being invested and around 11,000 people already working in the industry. Employment is expected to grow by 25% within the next year, according to a study done by Deloittes and industry promotional body CallingtheCape. Other provinces, particularly Gauteng and KwaZulu-Natal, are putting a lot of work into growing their own industries too. With the appearance of the Ion Group’s research results, their job will be made easier.
SOUTH AFRICAN CALL CENTRES HELP TO IMPROVE UK CUSTOMER SERVICE
The UK’s Datacall, a client liaison specialist for the highly competitive UK office equipment industry, has selected South African call centre operator Digicall as its preferred telesales and telemarketing partner.
“A lot of sales-driven companies struggle to develop good long-term relationships with their customers,” explains Datacall’s Steve Blogg. “We provide outsourced client liaison services to benefit both the equipment sales companies and their customers”.
From South Africa, Digicall begins the process with a series of courtesy calls, using advanced predictive dialling tools and taking advantage of low international call charges offered after South Africa’s recent embracing of voice over IP (VOIP) technology.
In the first joint project between the two companies, Digicall is making 2 000 calls a month to current and former clients of a major UK equipment supplier. “We update their contact details and make appointments for representatives to visit them,” says Digicall’s André Geboers. “This is a three-month pilot initially, but we’re confident it will grow into a long-term relationship.”
“The call centre industry generally has a negative image in the UK,” says Richard Holt of the Qualia Group, who introduced the two companies. “In South Africa there is no stigma attached to working in a call centre and the people are passionate and productive; they make very good salespeople.”
“We’re not quite as cheap as India,” adds André Geboers, “but we have better English language skills and there’s less of a cultural divide. Cape Town is also a nicer place for our clients to visit, and there is no jet lag to contend with.”
Steve Blogg agrees, “I looked at India very briefly, but it’s a victim of its own success to a degree. The labour market is not as stable as it is in South Africa, where there is more opportunity to build people and their skills because working in a call centre is seen as a genuine long-term career option”.
The cultural affinities between the UK and South Africa helped to ensure that both companies enjoyed “an instant meeting of the minds” when they were first introduced. Steve confirmed, “We don’t do business with people unless the chemistry is right. In this case it was: we had our first meeting in June and the project was ready to go within a week”.
Qualia’s role was crucial, he added, “It helped enormously that Richard Holt knew us, knew Datacall and knew we had something in common. It could have taken us months to get this far without his facilitation, if we even became aware of the opportunity in the first place.”
Richard Holt says the form of the partnership between Digicall and Datacall is becoming increasingly common. “We have the UK company creating the new business and managing clients and projects, and the South Africans doing the practical fulfilment. It has great benefits for both parties.”
OUTSOURCING TO SOUTH AFRICA
As companies worldwide respond to increasing cost and efficiency pressures, South Africa is well placed to become a favoured international location for business process outsourcing, including outsourced call centres.
Traditionally, countries such as India and the Philippines have led the way in servicing markets for the United States and Britain, among other countries. South Africa is quickly catching up, however, thanks to a range of factors working in its favour.
World-class service levels of call centre staff, time-zone compatibility with Europe, high rates of fluency in English coupled with neutral English accents, a favourable exchange rate and an advanced telecommunications industry are all contributing to South Africa’s growth as a destination for business process outsourcing – which includes the processing of accounts and claims, as well as front office activities such as call centres.
And the government is all for it. President Thabo Mbeki, in his 2006 State of the Nation address to Parliament, identified the call centre industry as one of the high-potential sectors targeted in the government’s strategy to boost the country’s economic growth rate and create employment.
The strategy aims to make South Africa the world’s third-biggest business process outsourcing centre – after India and the Philippines – by 2008.
Calling the Cape
In February 2006, leading UK telecommunications firm TalkTalk announced plans to spend R200-million setting up two call centres, one in Cape Town and the other in Johannesburg, in the biggest foreign investment yet in South Africa’s call centre industry.
According to investment agency Calling the Cape, which facilitated the TalkTalk deal, the body has facilitated call centre deals in the Western Cape worth R933-million since the beginning of 2004, with investments in 2005 up by 19% over 2004.
79% of this investment originated from the UK, with companies from Canada, Germany, the Netherlands and the US also represented.
Companies running call centres in the Western Cape include Barclays, JP Morgan, Lufthansa, the Budget Group, Merchants/Asda, Dialogue and STA Travel.
Call centre numbers expected to double
Research published in November 2004 by independent analysts Datamonitor predicted that South African call centre numbers would double by 2008 – and rated Cape Town ahead of India for quality of service.
Datamonitor predicted that there would be 939 call centers in South Africa by 2008, almost double the number of 494 in 2003 – a compound annual growth rate of 14% over the period.
It said South Africa offered outsource providers a higher quality, more culturally aligned front-office and back-office location, with labour costs running at about two-thirds of their US or UK equivalents.
These findings were echoed in a report released in 2005 by the Ion Group, which polled many of the UK’s top 1 000 companies for their ideal offshore location – and ranked South Africa ahead of India, Mexico and the Philippines.
More competitive advantages
For global firms, South Africa slots in between near-shore locations such as Canada, Mexico or Eastern Europe, which offer close proximity and also cultural affinity to domestic markets, and more traditional offshore locations, such as India and the Philippines, that offer cheap labour.
Other factors working in the country’s favour include the broad base of management and service provider expertise in the local industry, along with the depth of local financial services expertise, particularly in insurance, mortgage and loan processing and collection.
The liberalisation of telecommunications in the country will also lower the costs of investing in call centres in South Africa. Voice over Internet Protocol (VoIP) has begun to be phased in, and the licensing of a second national fixed-line operator – due to start operating by the end of 2006 – will offer competitive price challenges to state company Telkom.
SOUTH AFRICAN CALL CENTRES TAKE ON THE WORLD
April 29, 2007
By Wiseman Khuzwayo
Johannesburg – Representatives from 30 countries gathered this week in Cannes for the inaugural contact centre global forum.
Senior decision makers from the world’s most prominent contact centres and industry associations attended to address the need to promote best practice standards in the industry and to encourage global co-operation and exchange in the industry.
According to the forum director, Christina Wood, more than 6 million people worldwide are employed in this industry, with 80 percent of the contact between firms and their customers occurring through contact centres.
Wood said: “This forum will become the powerhouse through which leaders of the industry will raise its standing as a source of professional employment, service excellence, competitive advantage and economic value.”
In light of this, South African contact centres have come under the government microscope.
The industry has been scrutinised for the challenges it faces and its ability to measure up internationally, with a view to positioning South Africa as a leader in the global industry. The government’s response to these issues came last year in the form of the government-approved incentive scheme for the business process outsourcing (BPO) industry, which identified the contact centre sector as a specific growth area.
A rumoured R2 billion will be invested in the industry in a bid to accelerate economic growth and create jobs as a part of the accelerated and shared growth initiative for South Africa. In addition to this, the department of trade and industry is embarking on trade missions to the US and Europe to promote foreign investment and encourage these countries to relocate their BPO activities to South Africa.
Roland Witham, the general manager of QuestConnect, spoke on the key issue of staffing call centres from a global and local perspective.
“South Africa offers a host of appealing qualities for foreign clients. We have a large skilled workforce, with the sector education and training authority, and other organisations supporting the skills development of our existing and potential workforce. We work in a similar time zone to most of Europe. We offer a predominantly English-speaking workforce with accents that are easy on the ear. Most importantly, we offer excellent service delivery at a great financial saving,” said Witham.
Witham said that with all these factors at play, it was no surprise that research by Trade and Investment SA revealed that not only was the contact centre industry already comparable in size to most European countries, but with government incentives, grants, foreign investment promotion and the recent announcement of reduced Telkom tariffs, the call centre industry was expected to create 100 000 jobs in the next five years.
Witham said: “We need skills development at an agent and supervisor level. In response to this, the industry has developed many government-backed programmes to develop skills, which are gradually being supported by a culture of training within the private sector. The only questions that remain are whether we can develop the skills fast enough for the rapid growth of the industry.”
India has always been regarded as having the upper hand in the call centre industry because of its early entry and the relative ease to do business there.
However, Witham said: “South Africa and India have signed a memorandum of understanding that encourages knowledge sharing between the two industries.
The strategy is perhaps more complementary than competitive as South Africa is willing to promote multisite strategies for large multinationals between the two countries. South Africa is not the cheapest, but its value proposition is built on the strength it has in verticals such as financial services, telecommunications and information technology.
“The industry at the moment is less than 1 percent of gross domestic product. The sector has, however, been identified by government as a key growth area. The deputy president, Phumzile Mlambo-Ngcuka, is driving the initiative with members of cabinet and a permanent member of the office of the president. The prospects for BPO and contact centres are strong in South Africa,” Witham concluded.