The initial impetus behind the drive to outsource was cost-effectiveness, and countries such as India and the Philippines have a great advantage in that they have a huge, well educated workforce that earns relatively little compared to their counterparts in the developed world, writes Andrew Holden, MD of Bytes Outsource Services.
That has enabled a country like India to create two million jobs in the call centre industry. But the challenges that India faces are the accent of English-speaking Indians, its time zone relative to the countries it services, and its diminishing excess capacity as its popularity as a call centre outsource destination grows, with associated employee poaching.
Poaching is a major problem. Up to 30% of call centre employees are poached by rival Indian organisations, which brings its own set of challenges. Companies are continually retraining and coaching employees as they acclimatise to the new business and its customers. People in the call centres need to know about the people and the regions they’re servicing if they’re to strike up a rapport.
South Africa can compete on many levels with countries like India, the Philippines, Mexico, Rumania, the Czech Republic and Poland that all have good education facilities. However, those former Eastern Bloc countries have a proximity to the many European customers that South Africa and the others lack.
But South Africa does have a favourable time zone for servicing European customers at least. This country also has a labour pool relatively close to major metropolitan and commercial centres, but is deficient in the education department compared with European countries and India. The local telecommunications environment was a challenge until two years ago, but Telkom has done much work to bring costing in line with the rest of the developing world and South Africa generally has a first-class infrastructure supporting business. That includes road networks, water and plumbing, electricity, telecommunications – the overall business environment required to get people to work and working.
In addition, the government firmly supports local businesses in making South Africa a preferred offshore call centre destination. Various departments, non-governmental organisations and public-private partnerships have put much effort into investment grants to help make South Africa an attractive offshore destination. The grants and breaks are substantial, mitigating the labour costs that, although low, are relatively high compared with other emerging markets.
Other IT-related businesses are starting to outsource and offshore their work to South Africa, almost as part of an internal workload shuffle for some large, international vendors and service providers. Europe and the US are driving most of this.
So the process has started, but government wants to create 200 000 jobs in the sector in eight years. That’s a hefty goal.
The problem is that, although we have a first-rate business environment, our own businesses don’t outsource their call centre operations to local providers. Eating our own dog food becomes an issue because offshore companies want to know why our local businesses aren’t supporting us. It also means we have limited platforms from which to grow.
Small outsource call centre operations of a few hundred seats find it difficult to rapidly accommodate a few thousand seats if they land an offshore contract. And a few thousand is conservative. Some of the offshore operations are massive. One outsource call centre operator in Europe operates 8 000 seats. For a local operation to ramp up to be able to handle even a quarter of that is next to impossible.
South Africa has cracked the list of top 20 offshore call centre destinations, but with few “show and tell” case studies to back up the proposition, any significant growth looks unlikely.