India’s
supremacy as the number one choice for UK companies locating
contact center and business process operations in lower cost
offshore locations is about to be challenged. New research,
commissioned by investment agency Calling the Cape, and
undertaken by Deloitte, concludes that Cape Town, South Africa
presents a highly competitive option, with high service
quality, a stable workforce, a robust skills base and a
business culture that’s closely aligned to the UK’s.
First time call resolution - a standard contact center quality
measure based on the number of customer queries resolved on
first point of contact - stands at 89% in Cape Town’s contact
centers, compared with only 65.9% in India’s, while staff
attrition, recently reported to be 24.3% and rising in India,
is stable in Cape Town at 10.7%.
Cape Town’s development as an offshore location has benefited
from the existence of a well established domestic contact
center and business process outsourcing (BPO) industry, which
has developed largely to support the city’s significant
financial services sector (Cape Town is a major financial
services hub for South Africa, one of the world’s top 25
economies). As well as providing a solid base of skills and
expertise, this makes Cape Town especially attractive to the
UK’s financial services companies, who have been early
adopters of the offshore business model.
“The large
number of experienced agents, managers and other service
personnel is a major benefit for UK companies looking to
locate operations in Cape Town,” says Ebrahim Rasool, Premier
of the Western Cape. “An active domestic industry – largely
absent in India – has created a body of experience and product
knowledge that would be expensive to replicate. In financial
services the similarities in terms of regulatory framework and
product type, make it easy to recruit staff with highly
relevant experience, leading to improved quality and the high
levels of consumer empathy that contribute to high levels of
customer acceptance and satisfaction.”
The Cape Town contact center and BPO industry is showing
significant growth. In the past year the number of agents
employed have risen by 25% to 11,000. Growth expectations for
the next two years average 40% but are highest, at 141%, in
the outsourced sector, where the influx of international
business is likely to be greatest. Outsourcers now represent
30% of Cape Town’s contact center and BPO operations (up from
19% one year ago). Outsourcers are already generating 55% of
their revenues from international clients and expect to see
that share grow.
“The combination of local and international, in-house and
outsourced operations lends the industry in Cape Town a very
different character to other international offshore
industries, such as India,” says Chris Gentle, Director of
Research, Deloitte. “The presence of a local industry in
South Africa gives a base of skills and expertise in
management and service providers uncommon among offshore
destinations”
Western
companies already operating in Cape Town report high standards
of satisfaction. From a list of 37 factors that might
influence a choice of investment location, 35% are judged to
be growth enablers and 41% growth neutral. The area’s strong
skills base, standards of education, industry sophistication,
technology infrastructure, geopolitical stability and quality
of life are seen as the most positive contributory factors.
The labor market in particular has proved to be both
growth-enabling and stable. Though agent starting salaries
are higher than India (£4,355 vs £1,902) they remain a third
of those in the UK, (£12,945), while attrition is
significantly lower. With high unemployment rates among
graduates and matriculants (equivalent to the UK’s A level
achievers) there is no shortage of staff. It is estimated
that the industry could grow by 10,000 seats per year without
straining available skills resources. The industry and
Government are working in tandem to grow and develop the
skills pool through subsidized training and work placements.
Wage inflation has been at zero for the past year, despite a
30% growth in the agent population.
Property costs are low in Cape Town, £7 per square meter as
opposed to £25 in Delhi and £65 in London. International
telephony costs, which have traditionally been high, are
lowering, with the partly privatized operator, Telkom,
offering special packages for contact center operators.
Further decreases are expected when the second international
operator enters the fixed-line voice market during the next
year.
The
sophistication of Cape Town’s skills base is further
demonstrated by the complexity of work undertaken. Outbound
calls, for sales, service, data collection and data cleansing,
account for 42% of the total, of these, 41% are international
in nature. “The trend in other offshore locations has been
for companies to offshore back office work first, then inbound
work and, last of all outbound, says Luke Mills, Executive
Director, Calling the Cape. “Cape Town is clearly following a
different model. The fact that international companies have
trusted Cape Town with outbound work speaks volumes about the
high quality of agents in the market and, in particular, the
degree of empathy that can be established between agent and
international consumer.”
