24 November 2004
South African call centre numbers are expected to double in the next four years – and Cape Town is hotter than India when it comes to service, recent research says.
Independent analysts Datamonitor predicts that there will be 939 call centers in South Africa by 2008, almost double the current number of 494 – a compound annual growth rate of 14% over the period – and that South Africa could soon occupy a priority position in the portfolios of global operations.
Meanwhile, research conducted by Deloitte & Touche, and commissioned by investment agency CallingtheCape, says Cape Town offers a stable workforce, high quality service, a “robust skills base”, and is a “highly competitive” alternative to India for foreign companies.
- South Africa: An Emerging Offshore Opportunity – Datamonitor report.
- Contact Centres and Business Process Outsourcing in Cape Town – 2004 Key Indicator Report.
Dial SA for service
Datamonitor predicts that in four years’ time, offshore agent positions will quadruple on current levels.
It says South Africa offers outsource providers a higher quality, more culturally aligned front-office and back-office location. Labour costs run at two-thirds of their US or UK equivalents.
For global firms, South Africa is expected to slot in between near-shore locations such as Canada, Mexico or Eastern Europe, which offer close proximity and also cultural affinity to domestic markets, and more traditional offshore locations, such as India and the Philippines, that offer cheap labour.
The total number of agent positions in the country is predicted to rise to 69 600 by 2008, with 6 200 offshore outsourced.
Currently, 70% of South Africa’s offshore customer service agents service clients in the UK market. Most of these are located in Gauteng province – more specifically, in Johannesburg.
However, Datamonitor expects the balance to shift in favour of Cape Town.
Capetonians just better than most
According to Deloitte & Touche, while the number of agents in the industry grew 25% over the last year – it now employs some 11 000 people – staff attrition is stable at 10.7% compared to India’s attrition rate of 24.3%. Absenteeism is low.
Capetonians, its report says, are also better at fielding calls. First-time call resolution – which measures how efficiently customer queries are resolved – is 89% in Cape Town compared to only 65.9% in India.
Other key productivity measures, such as abandon rates, hours worked per agent, and business uptime, are ahead of or line with international comparators.
The research also found that:
- The industry in the Western Cape, and Cape Town in particular, is well-established, with a broad base of management and service provider expertise.
- The industry is already one of the city’s top 10 employers. Growth expectations for the next two years stand at an average 40%.
- Offshore outsourcing is a key driver of growth, with 55% of outsourcers’ revenue coming from international clients. Outsourcers offer seven foreign languages including German, Dutch, French and Italian.
- A key strength of the Western Cape market is the depth of financial services expertise, particularly in insurance, mortgage and loan processing, and collection. Financial services accounts for over 50% of staff in the industry.
- Existing investors in the Western Cape report high levels of satisfaction. From a list of 37 factors that might influence a choice of investment location, 35% were judged to be growth enablers and 41% growth neutral. The key enablers are an excellent skills base, technology, infrastructure, industry sophistication, and quality of life.
- The local labour market has proved to be both growth-enabling and stable.
- It is estimated the local industry could grow by 10 000 seats per year without straining available skilled resources.
CallingtheCape says that the recent telecommunications liberalisation announced by the government should also be a boon for the call centre industry.
The introduction of a second national fixed-line operator will offer competitive price challenges to Telkom. At the same time, regulatory changes, which take effect in February 2005, will allow for the phasing in of Voice over Internet Protocol (VoIP).
These are expected to significantly lower the costs of investing in call centres in South Africa.
- British firm calls on Cape Town
- Dial SA for service