The outsourced contact center industry in South Africa is experiencing the growth, but the government in that country still has reasons to worry as this may not reach the government’s targets. According to a study carried out by Frost & Sullivan (News - Alert), the total number of outsourced seats will reach about 60,000 in the next five to seven years, but the government has a goal of 100,000 by 2009.

 

As a target for job creation and drawing in foreign investments, the past few years have witnessed considerable growth in the business process outsourcing (BPO) sector. There has been a significant surge in the number of call centers as they have grown from 450 call centers in 2004 to over 1,300 in 2007. At the moment, the number of outsourced seats in South Africa is estimated to be between 24,000 and 25,000.

 

But according to Frost, South African government needs to re-evaluate its value propositions in order to maintain strong growth rates. Even though the government is supportive to the BPO sector as a whole, many feel that this support does not match with the efficiency shown by these centers. Most of the times the investors are frustrated into setting up operations elsewhere as government support is regarded by some industry organizations as slow and bureaucratic.

 

The cost is also a factor. While many companies think that the cost of setting up the business in South Africa is on the higher side, the cost of labor is also shooting up, says Frost. It believes there are two critical factors that South Africa must address to maintain its growth rates in the contact centre industry. To start with, the country must invest in skills training to contain the attrition rate. Then, stakeholders must address a belief in the market that South African telecoms costs are amongst the highest in the world.

 

“The planned growth in the industry is unlikely to be realized under the current circumstances,” says Frost & Sullivan research analyst Spiwe Chireka. “This is due to a number of factors, particularly that South Africa’s value propositions are not all relevant. The country is relying increasingly on factors such as good language capabilities, favorable time zones, its advanced financial services sector and strong government support which investors are not necessarily looking for anymore.”