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Aegis pumps R500m into SA economy

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Outsourcing group Aegis is on track to invest a total of R500 million in the local business process outsourcing (BPO) sector in the next 18 months, which will result in the creation of 5 000 jobs.

The country's BPO sector is seen as a key economic driver and has the potential to create thousands of jobs, especially for lower-skilled people. However, the industry, and the call centre segment in particular, has been under strain recently, as a result of the global economic crisis.

Dialogue SA was put into liquidation in March, because it was running at a loss after spending dwindled on the outbound services it offered. Blue Label has also closed call centres and shed 300 jobs, because the economic crisis hit the financial services sector hard.

The industry also faces several challenges, including the lack of a suitably-qualified skills base, a need to cohesively market its value proposition to potential investors and high telecoms costs, although broadband prices are expected to come down substantially.

South Africa has a $960 million annual BPO industry, which is forecast to grow to $1.9 billion by 2015, according to the latest figures from Frost & Sullivan. Revenue was estimated at $885.2 million in 2007.

However, other countries are likely to outpace SA's growth rates. Kenya's BPO market is worth $23 million, and is expected to grow to $89 million in the same period, and Nigeria is at $8.3 million, which is anticipated to shoot up to $114 million, says Frost & Sullivan.

Bullish outlook

Despite SA's challenges, Aegis, which is part of the $15 billion Essar Group, is bullish on the industry's outlook. The company has already invested R200 million in the sector and plans to invest another R300 million in the next year-and-a-half.

Aegis provides outsourcing services for more than 135 clients and has more than 39 000 employees across 42 locations, with a presence in 10 countries. It serves industries such as telecoms, healthcare, travel, consumer goods and technology.

The investments are expected to lead to the creation of 5 000 jobs in the next three years. Aegis entered the local market last year when it bought the CCN group and has since created 500 jobs.

Aegis BPO Holdings SA senior VP Kobus van der Westhuizen says: “Despite a challenging economic environment, which has resulted in the sector reporting flat-lining, we have delivered growth. We are very bullish on the future and have received very good traction from new customers, particularly in the insurance and telecom space.”

He explains that the investments will be a mix of greenfields call centre developments and acquisitions.

Van der Westhuizen adds that Aegis purchases call centres from companies that do not see the centres as core to their business, and then rents the service back. This, he explains, allows Aegis to add additional services onto an existing call centre, which gives it economies of scale and allows it to run the centre more efficiently, and profitably.

Aegis' current focus is on inbound customer service and sales offering. Over the past calendar year, Van der Westhuizen says, Aegis has grown revenue 45% in the local market.

However, Aegis also has a “very aggressive African strategy” and will invest further into the continent in the future, says Van der Westhuizen. He explains that the company uses SA as a hub for resources and skills to export to its African operations.

Van der Westhuizen says, in order to expand its presence, Aegis needs to ensure it has the right skills set in place. “You have to be able to take unemployed people and turn them into call centre agents.”

Consequently, the company has set up the Aegis Global Academy, the higher education division of Aegis, which plans to introduce its Institute of Customer Experience Management in SA shortly.

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