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Industry Research : Call Centre Jobs Boost
Business process outsourcing is back in the news following US retailer Amazon’s recent announcement that it was setting up a call centre in the Western Cape that would lead to the creation of 600 jobs.
On Wednesday the Department of Trade & Industry said it had approved grants worth R157.8m related to its business process outsourcing incentive scheme. The grants will be disbursed to ten projects over the next three years and will create more than 11 000 jobs, according to Minister Rob Davies.
But the truth is, grants are just a part of the picture. Five years ago the SA government vowed that at least 100 000 jobs could be created by promoting SA as a destination to companies wanting to outsource their business processes to lower cost locations.
In reality less than half of these jobs have been created. Currently 40 000 jobs have been created and the industry generates revenues of $840m to $900m annually. But it could be so much more.
According to Birgitta Cederstrom, Frost & Sullivan’s head of ICT Africa research, the industry could have easily been worth $1.2bn p/a by now. "Five years ago government and the call centre industry announced at least 12 initiatives to make the industry competitive and attractive to outside investors. But it is one thing to release incentives and another to drive them. Nobody follows through and I think just two of these exist today."
Old headaches still exist. It takes too long to process work permits through Home Affairs and getting a business registered is needlessly complicated. "Mauritius – which is emerging as a real competitor to SA’s business – promises to have your business registered in two days," says Cederstrom.
However, the business process outsourcing sector (which includes call centre outsourcing, as well as back office services, IT support, financial accounting, data analytics and legal services) has persevered and other problems have been resolved. For instance regional rivalry has been replaced with a one-country approach with the formation of BPeSA, a call centre umbrella body for the industry.
The challenge now for SA, she says, is to catch the next wave. "We are seeing accelerated global growth in specialised outsourcing services, for instance the financial services arena. What we need to see is targeted training in these areas. We have historically focused on call centre outsourcing."
While SA faces strong competition in the space – historically from India and the Philippines and more recently from Mauritius, Ghana and Kenya – the country has some natural advantages. These have been seized by the likes of Wesgro, the Western Cape’s Investment and Trade Promotion Agency. "We are on the same time-line as Europe and there is a strong cultural affinity with UK and US customers," says Nils Flaaten, Wesgro CEO. In addition, good language skills mean local call centre agents are able to handle complicated transactions and provide value added services, which other jurisdictions may find more difficult.
The Western Cape, which has about 6 000 call centre seats to Gauteng’s 24 000 (seat numbers vary depending on how you calculate them – these are according to Frost & Sullivan), is working hard to woo new business to the Cape.
In partnership with Internet Solutions, it offers free internet, voice and data services for a period of six months to companies that set up call centres in the province, providing they service clients in offshore markets.
"This incentive targets companies that are contemplating moving their BPO services to the Western Cape, but need some extra encouragement," says Western Cape Minister of Economic Development, Alan Winde. Internet Solutions will offer each company telecommunication services worth R1.5m for every 200 agents they employ.
This incentive complements the national incentive for the offshore BPO sector, which provides wage subsidisation for local employees for the first three years of operation (year one = R40 000/employee, year two = R40 000/employee, year three = R32 000/employee). Together these incentives reduce the cost of operations in the first six months by 50%.
The Department of Economic Development and Tourism has also implemented a training programme for call centre agents. Last year, 310 jobless youths were trained under the scheme, and 309 have subsequently become employed.
Companies that will be receiving the grants include Old Mutual (JSE:OML) Assurance, Amicorp South Africa, Amazon Development Centre First Call Centre Solutions and Call Centre International. Long established call centre operators include Lufthansa, which does all of its flight balancing from CT and Shell.
Wesgro’s Flaaten says there are good deals in the pipeline. The provincial government should be able to announce two or three before the year is out.
Posted by Veronica Silva Cusi, news correspondent
Today's Tip of the Day - Involve Staff
Published: Monday, September 5, 2011