A call centre dream has come tumbling down as Dialogue SA is put into liquidation, six months short of the holding group's three-year listing anniversary.
Dialogue SA had been hard hit by the global economic crisis and had been running at a loss for some time. However, in September last year, Dialogue expected the unit to return to profitability this year.
Despite radical cost cutting measures, including staff retrenchments, this was not possible, and the call centre company, a division of the Dialogue group, has closed its doors.
Restructuring the unit cost the holding company R2.9 million for the financial year to December, which trimmed operating costs by R16 million. However, says Dialogue chairman Peter Watt, the company just could not get its costs down far enough, even though it had trimmed losses from R3 million a month to R1 million.
Watt says the company was a casualty of the financial crisis, which came on the heels of the National Credit Act. Dialogue was set up as an outbound call centre, but the Act limited the range of products it could sell, and the way in which it could sell the products.
This was followed, towards the end of 2008, by a global recession that shook local and global markets. As a result, Dialogue SA had been loss-making for about 18 months, Watt says.
Too many losses
Last year, more than 50 companies in the ICT sector filed for liquidation, more than double the 25 that were wound up the previous year, according to the Companies and Intellectual Property Registration Office.
Dialogue SA had an accumulated loss of R10.5 million at the end of June last year, and incurred a loss of R15.9 million between January and June last year. Watt says all the other business units in the company are profitable.
Dream team?
Chris Gilmour, an analyst with Absa Investments, points out that - at the time of the company's listing in September 2006 - call centres were set to be the way of the future. He says, at the time of its d'ebut, it was a “good news story”.
Dialogue itself said it had a bright future, claiming “strong future prospects” with a “healthy contract book”.
Dialogue was SA's largest privately owned independent call centre operator until it listed. Its opening price on the day was 140c, up 40c on its pre-listing placement price of R1 a share. This morning, its shares tumbled 11.76%, to 15c.
At the time, the company hoped to use the R35 million it raised before listing to take advantage of the $130 billion global outsourcing market.
Dialogue said on the day of listing that SA was becoming a preferred outsourcing destination due to quality of service, efficiency levels and competitive costs.
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