Contact centre jobs in South Africa grew by 30% last year, which shows that demand remains high in this industry. While this is good news for the Dialogue Group, its growth in some areas has been hampered by the economic slowdown.
The AltX-listed outsourcing company released results its annual results yesterday, showing a 61% increase in group revenue and a 121% increase in gross profit. The contact centre business however suffered a 22% reduction in revenue.
"The impact of the financial crisis on the financial services industry, which dominates the South African contact centre markets, impacted on Dialogue's call centre earnings," says Frost & Sullivan ICT analyst Spiwe Chireka. "This is because the financial sector has cut down on mega deals in outsourcing."
Frost & Sullivan expects that the crisis may also have a positive side for Dialogue though, as companies in developed countries are looking at outsourcing more now than ever in an effort to save costs. The size per deal is likely to be much smaller though.
"There is no evidence yet of this happening in South Africa, but companies in Asia have definitely seen a change," Chireka says. "The number of offshoring deals is increasing steadily there."
Chireka cautions that to secure ongoing success, Dialogue must capture more of this international market.
"While the offshore market is expected to present some growth opportunities, Frost & Sullivan believes that the domestic market has reached maturity," Chireka says. "The overall effect is that we expect local year on year growth rates to decline steadily to reach single digits by 2012."
She adds that Dialogue needs to be aggressive in marketing its services to become a more formidable international player.
"India and other Asian countries still dominate as the destinations of choice for offshoring," she says. "Dialogue is however well positioned to compete for offshore contracts given its size, range of services, and the geographical spread within South Africa of its operations."
Chireka does however warn that Dialogue may start to feel the pressure of holding several companies, including contact centres (e.g. Interaction Call Centre), contact centre recruitment services (e.g. Call Force Direct) and business continuity providers (e.g. Sunguard and ContinuitySA). These were acquired through several mergers and acquisitions over the last two years.
"It is now a case of converting these into sustainable, profitable operations," she says. "Frost & Sullivan wonders whether the group may not be overburdened by all these acquisitions and will wait to see whether it has resources to make sure each of them is profitable."