Issues and Opportunities in Contact Centre Outsourcing - 7 October 2007

The South African government’s recently announced plan to support the local call centre and business process outsourcing market augurs well for the industry, but the proof of the pudding will be in the eating.

So says Jean Arnall, Key Accounts Manager at ATIO. There should be more visible tax breaks for companies investing in the South African contact centre industry and while the proposals that have been put forward look good, they will require significant work to manage the output and delivery against the criteria.

She says one of the trends in hosted call centres and PBXs is that the South African market is nibbling at the hosting model where this makes economical sense but there is still a tendency for wanting to control things internally. For smaller companies the hosted model reduces the capital expenditure requirements but the larger companies still tend to purchase technology and manage the environment in-house.

The pros of an in-house contact centre are that knowledge is retained within the organisation and companies have control of the end-to-end customer relationship process, says Arnall. The cons of an in-house contact centre are risk and scarcity of appropriate contact centre skills, retention and career path for contact centre skills, limited economies of scale, need to employ consultants to ensure best practice and it could be more expensive than outsourcing in the long term.

Outsourced contact centre can introduce economies of scale, access to best practice and make the skills acquirement and retention someone else’s problem, she says. The key determining factor is setting up the right kind of relationship, service level agreements and vendor management function so that the outsource relationship is smooth and beneficial to both parties.

Arnall says while there has been some success in attracting offshore contact centre business, these have been more outbound services than inbound service functions. South Africa is not seen as cost competitive as India and is still very immature in the whole BPO space. India has a more all-round approach to outsourcing encompassing the contact centre as well as the back office processing (the true end-to-end BPO model) than South Africa does right now. Where South Africa has been successful is where companies such as Dialogue and Dimension Data that have international connections and these have resulted in these services being outsourced to South Africa. Overall however we still have a significant amount of maturing to do as this is still in its infancy stages in South Africa, she says.

The telecommunications and bandwidth issues in this market are the thorn between the roses. Telkom, the largest provider of broadband in South Africa, is still too slow and bureaucratic to be effective and the costs of telecommunications in this country have a material impact on the cost effectiveness of offshoring and outsourcing, she says. It is all very well for Telkom to say “give us volumes and we’ll give you discounts”, but they a more open approach and the publishing of clear volume breaks to allow companies to make decisions appropriately would be more beneficial.

South Africa ’s greatest weakness right now is probably the lack of depth in contact centre management and analytical skills. We have grown skills from contact centre agents to team leaders and up to supervisor level. However we have very few really mature contact centre managers in this country. Arnall concludes that in many contact centres, the management skill level is fairly immature and seen as lacking when compared to the same skills available overseas, whether in the US, UK and places like India, Philippines and even Egypt.