By Jed Hewson, director of 1Stream
A white paper commissioned by British-based company Teleperformance found that 10% of all contact centre agents serving the UK will be based in South Africa by 2014. Jed Hewson, director of 1Stream, believes that the figure should be a lot higher.
“Offshoring” does not carry the same negative connotations it had ten years ago. In fact, whereas UK customers were complaining about being put through to Indian call centres in the 90s, the industry since has upped their game to such an extent that they are now insisting on them – translating in an annual growth rate of 50% for the BPO industry. But although there is no reason why South Africa can’t become equally well known as a key business process outsourcing destination, we are not there yet.
The BPO boom in India can be attributed to cheap labor costs and the country’s pool of skilled, English-speaking professionals – both factors that can be found in abundance in South Africa. And considering, from an economic viewpoint, that the call centres outsourced to India alone has created 800 000 jobs, we should make a point of competing for a spot in that market.
By international standards, South Africa has a quality telecommunications infrastructure, particularly with the new bandwidth lines, and is backed by a good power supplier. Not to mention that the cost of telecoms to the UK, for example, has almost halved in the last five years. South Africa remains the most advanced country on the African continent, with quality training programs and a skilled workforce. However, training, teleco’s and English language skills are not the only selling points to consider.
When independent research firm SourcingLine rated countries according to their attractiveness as outsourcing destinations (using factors such as cost competitiveness, resources and skills, and operating environments) India scored 7.1, Indonesia 6.9, China 6.4 and the Philippines as 6.3 compared to South Africa’s 4.6. This is despite the fact that we are in some respects more technologically advanced and better-equipped than many of the countries who gathered higher ratings – including Vietnam, Ghana, Lithuania and Jamaica.
If we really aim to compete with other nations as a BPO destination, we need to turn the tables on the limitations we encounter. For example, when drilling down into the individual index scores for the top rated countries, the Philippines has the highest cost competitiveness score by far – almost double that of India. In fact, price should be a significant deterrent to businesses wishing to outsource to India – renting Mumbai commercial space is nearly double that of downtown New York.
Realising this, the country drastically reduced IT costs – senior on-site IT staff are paid a third of the salaries they would receive in countries such as the United States, without compromising on quality. Indian companies have also become more mobile – making increasing use of hosted platforms and cloud technology. This strategy, in particular, has ironically led to Indian call centres maintaining a competitive edge, without actually remaining in India: 13 of the largest Indian call-centre companies have seamlessly relocated at least part of their operations to the Philippines to take advantage of the cheaper real estate. And why not? All an agent needs to access the system is a PC and a headset. There are no capital costs. No hardware or software costs. No upgrade costs. India is still dominating the call centre industry without relying on its past differentiators.
Flexibility and economies of scale may well be the key to drawing the offshore market to South Africa. It is a well-known fact that in-house IT, particularly in terms of call centres, are not able to maintain their technology and standard of service in the long run. Similarly, companies struggle to attract skilled individuals with the specialised knowledge required, and when they do, the more premise-based their IT is, the more difficult it becomes to adapt, expand and relocate.
The hosted platform has already drawn multinationals like Amazon and wonga to South Africa. By moving the call centre into the cloud, there is no need for an in-house IT department or even IT assets – in short, creating a solution that enables companies to deploy what they need when they need it.
Perhaps if we want to position ourselves as a prime BPO destination, we need to sell the concept of having a world-class contact centre that virtually comes out of a box. We already have skilled hosted providers that can provide the consultative backup needed and we are making strides in terms of connectivity.
By harnessing the power of achieving more with less – fewer software costs, fewer IT costs, less of a dependence on costly real estate – we can essentially remove the borders and restrictions placed around technology the same way we’ve removed the borders between countries.