TeleTech overcomes BEE concerns

By Christelle du Toit, ITWeb senior journalist

Johannesburg, 30 Nov 2007

US call centre operator TeleTech says it has overcome fears about the country`s prevailing broad-based black economic empowerment (BEE) policies and, despite "ridiculously" high telecommunication costs, it is investing "hundreds-of-millions" in expanding its footprint in SA.

TeleTech SA GM Craig Reines says the international market is very concerned with government`s BEE policies and the impact they could have on big multinationals.

"It is one of the concerns that came up when I was selling the idea [of investing in SA] to the board," says Reines.

Recently, major international players like SAP and HP have expressed unhappiness by BEE targets set by the likes of Telkom and other state-aligned institutions, which are setting their own BEE targets. SAP called for a "level playing field" in this regard, and is currently in talks with government about creating such an environment.

Additionally, the ICT sector`s BEE charter has still not been gazetted, seven months after being aligned with the Department of Trade and Industry`s (DTI) codes of practice, and it is unclear where the hold-up is.

"We [TeleTech], at least, are not required to sell equity and can maintain a wholly-owned environment, as 100% of our revenue is offshore," says Reines. "Also, our strategy is such that the people we want to hire are generally unemployed previously-disadvantaged individuals, so we fair very well on the scorecard in that regard."

More worries

Apart from the market having BEE jitters, Reines says the cost of communication in SA definitely has a negative impact on foreign investment in the country.

"Telecommunications costs were definitely a deterrent for [TeleTech] investing in SA - and still are," says Reines. "It`s ridiculous and it`s just not logical why it is so much more expensive in SA - there is no rationality behind it."

Reines says TeleTech has, however, been "working closely" with the DTI and the Department of Communications and has given direct feedback to Telkom on its concerns.

"There is a lot of pressure on Telkom and government to fix the situation - it can do a lot of economic damage if businesses can`t deliver due to telecommunications costs."

Good reasons

The availability of cheap labour is one of the reasons TeleTech found the SA market attractive to invest in, says Reines.

"International analysis shows that skilled labour in SA is as expensive as in Canada," he explains. "We, therefore, took the plunge in a market that is marked by divisions and where there are plenty of people who have the basic skills that we can train up. All we require is that they have good communication skills."

The second driving factor in the decision to enter the SA market was the Government Assistance and Support Programme (GAS), says Reines.

"If you can see through obstacles like Telkom, the capex incentive is enough of a buffer to compensate for other issues."

Under the programme, TeleTech was awarded support grants of between R37 000 to R60 000 per call centre seat it creates in the country. Reines was, however, not wiling to disclose the exact value of the company`s grants, saying it was confidential.

GAS is especially supportive of call centres that are set up in rural areas and Reines says this is one of the reasons the company is strongly considering building its future call centres in areas such as Limpopo, the Eastern Cape, and KwaZulu-Natal.

TeleTech plans to create 500 to 3 500 call centre seats in the country over the next five years. The company started construction on its first call centre in Africa, in Cape Town this week, which is expected to employ 2 500 people.