PowerPoint Presentation

The contribution of Call Centres to the GDP in South Africa

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www.callcentreweek-africa.co.zaTable of ContentsThe overall AnalysisGeographical CoverageRegional PieLocation of call centresThe governments roleFactors driving the growth of the industryConclusion

www.callcentreweek-africa.co.zaThe overall analysis

Over the last few decades, South Africa and particularly the Cape Town region has established itself as a successful Call centre and business process outsourcing destination. With a highly talented pool of productive labour and with Cape Town sharing cultural affinity with Britain, large overseas firms such as Lufthansa, Amazon.com, ASDA, The Car-phone warehouse, Delta airlines and many more have established inbound call centres within Cape Town as a means of utilizing Cape Town's low labour costs and talented labour force.

Organisations have traditionally viewed call centres as a means to cut costs and improve customer satisfaction. Some are looking to reduce this channels costs by moving more transactions to self-service options; others are aiming to make it a profit centre that drives sales growth; a number of banks are doing both.

Banks are tops when it comes to their call centres, at least according to a study from Genesys Labs (San Francisco), a provider of contact centres solutions. Genesys polled call centres managers and technical support personnel at 82 financial services companies from around the world, including banks, credit unions, investment management funds and realty lending firms, for its Contact Centres Realities Study. The survey concluded that financial services are among the leading industries in terms of effective contact centre use. www.callcentreweek-africa.co.zaGeographical CoverageCall centre activity in South Africa is largely located in the major economic hubs of the country, with the countrys economic heartland of Gauteng and scenic Cape Town being the major foci of activity. A total of nearly 51% of firms were located in Gauteng province, the Western Cape is the second largest site, with 38% of firms, and another 8% are in Durban.

Respondents may be over-represented in the Western Cape. Mitial Research (2002), for instance, in a study of the South African industry conducted two years earlier found that, out of 410 call centres in their study, 63% were located in Gauteng, and only 15% in Cape Town, with another 8% in Durban. In a database of call centres in the country, of the 740 call centres with an identifiable location, 69% were in Gauteng, 23% in Cape Town and 5% were in Durban.

www.callcentreweek-africa.co.zaRegional PieMost call centres in South Africa serve the national market, while small percentages serve local (14%) or regional (5%) markets. These local or regional centres tend to be smaller firms with in-house call centres, serving clients in their immediate area. The call centre industry in South Africa, therefore, is a mature one, serving primarily the domestic market.Primary Market Served by Call Centre

International Market: 9%, Local 15%, Regional 5%, National 72%

Location of Call CentresGauteng 50%,Western Cape 38.1%, Durban 7.9%, Eastern Cape 1.6%, Other 1.6%

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Total turnover. The typical call centre reports a total turnover rate of 20% per year. This includes promotions, voluntary quits, retirements and dismissals.

However, there is great variation in turnover, ranging from a low of 4% in Austria to 40% in India. Median turnover is 15% in coordinated countries, 25% in liberal countries, and 23% in industrialising countries.

Staff Turnover

Costs of turnover. The costs of turnover are high. On average, replacing one agent equals 16% of the gross annual earnings of a call centre worker that is, the simple replacement costs of one worker equals about two months of a typical workers pay. If lost productivity is taken into account, replacing one worker equals between three and four months of a typical workers pay.www.callcentreweek-africa.co.za

The governments roleA government-backed BPO support programme, launched in 2007, was aimed at enhancing South Africa's competitiveness and included a budgeted R1.1-billion in investment incentive. Government Assistance and Support Programme (GAS) The plan focused on:

A broad-based marketing strategy. A government support programme which included an investment grant and training subsidies.A developmental pricing framework for telecommunications.Government incentives play an important role in attracting new business, says Jason Drew, CEO of call centre outsourcing firm Dialogue Group. The recognition by government that its a key sector is following on the best practice in India and Philippines. A close relationship with government levels the playing field.

www.callcentreweek-africa.co.zaThe governments roleThe governments Training and Skills Support Grant helps subsidise the cost of company specific skills training at a cost of up to R12,000 per agent, while the BPO Investment Support Grant which ranges between R37 000 to R60 000 per seat is offered to all investors that create projects serving offshore clients.

The incentives the government has launched are appropriate. The most appropriate being the training element, for two reasons, adds Drew. Firstly, training is one of the most expensive areas, and secondly, it leaves behind a skilled workforce.

It is incentives like these that the government hopes will help it meet its target of becoming a Tier 2 player and creating 100,000 direct and indirect jobs by the end of the programme. If this target is met the government estimates the BPO sector will be contributing around R8bn in GDP. Call centres will post 8.6% of GDP growth by 2016.

www.callcentreweek-africa.co.zaFactors driving the growth of the industryThe factors driving the international industry include the existence of a strong skills base in low-cost developing countries; access to a low-cost global communications and computing infrastructure;The cheaper labour force in South Africa means call centres can run about 40% cheaper than in Western European countries, providing a huge cost saving. Contact centres in South Africa are also delivering a higher quality service than those in

Western Europe, while Indian call centres undercut their South African counterparts on cost by as much as half, attrition in India remains extremely high. Turnover in India can be in excess of 100% however a back-office work in India tends to retain workers longer than this.

Traditionally, call centres do have a very high attrition rate. In South Africa, however, it is generally agreed that attrition is somewhere between 15% and 25%, a low average relative to the industry.

While there is turnover in South Africa, people view it as much more of a career. There is lots of career activity and growth in the industry. People can become managers or team leaders if they choose to.

www.callcentreweek-africa.co.zaFactors driving the growth of the industryFurthermore, South Africa and first world countries are culturally very similar. There is a pool of employees that can already identify with intricate details such as you would find in the UK, reducing the need for training.

Birgit Thumecke, managing director of global telesales at Lufthansa, says the German airline chose South Africa for its call centre due to the availability of German speakers, labour, an educated workforce, good service attitude, affinity to European culture and time zone. I would mention cost as the last in the list. I dont find the costs are extremely attractive. Costs are increasing here; prices seem to go up 10% a year automatically. South Africa needs to be careful it doesnt price itself out of the market,

Thumecke cautions one of the big cost issues has been the monopoly Telkom held over the fixed-line telecoms industry, which critics say has already had a hugely negative effect on the industry, with the country missing out on many significant opportunities.Telkom has dropped its rates now. They are now on a par with international standards, but its too little too late. Weve missed some very big opportunities over the last few years, adds Rod Jones.

www.callcentreweek-africa.co.zaWe are a diverse nation and able to support most of the European languages.We have call centre agents with the skills, knowledge and competencies to support any call centre requirement.We have specialist support people with the ability to support any technology in any call centre environment.

Conclusion

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