Eskom price hikes could spell the end for the burgeoning business process outsourcing (BPO) industry – and the hundreds of thousands of jobs it is hoped this sector will create.
Sipho Zungu, CEO of BPeSA Western Cape, says that, if Eskom is given the all-clear for three proposed 45% electricity hikes, the BPO industry in South Africa may very well suffer irreparable damage.
The latest proposed change follows on from a 31,3% increase by Eskom earlier this year.
“If the suggested hike is accepted, South Africa will very soon be priced out of the market,” Zungu says.
Call centres require a large amount of electrical output to operate. Costs include; running computers and other call centre related equipment, lighting, cooling systems, 24-hour security protection, multiple backup systems, standby generator and an uninterruptable power supply.
“The BPO sector in South Africa plays a key role in job creation and economic development and to date has already created around 100 000 jobs for the country," Zungu says. "This growth has been driven by various competitive factors, which have resulted in a number of overseas investors outsourcing their operations to South Africa. By increasing electricity costs you are taking away a key differentiating factor."
Roland Govender, CEO of 118 Contact, agrees: “These proposed hikes will be felt by all businesses particularly those in the BPO sector, but the biggest losers will invariably be the SME’s whose margins will be significantly affected, which in turn will impact on their commercial viability."
According to Alan Winde, MEC for Tourism & Economic Development in the Western Cape, the call centre industry is responsible for providing in the region of R3-billion a year to the province's gross regional product
“The whole industry is feeling the effects of the credit crunch and as a result, even a 10% rise in costs would have a major impact on the success of the entire sector,” Zungu says.