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Voice over IP boosts foreign direct investment

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Voice over IP (VoIP) telephony is saving local companies hundreds of thousands of rands per month and enabling massive foreign direct investment, CallingtheCape’s annual telecommunications conference heard last week. But most participants stressed that South Africa’s telecommunications costs needed to reduce even more to enable job creation and growth.

The conference, which focused on the returns business are reaping from the legalisation of VoIP two years ago, heard that one Johannesburg-based call centre was saving up to R300 000.00 a month since implementing VoIP in July 2006.
The savings, according to a presentation by Dave Tolmay of e-Centric, were due largely to per-second billing options which slashed the costs of very short calls to mobile and Telkom numbers by over 80%. Telkom currently charges for a minimum of 60 seconds per call even for very short calls such as those to wrong numbers, voicemail, answering machines or fax machines, said Tolmay. These calls can account for a high proportion of call centre costs without providing any benefit.
“Our overall savings have been over 55% without compromising call quality and with no capital outlay,” says Tolmay.
For international firms such as Carphone Warehouse and the Budget Group of Companies, the conference heard that VoIP had helped to make South Africa an attractive destination for customer service call centres.
Ian Measures, the UK-based Associate Director of Business Technology Solutions for the Budget Group of Companies, said South Africa represented a “value-based” offshore proposition. Unlike destinations in the East, he says, “South Africa offers a good compromise between cost and quality. Our SA operation achieves 35% savings compared to the UK, with no quality compromise. In fact, South Africa matches and often exceeds UK standards.”
The Budget Group is a rapidly growing insurance and financial services company with strong ties to South Africa’s Auto and General. It used Telkom’s call centre product when it first entered SA shortly before the legalisation of VoIP, but moved to a VoIP solution in July 2006 after extensive trials. The Cape Town operation served as a test case for the group’s entire global operation, with the UK switching to VoIP only in January 2007.  
Measures told the conference VoIP had delivered both higher quality and lower costs, partly due to better network stability. Downtime previously cost the group a total of R800 000.00 over 13 month, but has decreased to zero in some months since migrating to VoIP.
The new VoIP options available also enabled a massive investment into the local operations of The Phone House, a call centre subsidiary of UK telecoms giant Carphone Warehouse set up to serve the rapidly growing customer base of its telephony company TalkTalk.  The Phone House created 850 new call centre seats in South Africa during 2006.
Greg Brown, the UK Head of Service Management for Carphone Warehouse, told the conference the SA call centres were entirely VoIP-based, with Internet Solutions providing a total of 18Mbps into the Cape Town office and 11Mbps into an outsourced operation in Johannesburg. The company had spent around R8 000.00 per call centre seat on VoIP infrastructure alone, but the cost savings achieved by the offshore operation had repaid this investment in a single month.