The number of call centres in SA will double and the number of agent positions (APs) will quadruple by 2008, says UK market analyst group Datamonitor.
Datamonitor has released a report titled "South Africa: An emerging offshore location", which also says the South African market slots between the "nearshore" destinations of Canada, Mexico and Eastern Europe to the UK and other European countries, and the traditional "offshore" destinations such as the Philippines and India.
Datamonitor says South African labour costs run at two-thirds the cost of their US or UK equivalents, but it offers cultural affinity to the US and UK domestic markets compared to those in India and the Philippines.
The group expects there will be 939 call centres in SA by 2008, almost double the current number of 494, which represents a compound annual growth rate of 14% over the period.
The total number of APs in SA, meanwhile, is predicted to rise to 69 600 within four years. Of these, 6 200 will be offshore-outsourced APs.
According to Datamonitor, SA offers outsource providers a higher quality, more culturally-aligned front- and back-office location where labour costs run at two-thirds of their US or UK equivalents.
Datamonitor says 70% of South African offshore customer service agents service clients in the UK market. Most of these APs are located in Gauteng, more specifically in Johannesburg. However, the group expects the balance will shift in favour of Cape Town.
Western Cape premier Ebrahim Rasool has been a strong supporter of the development of an offshore call centre industry in the province, which employs around 11 000 people within the offshore sector.
"While SA is not as much of a labour arbitrage cost play when compared to India and the Philippines, it offers multilingual and non-English language agents that are better able to deliver more differentiated customer service based on greater empathy and closer cultural affinity to customers in key target markets such as the US and western European countries like the UK, Holland, Germany and France," says Ryan Powell, Datamonitor call centre analyst and author of the study.
The Dutch market is expected to be the biggest non-English language market that is served from SA. Firstly, says Datamonitor, the Dutch language is the root of Afrikaans, which means that cross-training call centre agents to speak Dutch should not be problematic. Secondly, the domestic Dutch call centre market is mature, reaching saturation point and delivers little margin for outsource providers there.
SA is the only offshore market that can support the Dutch market on a big enough scale, the Datamonitor report says.
South African call centres will be able to provide higher quality customer service and sales services, with a particular focus on the financial services industry.
"The established call centre industry means middle managers already exist. Top-up training will bring those people up to suitable levels whereby they can best meet their offshore clients` requirements. State-funded learnerships are helping to fill the staffing pipeline to the industry for the longer-term needs," says Powell.
Datamonitor says the promised deregulation of the telecoms market will bring about greater price competition and herald the long-awaited arrival of cheap voice over Internet Protocol traffic, stimulating further demand for offshore operations in SA.
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