There is a belief, almost pervasive in the South African call centre industry, that an opportunity exists for South Africa to become a leading international call centre destination. Almost surprisingly, analysts agree, but note that differentiation and the provision of a quality product are key to the country’s success or failure in this goal.
Some years ago the Department of Trade and Industry (DTI) identified the call centre market as one that could potentially create jobs and grow the economy. What followed was a five-year plan: the goal to create 100,000 new call centre jobs within that time, and, while the advisability of setting such an aggressive target has been debated vigorously, nobody doubts the sincerity or motives behind the plan.
While the DTI was generating interest in SA as a destination, the local call centre industry was busy organizing itself, and establishing regional bodies to represent it and lobby on its behalf with government. Recently, however, three of these organizations, Calling the Cape, KZN on Call and Contact in Gauteng, got together with the DTI and established SACCCOM (the South African Call Centre COMmunity) — an umbrella body charged with national co-ordination.
Newly appointed SACCCOM CEO, Mfanu Mfayela, describes the organization’s role as the national association of call centres. “Government has been doing quite a lot for the (call centre) industry and, at the same time, the industry has been doing a lot on its own, but it has never been co-ordinated, or done jointly.
“That is the purpose of SACCCOM, because once you co-ordinate you are able to unlock a lot more value. If you look at the success of India, Ireland, or any other country that has been successful, it has typically been because of collaboration with government. Government comes up with incentives and strategic plans like skills development, and, through benefiting from that, the industry is able to offer a better value proposition in terms of either price or quality to off-shore markets,” he explains.
In effect, Mfayela is charged with running what is a classic example of a public-private partnership (PPP). “We have key deliverables which are stated clearly and specifically. One is to co-ordinate a national program within the regional bodies, and to make sure that all programs are aligned. At an operational level SACCCOM is charged with promoting the use of global best practices — both from a quality point of view and an agent welfare perspective,” he adds.
“It is a nonprofit organization. The four founder members donated the seed capital needed to establish SACCCOM, but, in the long run, the organization needs to be self-funding: we need to be involved in fundraising within the industry and will solicit development funds from government,” says Mfayela.
He notes that SACCCOM’s role is also to investigate alternatives, and inform the industry, not necessarily to prescribe. “We must also ensure that strategic programs, such as learnerships, are properly co-ordinated, in order to unlock value in the industry; to ensure that there is proper co-ordination, and that all processes and procedures of those statutory developmental programs are followed.”
The final, and perhaps most important, task with which Mfayela is charged is to provide the interface between the industry and the government with respect to lobbying on behalf of the industry. “For example, if we are looking at skills development, and we identify a management gap — because in SA we have never managed 4,000-seat call centres — by partnering with government we can initiate programs in order to bridge those gaps,” he says.
Bandwidth is key
Anton Newbury, of Kathea Communications, believes that bandwidth is key to the long term success of the local call centre industry. “If you look at the U.K., that market has been deregulated since the 1980s. The result is that users have more bandwidth, so applications can be far richer,” he notes.
Newbury says, by comparison, SA has been bandwidth-starved, primarily due to the high cost of telecommunications. He expects this situation to be addressed by the coming deregulation, but points out that the details are still too hazy at this stage to know exactly how much of an effect it will have.
“That is really the big opportunity that one is seeing with respect to call centres. So in terms of challenges: certainly, what is the regulatory environment? secondly, how much will our calls cost? by how much will they drop? and when? are the issues.”
Rasheed Hargey, managing executive of Tellumat Comms Group, notes that the biggest issue affecting the SA call centre industry at present is the cost of basic telecommunications services. “Deregulation will address that over time, but it is not going to happen with a big bang approach, because there is still the issue of international call costs.”
He also does not believe that VoIP will be the panacea that everybody is expecting it to be. “VoIP will bring prices down quite nicely, but bear in mind there are also issues of quality, and one has to ensure that when you establish a call centre you have the kind of quality that your customers would expect.”
Quality of service
He points out that quality of service (QoS) will still depend on Telkom SA Ltd. “VoIP technology does not care what data is being transmitted, so it is critical that voice packets receive the highest preference.” Mike Fairon, CTO, Customer Interactive Solutions — SA, a DiData company, also believes that technology can help, but that it is no elixir. “Very often success is governed by how you deploy an application technology, rather than the technology itself,” he says.
By way of example he cites Interactive Voice Response (IVR) technology. “What has typically happened is that IVR has been deployed as a technology; rather than as a channel … meaning that organizations have not looked at the user interface, or tested it properly,” says Fairon.
“From a technology point of view it appears to work well, connects to everything and it does what users want, but they have not spent the time, the money and the effort in designing how the customer interacts with that system,” he adds. “It is very important to send the right call to the right department or team or business unit.”
Fairon believes that technology is one of the pillars of the call centre industry. “It is certainly a pillar that has the ability to assist organizations in driving costs down and driving additional revenues.
“If you take IVR as an example, and we are going to make the assumption that the user interface has been designed properly, you have the ability to automate transactions, and you have the ability to provide a consistent level of service, so customers do not get varying levels of service, different answers and that kind of thing. So you provide a consistent interface for the customer and it can automate transactions for the call centre, as well as provide customers with a self-service capability. That can drive costs down.”
However, as much as technology can do, Alain Schram, MD: sub-Saharan Africa at Avaya Inc., believes it is merely an enabler, and that the key differentiator will always be the people. “Someone from CSC was telling us about a project that the company ran in Cape Town. It was capturing old insurance policies electronically, and calling clients in the US to clarify details.
“And (SA) was just so much more effective than India in this particular case … purely because the people in India do not understand life (assurance) or short-term insurance. It does not exist there for the man in the street. So they were not asking the questions because they were not seeing anything wrong.”
“It is very much a cultural thing, and SA is aligned a lot more with British and American culture. That makes us more approachable when customers phone in, because we understand a bit more of their world and we get things done faster, purely because we are connected by way of our culture, and understanding each other’s culture,” adds Schram.
Tim Wyatt Gunning, joint CEO of Storm, says feedback from foreigners indicates an acceptance that SA has a different value proposition. “The SA accent seems to be more palatable, particularly to the European market and the difference in time is negligible,” he says.
Philip Swanepoel, CRM solution manager at SAP SA, believes that Europe is a relatively untapped market for SA. “One of the things that has been very high on government’s agenda is to position SA as a hub … an international hub for call centres, and we have already seen a few companies like Lufthansa moving their global call centre capabilities to SA. Certainly, language is a big issue. Most SA citizens are multilingual, and they can speak English. If I speak to my counterparts in Spain, Italy, Germany, they are not that fluent in English,” he says.
“I would find it hard to believe that we could be cost-competitive with India, but our aptitude for service, coupled to language and accent, would present a distinct value proposition,” he adds.
Noel Wait, business development manager for Business Connexion’s Networks Competency, agrees: “When you go to India or Malaysia, first of all you have the language problem. Also in SA, we have very, very good linguistic skills. We have numerous people who are fluent in German, Dutch, French and Italian.
“We have just deployed a call centre in Cape Town that can handle 12 international languages, … English, French, Spanish, German, Greek, Italian and Dutch, among others.”
Hargey offers another example: “In Cape Town we have the global Lufthansa call centre. Obviously most of the people that work there speak German as a second language. So clearly, we can offer that kind of service … it does take time, but if we want to stay in the international space we have to be language-independent.”
Mfayela believes that there is huge potential to promote SA as a global call centre destination, and build on the good work done thus far by the DTI. “If you look at the past, SA has been more focused on marketing, international positioning and now with deregulation. With prices coming down, we are seeing a lot of interest in locating to SA,” he says.
However, he believes it is important to understand that SA is unlikely to build an industry the size of India’s. “We are not necessarily wanting to duplicate the Indian (market) as is. We want to duplicate its successes, but also appreciate the differences between SA and India.
“For SA to succeed we need to look at niche sectors like financial services, where SA has very specific expertise. If you look at India, they are more focused on IT and outbound markets … they are good at that, and, as much as we can get some of that business, I do not believe that we can be as good as them,” adds Mfayela.
He believes SA is very good at business-to-business services, while India is very good at business-to-consumer services. “We are not saying that we are not going to chase the business that India is good at, but what we are saying is that we are going to focus our marketing on what we are good at.
“That will also help us, because at the moment we are still more expensive than India, but if we are niche, and specialist within our sector, people will be willing to pay a premium for that service,” he adds.
SACCCOM is in the process of putting the finishing touches to its business plan, which Mfayela expects will be available on the organization’s Web site around the end of this month. He notes that the business plan has been compiled on the basis of research from McKinsey globally and Paladin locally.
“What those two studies have done is basically given us a clear picture of where SA is, where the global market is, and where the opportunities lie. We have taken it a step further, and identified the obstacles and challenges facing us if we want to capitalize on these opportunities,” he says.
“We have come up with eight key challenges, and our business plan is based on addressing those key challenges,” he adds.
That SACCCOM is putting together a business plan is perhaps a step in the right direction, but, without seeing the final document it will be difficult for anyone to pass comment on it. Newbury believes the prognosis is good: “For the call centre market to double over the next four years is very easy,” he says.
“SA is a great call centre destination, you have infrastructure reliability: there is not going to be a problem with your electricity or your telco going down; and there is a high correlation between European empathy and SA attitudes. However, your call costs are a material component,” he cautions. “I would be looking at 15-20 percent year-on-year growth, and that will really lead to a doubling in four years.”
Schram concedes that this would still leave SA some way short of the DTI’s target of 100,000 seats in five years, but doubts that the minister will have a problem with it. “If you look at the DTI, they want to create jobs. If you are looking at creating say, 25,000 jobs in the next four years, each job feeds eight people. So I think that is great … you are looking at feeding 200,000 people.”
Hargey believes that this is only the beginning: “I think we are still at the tip of the iceberg in terms of the potential size for the business, specifically in terms of the outsourcing market place. If you look at the amount of business that India, for argument’s sake, has got in the call centre business … we have a fraction of that, and, clearly, there is still huge potential for the call centre industry here in terms of the outsourcing business on an international scale.
“I do not believe that the international market is limited … the domestic market may be, but clearly there are huge opportunities for SA as a nation to actually embrace call centres as a potential job creator,” he adds.
Understand the competition
Hargey argues that, in order to succeed in the global call centre market, SA and SACCCOM must have a clear understanding of the strengths and weaknesses of the competition — something that Mfayela appears to have grasped. “The first thing obviously is that we have a fairly educated workforce; we speak English here, which is important to the countries that tend to outsource call centres, U.S., U.K., Canada, etc.”
It is important to understand the difference in scale currently between SA and its competitors in the call centre market place. A typical call centre in India can have as many as 20,000 seats, whereas locally, we are more accustomed to between 100 and 200 seats.
“The issue is we have not had any huge companies coming into SA yet, we have a couple of companies like Dialogue from the U.K., which is now based in Cape Town. It believes that it will expand its call centre substantially in the next two years, taking on another 1,000 people this year,” adds Hargey.
“That is all that there will be until such time as we have some of the big companies … say, British Airways as an example, outsourcing some of their call centre traffic down here. That is the kind of company size that we actually need to meet those targets … I believe that it is possible … it is a challenge, it is not going to be easy.”
Fairon mentioned a secret local project involving 30,000 call centre seats, but could not give away too much due to confidentiality agreements. “This (project) shows that we can do it, and that there is a big opportunity for SA. We have to make sure that, as a country, we position our value proposition into the market correctly,” he notes.