Please sir, may we have some more?

Right now, the phones are ringing off the hook in the South African contact centre industry. Some estimates suggest the market has doubled in the past two years, and depending on whose figures you believe, the industry employs anything between 65 000 and 80 000 people, either directly or indirectly.

Research published in November 2004 by independent analyst Datamonitor predicts South African call centre numbers will double by 2008. That means there could be more than 939 call centres in SA by 2008, almost double the number of 494 in 2003, a compound annual growth rate of 14% over this period.

This is in partly due to SA's efforts to market itself internationally as a contact centre destination. Indeed, the deals are coming but many believe the industry could be far stronger if government and telecommunications providers came to the party. Greater incentives, better training support and cheaper bandwidth were just three of the common themes to come up at a recent round table discussion on contact centres at ITWeb's Rivonia offices.

"SA is nowhere near achieving its potential. In fact, any successes in this area are a matter of debate," says Paul Fick, MD of Spescom DataFusion. "If we are to stop bleeding business to India and other third-tier destinations, we need to see more government incentives put in place and the cost of bandwidth must come down."

The clear feeling emerging from industry is that it is a little jaded with government. President Thabo Mbeki has identified the sector as a key growth point, the Department of Trade and Industry makes all the right noises, and umbrella body SACCCOM (the South African Contact Centre Community) has been established, ostensibly to co-ordinate marketing efforts and establish a common vision and agenda going forward. While this is a step in the right direction, real action is still a little thin on the ground, it seems.

Atio's Dawn Wood says that for all the initiatives established to support and encourage SA's call centre industry and to market the country abroad, little else has noticeably been done by government to progress the country's standing to a tier-one destination and the destination of choice.

"We've been paying our school fees for three years now, but not seeing much movement," says Roz Broome, MD of e-Centric. "The country should have had a marketing plan three years ago when interest in the industry was at its peak. I can't help feeling that we've lost the opportunity."

In other words, it is not enough to have the will alone. "We now need to see the rubber hit the road," says Vanda Dickson, marketing specialist at Dimension Data subsidiary Merchants. "I think we are going to battle to establish ourselves as a tier-one destination. There is a rush on the domestic market that is growing in any event. I just don't know how we are going to deliver on the promise of this industry being a panacea to all our problems."

The bottom line is that marketing and incentives work - but they don't guarantee service delivery, says Keith Mould, who works in business development at T-Systems SA. "We need to address the symptoms, and the root of the problem is the high cost base of telecoms. Factors such as added value and the quality of relationships add to SA's competitive edge. However, lower telecoms costs are essential to any future success."

Part of the problem is that the industry has a varying set of expectations from government. But should the industry be waiting for government to do the groundwork? The key, says Kobus van der Westhuizen, director of strategy at Call Centre Nucleus (CCN), is to divorce government development efforts from commercial models. In other words, it is up to individual contact centre players to first create business for themselves, and then to find a role in SA's skills development and business process outsourcing (BPO) programme.

The industry seems to be waking up to this fact, with a steady trickle of large international investors heading for these shores. In February 2006, UK telecommunications firm TalkTalk announced plans to spend R200 million setting up call centres in Cape Town and Johannesburg in the biggest foreign investment yet in the country's call centre industry.

According to regional investment agency Calling the Cape, which facilitated the TalkTalk deal, the body has facilitated call centre deals in the Western Cape worth R933 million since the beginning of 2004, with investments in 2005 up by 19% over 2004. Fully 79% of this investment originated from the UK, with companies from Canada, Germany, the Netherlands and the US also represented.

Durban's call centre operations are also flourishing, with the recent announcement that Brightview, a UK Internet service provider (ISP) with 250 000 customers, had relocated its call centre to Durban from India in a lb2 million (R23.5 million) deal with South African contact centre Bizworks.

"There is still a longer-term potential - and clear opportunities - for the local industry. SA is seen as an offshore destination, period. Now we have to start adding value around that," says CCN's Van der Westhuizen. "A lot of people come here and kick the tyres, but the perceived risk in outsourcing to SA is still high."

Read any brochure punting SA's attractiveness as a call centre destination and you'll be overwhelmed by the perceived flood of skills on offer. The country has a strong English-speaking population with a clear accent, we are told. Add to this a sound skills base, good standards of education and a strongly motivated service culture.

Scratch the surface, though, and it's clear that these attributes are in desperately short supply. Atio's Wood says there is no doubt that SA can offer an abundance of labour at costs comparable with India, but not at the same level of education. Add to this a poor customer service culture and SA is at a disadvantage.

"We have a very mature IT environment, but the biggest obstacle is skills," says Van der Westhuizen. "With a finite pool of trained skills, everybody ends up poaching from each other. This means costs go up and we end up cannibalising SA's value proposition. If we don't start training a new skills pool, we won't be able to scale."

Merchants' Dickson says the way to go is to build skills incentives and then to provide the kind of environment to keep those people in the industry. At the moment, she says, many trained contact centre agents are simply using the industry as a springboard into other sectors, like the service industry.

Here again, the finger appears to be pointed directly at government. It has created SETAs and companies have invested millions in learnerships, but realising the full rewards of providing this training is proving hard to come by. There are also numerous skills development initiatives being run by the four regional contact centre bodies in SA, but they appear unable to meet the growing need for skilled operators who can meet international standards for service and efficiency.

With a finite pool of trained skills, everybody ends up poaching from each other. This means costs go up, and we end up cannibalising SA's value proposition.

Kobus van der Westhuizen, director of strategy, CCN

Almost inevitably, any conversation around contact centres must turn to the cost of telecommunications, which is universally identified as one of the major stumbling blocks in the way of the industry. Simply put, Telkom's exorbitant costs are choking it.

"Telecoms costs make up 40% of contact centre operations," says e-Centric's Broome. "The problem is that there is no recourse if the major operator lets you down. We have had to become used to working with Telkom's non-existent business approach."

Horror stories abound of contact centre operators signing agreements with Telkom months in advance of going live in new facilities - only to find that on the day they are supposed to start installing, Telkom shrugs its shoulders. It is no isolated incident, either, if the anecdotes are anything to go by.

For all the anger and frustration though, very few people are prepared to go on the record with their gripes. Jacques du Toit, director of Orion Telecom, is less inclined to pull his punches. He says SA's telecoms sector continues to be stymied by "punitive and superfluous" regulatory structures that are gravely impeding the development of the call centre industry.

"There's no doubt that we need to restructure the telecoms regulatory environment if we want to compete with the likes of India, Mexico and the Philippines," says Du Toit.

T-Systems' Mould gives a sobering perspective: SA's telecoms costs are up to 20 times higher than other major contact centre destinations, making deregulation at wholesale level critical.

The good news is that Neotel's entry to the market, and Telkom's pending loss of monopoly over the SAT3 cable, should bring prices down in the not-too-distant future, says Storm's voice business unit manager Kevin Jacobson. "We're also seeing new technology making life easier. As wireless replaces Diginet, and the quality of the service comes of age, costs are coming down."

So how does the contact centre industry turn SA into a tier-one destination by 2010, the year that millions of football-crazed tourists will descend on the country for the FIFA World Cup?

For a start, says Spescom DataFusion's Fick, a bit of high-level government involvement would not be remiss. That means providing meaningful tax and training incentives to local and international operators. It also means being a project sponsor for the industry: encouraging municipalities to outsource their debt collections, for example.

It should also be playing a stronger role in shaping a single value proposition for the country's contact centre industry - and step number two probably means determining what exactly the industry's value proposition is.

As T-Systems' Mould says, it's all about finding the country's niche capabilities. To many industry players, this means high-value, relationship-orientated call centre work, like ticketing and financial services. "We simply cannot compete effectively or sustainably against true low-cost destinations in a commoditised market for low-value, low-skill and low-language proficiency work," he says.

Step number three would be to provide genuine broadband and reduce telecommunication costs. Thankfully, this is already on the way, with Telkom's vice-like grip on the industry loosening steadily.

The fourth step is training. Quite simply, the industry needs more skills if it is to grow. Current skills development initiatives are visibly inadequate, and it is vital to formulate and implement appropriate training methodology to enable call centre agents to meet international service standards, says Atio's Wood.

Finally, contact centre operators should stop whinging about government not doing enough and wake up to the massive opportunities both locally and abroad. They should become familiar with the technology available to enable superior service levels and multi-media interaction capabilities; explore more specialised fields where they can offer a unique selling proposition; focus on adding more business value to their clients. Only then, perhaps, can this industry really fly.

Outsourcing your entire contact centre is a short-sighted business decision, says Keith Fenner, sales manager at Softline Accpac. "Most contact centres will not have a complete view of customers at any given time, which means they can't service customers properly."

Needless to say, contact centre operators are less than enamoured with these ideas. Luke Mills, executive director of Western Cape contact centre promotion agency CallingtheCape, retorts: "If 80% of such projects are destined to fail, then why are companies still doing it?"

Mills says the South African outsourcing market is not based on cost savings alone, but rather on the complete offering surrounding the service. While cost plays a big role, says director of strategy at Call Centre Nucleus (CCN) Kobus van der Westhuizen, companies that outsource are looking to their service providers to provide core functions, mitigate risks around labour legislation, offer access to skills and provide speed to market. "A proper outsourcing arrangement actually stimulates innovation within both companies," he says.

NetFlorist MD Ryan Bacher articulates the classic dilemma faced by many small and medium-sized businesses which use contact centres in their day-to-day business. These cannot always afford the technology, and managing the skills needed to stay ahead in the customer service industry can be taxing. "For an SME company, outsourcing is a completely different decision to the bigger companies. We find that our internal call centre plays a huge part in retention of our clients, but make no mistake: call centres can suck you in totally. So where the call centre is so central to your business, you either have to do it very well internally, or outsource," he says.

Welcome to the world of virtual call centres. It's the next big thing in the contact centre industry, says Intelleca MD Mike Renzon. In fact, US-based researcher Ventana says half of all call centres in the US intend to give their agents and top consultants the ability to work from home. "It is only a matter of time before this happens in SA," he says. "The technology is in place, and the drivers such as traffic chaos and the cost of headcount, are compelling management to consider alternatives. We are going to see a clear movement, especially to previously disadvantaged areas."

The first tentative moves in this direction are already upon us. The Total Call Centre Technology (TCT) Group is on the brink of opening the country's first township-based call centres, which will be linked to its main operation in Randburg.

Factors such as added value and the quality of relationships add to SA's competitive edge; however, lower telecoms costs are essential to any future success.

Keith Mould, business development manager, T-Systems SA

The idea, says TCT Group MD James Guthrie, is to create a national footprint of community-based and operated call centres. The first three call centres, which will be up and running within the next few months, will be situated in Soweto, Alexandra and Tembisa. They are aimed at servicing the needs of municipalities and other local government structures and will be staffed by fully trained young township residents aged between 20 and 25. Each centre will provide employment for 25 people.

Guthrie says it makes no difference where people sit. "By taking our operations to the people we employ, we are eliminating transport problems and costs for them, as well as travelling time. This will enable our staff to be more productive when they are at work, and to spend more time at home with their families."

Of course, an added benefit is that the establishment of township-based call centres is also a nifty corporate social investment initiative. "There is no better way to uplift previously disadvantaged communities and facilitate skills transfer than by taking employment directly to them," says Guthrie.