Ten years after its first democratic elections, South Africa is rapidly emerging as a key location for organisations considering an offshore route to business process outsourcing (BPO) and contact centres, and international companies are increasingly choosing Cape Town as an offshore base.

According to research commissioned by Calling the Cape (a non-profit agency dedicated to the development of the contact centre and BPO industry in Cape Town) and undertaken by Deloitte, the city of Cape Town has a stable workforce, robust skills base and a business culture that is closely aligned to the UK’s. The research, published in September, reveals that first-time call resolution – a standard contact centre quality measure based on the number of customer queries resolved on first point of contact – stands at 89% in Cape Town’s contact centres, compared with 65.9% in India’s, while staff attrition is stable at 10.7%, compared with 24.3% in India (according to research by ContactBabel in 2003).

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Growth industries

The Deloitte research shows that the Cape Town contact centre and BPO industry is growing significantly. In the past year, the number of agents employed has risen by 25% to 11,000.

According to the researchers: “Though agent salaries are higher than in India (Ł4355 [$7850] versus Ł1902), they remain a third of those in the UK (Ł12,945). With high unemployment rates among graduates and matriculants (equivalent to the UK’s A-level achievers), there is no shortage of staff. Wage inflation has been at zero for the past year, despite a 25% growth in the agent population.”

Ebrahim Rasool, premier of the Western Cape, says: “Wages for entry- level positions [in contact centres] are competitive with other industries. When we are speaking about the flat-lining of salaries, there is a general accordance in South Africa that salary increases are inflation-related. And our drive down of inflation means that the average increases are fairly low.”

Career incentives

Along with competitive salaries, the work ethic seems to be good. “We have incentivised the whole industry,” says Lynne Brown, minister of finance, economic development and tourism for the Western Cape. “What is important is that contact centres are not seen as a transition industry but as a career for young people. They can improve their lives – and that accounts for our stable workforce and the low attrition rate.”

Luke Mills, executive director of Calling the Cape, agrees. “We think we can grow by 10,000 seats a year without reaching any kind of capacity constraints in terms of people, connectivity, infrastructure or managing capabilities,” he says.

“Employees know they are getting in very early to what is a fast-growing industry and this is something we emphasise.”

Top-down support

The national and provincial governments have put measures in place to support the development of contact and BPO centres in South Africa. In his 2003 state of the union speech, President Thabo Mbeki named the industries as areas for focused action to promote growth as part of the government’s micro-economic reform programme. And this September, communications minister Ivy Matsepe-Casaburri announced the liberalisation of the country’s telecommunications marketplace, which is regarded as an opportunity to fuel further growth in the sector.

Added to nationwide efforts, each provincial government offers its own set of initiatives to encourage organisations to locate in their region. In the Western Cape, these include a Small to Medium Enterprise Development Programme, which offers a cash rebate of up to 15% of total investment in qualifying assets, plus various training and education initiatives for skills development.

With training and quality of employees high on the agenda, South Africa seems to be making its mark on companies in financial services, retail, healthcare, IT, telecoms, media and insurance to name but a few.

This is a major advantage, according to Mr Rasool. “Call centre employees are not just friendly people, they are engaging people able to understand the complexities that are part of doing business, because insurance, banking and finance systems all feed off each other in the UK and South Africa,” he says.