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Industry Research : SA Answers the Call
India’s global call centre outsourcing industry, long regarded as the unassailable market provider, was built on a low- cost model. But low costs alone are no longer adequate to counter problems besetting the Indian industry. This has created opportunities for competitors, including SA, where call centres serving foreign firms are high on government’s job-creation priority list.
Of the multiple problems facing the industry in India , arguably the most damaging is a breach of trust with clients. This problem was highlighted by a story in UK newspaper The Sun in August 2011 headlined: "Bank and credit card details held by Indian call centres are being peddled to crooks."
Yusuf Timol, head of economic affairs at the SA high commission in London, says: "There are definitely concerns in the UK around India as a customer service location." Concerns go beyond security. A big threat is dissatisfaction with customer service. Workers’ accents and lack of cultural affinity with UK consumers, in particular, are coming in for harsh criticism.
The impact is already being seen, says Gareth Pritchard, CEO of Business Processing Enabling SA (BPeSA) Western Cape. " Santander [a bank] announced in July last year that it had returned call centre operations to the UK following complaints from customers about quality," he says.
Capitalising on the situation, BPeSA’s marketing focus is on the UK. " There is a strong cultural affinity between the UK and SA," Pritchard says. "I believe UK companies will this year increasingly start looking for high-quality offshore alternatives. We have recently achieved a number of major breakthroughs and our opportunities are increasing."
The department of trade & industry has thrown its full weight behind the SA call centre industry’s drive to win more business offshore. The focus of the department’s effort is an incentive scheme aimed at narrowing the cost difference between SA call centres and those in India and the Philippines, the other major power in the market, which focuses primarily on North America .
Central to the department’s initiative is a tax-free subsidy payable in three annual tranches to companies for each full-time job created and maintained in the offshore call centre market. The subsidy is R112000 in government’s current fiscal year, falling in the following two years to R104000 and R88000 respectively.
"The initiative’s aim is to create an additional 30000 offshore call centre jobs by the end of 2015," says Francisca Strauss, the department’s chief director, incentive administration.
This number would represent around a four-fold increase in offshore call centre workers.
Strauss believes SA is well on the way to achieving the target. By the end of 2011, she says, the department had approved grants for 19 projects, and these are expected to create a total of 14309 jobs over three years. The cost of R175m is the amount allocated for the first year, Strauss says.
One of the most prominent beneficiaries of the initiative so far is US online retailer Amazon. It has opened the doors of its offshore call centre in Cape Town, which is set to employ 1400 people by the end of 2012. Other recipients are Dutch financial services firm Amicorp, US firm Call Center International and Old Mutual.
What the incentive has done is to add price competitiveness to SA’s other attractions as a call centre destination. "Without the incentive SA is between 40% and 60% more expensive than India and the Philippines," says Strauss. "With the incentive SA is only about 15% more expensive."
If the department’s initiative attains its goal, it will cost SA taxpayers around R3bn. Given the chronic unemployment situation this may be a small price to pay to create an additional 30000 jobs, 2000 more than the total number of jobs in SA’s vehicle manufacturing industry.
Posted by Veronica Silva Cusi, news correspondent
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