US BPO shift a boon for SA

By Christelle du Toit, ITWeb senior journalist

Johannesburg, 06 Feb 2008

SA could benefit from a move by US companies to take their call centre operations out of current business process outsourcing (BPO) hubs such as India.

This is according to Spiwe Chireka, Frost & Sullivan ICT analyst, and Diane Capazorio, director for strategic business solutions at Kelly.

They were reacting to a recent study by the CFI Group, which indicates US companies should reconsider off-shoring their call centre operations as their customers are more satisfied when they believe a call centre is based in the US.

This is largely based on cultural perceptions and factors such as US callers struggling to understand offshore call centre operators. Between 40% and 60% of all US call centres are based in India and account for 45% to 48% of India's BPO market.

Chireka and Capazorio say a trend away from Indian-based operations would constitute a shift from primarily cost-considerations when deciding on BPO locations. They believe this would be a shift towards quality-considerations and that SA could benefit significantly from it.

Quality vs cost

"SA's value proposition has never been one of cost - although it is cheaper than the US and the UK - but rather one of quality."

Capazorio explains that South Africans' generally understandable accents and ability to adapt culturally is part of the value proposition that could set it up perfectly to benefit from a new approach in the US BPO industry.

Chireka says the global BPO sector is estimated to be worth $930 billion (about R6.882 trillion) and is forecast to grow at a compound annual growth rate of 15%, to $1.43 trillion (about R10.582 trillion) by the end of 2009.

She agrees that SA has not managed to compete aggressively in the cost arena and, when it comes to contact centre BPO, has a stronger offering in terms of quality of service than its Asian counterparts.

"If SA markets itself strongly in the US market, we may see it becoming the next destination of choice for US companies."

Overcoming challenges

Both Chireka and Capazorio agree that such a transition will not be an easy or automatic one.

"SA will need to increase its focus on growing its skills base in the back-end sector of BPO if it is to compete aggressively in this sector," says Chireka.

The CFI report quotes gaps in knowledge as one of the reasons US callers do not enjoy interacting with foreign call centres and Capazorio says this points directly to skill levels.

"Skills are a global challenge at the moment," she says. "We have a lot of work to do in this regard, as well as when it comes to general business knowledge."