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Contact centre incentive hits sweet spot

Paul Vecchiatto
By Paul Vecchiatto, ITWeb Cape Town correspondent
Johannesburg, 03 Dec 2010

Business process outsourcing incentives offering a tax-free grant of R112 000 per new job created, have hit the “sweet spot” for attracting overseas investment into the call centre sector, says Gareth Pritchard, CEO of BPeSA Western Cape.

The grant is part of the recently announced series of incentives by the Department of Trade and Industry as part of its contribution to government's overall plan to create five million jobs within five years. It is also an effective doubling of the grant that had been in place for a number of years.

Pritchard, who has now been made permanent in his current position, says the incentives effectively mean a lowering of investment costs by about 20%.

“The plan is that this incentive will be phased out over a five-year period. What it effectively does is eliminate the telecommunications costs, which are expected to fall during that time as the undersea cables are built or brought into commission on either side of the continent,” he says.

Contact centres have been a prime source of job creation in the Western Cape. According to BPeSA, there are now about 35 000 full-time contact centre agent positions in the province. On top of this are the management and other support jobs needed to support the agents, and Pritchard estimates that this could be calculated on a rough ratio of at least one manager for every 10 to 15 agents.

Pritchard has just returned from a trip to the UK with the DTI, with the aim of promoting the South African contact centre sector.

“The DTI incentives really did hit the sweet spot with the UK companies. Interestingly, crime was not seen as an issue and neither was the rand exchange rate, and most of the companies realise that telecommunications costs are heading in the right direction. Telecommunications costs used to be number one on their list of concerns - it no longer is,” he says.

The Western Cape contact centre industry took a heavy blow to its image earlier this year with the sudden departure of US group Teletech, barely a year after it had been launched. Furthermore, disappointing results from another flagship company, The Dialogue Group, also dented the image.

However, Pritchard believes these issues have been largely overcome.

“There are at least six large offshore contact centres and between 30 and 50 smaller ones, depending on how they are defined,” he says.

BPeSA Western Cape, previously called Calling The Cape, is part of a national organisation that is marketing the sector overseas.

“It is important that we present a national front when dealing with foreign investors,” Pritchard says.

He says discussions about the role of the Western Cape's new Economic Development Agency, which will consolidate a number of organisations promoting business and investment in the province, was still ongoing.