South Africa takes on India in offshoring

South Africa is hoping to knock India of its perch as one of the most popular destinations for offshore call centres through government-led initiatives.

Pumela Salela, director, business process outsourcing and ICT-enabled services, with South Africa's Department of Trade & Industry (DTI), is in charge of the government initiative to drive growth in call centre outsourcing between now and 2011.

Her claim is that South Africa is politically and economically stable, and has a huge labour pool with a positive attitude and excellent English skills. And not only English, but Dutch, German (Lufthansa has call centres in South Africa already), as well Portuguese and French.

Cost factors

The DTI is offering up to R8,000 (€673) to companies who set up their call centres in south for every agent seat, depending on the number of positions, starting from a minimum of 200 places.

The subsidies are needed because as the CEO of call centre company Bizworks, Willy Govender, acknowledges, "We have higher telecom and labour costs than India, which makes us about three times most costly than an Indian call centre seat."

Frost & Sullivan's Lindsey McDonald explains that, until recently, South Africa had the most expensive fixed line communications in the world because of Telkom's monopoly. The incumbent is finally facing growing competition from Neotel and increasingly pro-competition regulation, which are beginning to lower prices.

Also a number of undersea and inland cables are due for completion in the next two years, which should also bring costs down substantially.

McDonald adds, "Call centres are seen as the low hanging fruit, the first wave of business process offshoring. There isn't enough bandwidth to offer data centres yet, but South Africa is well placed to serve both the UK and the US [with call centres]," because of language skills and being much closer in terms of time zones.

Power supply is another issue - uncertainty of supply means that call centres have to run their own uninterrupted power supplies and generators to avoid any downtime. The DTI's Salela insists the situation is comparable to conditions in India and provides no barrier.

Low, low attrition rates

The CEO of Bizworks adds, "We compete on quality, not lowest price" and certainly South Africans seem to be getting something very right on this front.

Bizworks runs calls centres on behalf of certain business units of some big British brands including Waitrose (England's poshest supermarket, part of the John Lewis Partnership, famous for quality and service), greenbee and BT's PlusNet.

Bearing in mind that Verizon's attrition rate is reportedly 110%, Bizworks' is 26% "at worst" which Govender claims is because this is many of his agents' first job after leaving education. He says they treat it as a stepping stone, with many going on to become network analysts, for example, rather than churning to another call centre.

One of Vodacom's four call centres within South Africa, at Cape Town, has an attrition rate of under 8%, according to Anel Coetzee, its business operations manager.

Unwittingly, I have had personal experience of technical support for Waitrose's ISP in the UK and was very impressed. Both Bizworks and Vodacom rent seats out to other businesses and Bizworks says it can offer services in most main European languages except Spanish.

India needs to look to its laurels in the call centre space.

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