SA call centres score again

9 February 2006

Leading UK telecommunications firm TalkTalk is to spend R200-million setting up two call centres, one in Cape Town and the other in Johannesburg, in the biggest foreign investment yet in South Africa’s burgeoning call centre industy.

TalkTalk, a subsidiary of the Carphone Warehouse Group, offers landline, broadband and mobile services to 2.5-million customers and was the first UK company to offer free calls between its customers “all day, every day, forever”.

TalkTalk’s two SA call centres will each initially recruit about 250 people and operate from 8am to 10pm UK time.

TalkTalk customer service director Steve Rescorla told Business Day that South Africa offered “a real pool of talent that’s an excellent fit with our business in terms of both skills and culture.”

South Africans, Rescorla said, have a reputation for strong empathy with British callers, along with excellent customer skills.

Rated ahead of India
Research published in November 2004 by independent analysts Datamonitor predicted that South African call centre numbers would double by 2008 – and rated Cape Town ahead of India for quality of service.

Datamonitor predicted that there would be 939 call centers in South Africa by 2008, almost double the number of 494 in 2003 – a compound annual growth rate of 14% over the period.

It said South Africa offered outsource providers a higher quality, more culturally aligned front-office and back-office location, with labour costs running at about two-thirds of their US or UK equivalents.

These findings were echoed in a report released in 2005 by the Ion Group, which polled many of the UK’s top 1 000 companies for their ideal offshore location – and ranked South Africa ahead of India, Mexico and the Philippines.

Competitive advantages
A favourable time-zone, neutral English accents and similar cultural outlook all contribute to South Africa’s competitive edge as a destination for business process outsourcing – which includes the processing of accounts and claims, as well as front office activities such as call centres.

And the government is all for it. President Thabo Mbeki, in his 2006 State of the Nation address to Parliament, identified the call centre industry as one of the high-potential sectors targeted in the government’s strategy to boost the country’s economic growth rate and create employment.

The strategy aims to make South Africa the world’s third-biggest business process outsourcing centre – after India and the Philippines – by 2008.

Briefing the media in Cape Town this week, Deputy President Phumzile Mlambo-Ngcuka – who heads up the task team busy fine-tuning the government’s growth strategy – said that business process outsourcing investments had already created 5 000 new jobs in the country, and had the potential to 100 000 more by 2009.

Research by Deloitte, published in December 2005, found that there were 535 call centres in SA employing about 65 000 people.

Calling the Cape
According to investment agency Calling the Cape, which facilitated the TalkTalk deal, the body has facilitated call centre deals worth R933-million in foreign investment since the beginning of 2004, with investments in 2005 up by 19% over 2004.

79% of this investment originated from the UK, with companies from Canada, Germany, the Netherlands and the US also represented.

Companies running call centres in the province include Barclays, JP Morgan, Lufthansa, the Budget Group, Merchants/Asda, Dialogue and STA Travel.

Calling the Cape director Luke Mills says the “pipeline is extremely full for 2006”, with a number of the investments secured in 2005 set to expand significantly, and with inquiries being received from “some of the world’s top 10 companies”.

SouthAfrica.info reporter