Tension over govt's 'special 10' plan

Johannesburg, 16 Feb 2007

It's too little, too late, say industry players of government's planned cut-rate bandwidth for 10 call centres.

President Thabo Mbeki told the nation last week during his opening address at Parliament that Telkom would "apply a special low rate for international bandwidth to 10 development call centres each employing 1 000 persons".

This is part of government's plans to boost business process outsourcing as it gears up to grow the economy by 6% a year.

"These centres will be established in areas identified by government. The special rate will be directly comparable to those for the same service and capacity per month offered in any of the comparable countries," said Mbeki.

While industry has welcomed cheaper rates and the much-needed boost to the economy, some stakeholders have questioned the move's relevance and narrow focus.

Growth inhibitor

The Dialogue Group says the initiative will make the industry more competitive internationally, but called on government to extend it to the entire industry. CEO Jason Drew says this will give smaller operators the chance to build their businesses.

Mike van den Bergh, COO of Gateway Communications, says government should not only focus on "special cases". "If they can do it for 10 call centres, they can do it across the board."

Dimension Data subsidiary Merchants applauded Mbeki's acknowledgement of high telecommunications costs. Spokesperson Vanda Dickson says: "By default, the high rates act as an inhibitor to the growth of the international contact centre industry in SA." Merchants also hopes the incentive will boost much-needed skills.

Thembelani Tukwayo, who publishes Outsourcing2sa, a local database of contact centres vying for business, says while the move will aid job creation, it could have the unintended consequence of 'marginalising' smaller contact centres.

Status quo

Telecoms service provider Connection Telecom CEO Rob Lith says government's 'special' offering in the business process outsourcing and offshoring sector is nothing new. "Telkom has, for some time, had a special solutions offering for international call centre services, which uses VOIP capabilities to provide the communications infrastructure to support call centre outsourcing services."

Dickson says cost-cutting measures such as VOIP and least-cost routing must be taken into account, otherwise the "revised rates may not be as beneficial as is needed".

Lith says current rates are, in any case, far below general call rates. He fails to see how government's announcement will benefit call centre development.

Andre Wills, analyst and MD of Africa Analysis, says the move could be worthy of a Competition Commission investigation if the development centres are vying for national call centre contracts, as this would give them an unfair advantage. However, he does not see the move being anti-competitive when it comes to bidding for international contracts, as the volume of competition from across the globe will negate the price cuts.

Two contact centre associations - neither of which wanted to be named - have said they would like some clarity on the issue, while Telkom was not immediately available for comment.