SA contact centres: carving a niche

In the pound seat by Laura Franz-Kamissoko

THE LOCAL SUBSIDIARY of the UK-based BGL Group is going from strength to strength as a result of it catering to the higher-end English speaking international business process outsourcing (BPO) sector.

Fusion Outsourcing Services (Fusion SA) was established in Cape Town in late 2003, with 40 staff members at its pilot operation servicing some of the group's international financial services clients.

Due to its financial and operational success, by the end of 2006, the operation had grown to 180 staff, and by 2008 it made available a further 600 seats.

Now, based on its success, and in part thanks to a R28 million grant it recently received from the Department of Trade and Industry (DTI), and in part due to its decision to cater to the local BPO market, Fusion SA is planning on taking on a further 600 seats over the next 24 months.

Fusion SA MD Johann Kunz indicates that it is currently finalising its infrastructure, technology, telephony, and resources plan to this end.

"We will appoint staff as new outsource agreements are attained. However, the recruitment campaign will be dependent on the contract type, that is, back office processing or high-end financial contact centre services. "For most of our current agreements, we employ staff at the high-end of the experience and qualification requirement curve, as most of our clients are in the complex financial services industry," he explains.

Fusion SA currently services large volumes of contact centre, fulfilment and back office processing activities for a number of UK clients, such as Budget, Dial Direct, Quotemart, ibuyeco and Yes Insurance, says MD Johann Kunz.

"However, with Fusion SA moving into the local outsourcing arena, we foresee a 50:50 split between local and international business," he says. "Our agents are currently all based at our Fusion House premises in Century City, Cape Town, but on the back of our commercial venture, we do foresee expansion to the rest of South Africa," Kunz adds.

To date, the BGL Group has invested about R140 million in Fusion SA, its only presence in Africa, he says, noting that the group does not intend to expand into Africa at this stage.

Of the local call centre market, he observes that South Africa is a stable emerging market.

"The local market has made great progress, specifically in terms of the DTI programmes supporting the progress of this market.

"Secondly, the identification of the BPO industry as a key industry for economic growth and development by government and industry organisations and the establishment of BPeSA is starting to have a positive impact on the industry.

"However, more can be done to pull together all the broader role players in the industry to create a target niche strategy for the South African BPO Industry," he maintains, noting that if South Africa were to focus on a specific strategy and market sector, such as the higher-end English speaking financial sector, it would allow South Africa to carve out a niche for itself.

"We do not see South Africa competing with the high-volume sweatshop operations, but rather with the high-value niche operations," he insists.

"Much more needs to be done before we will be able to compete with developed markets. By creating a focused strategy and aligning our marketing efforts, Seta training programmes, etc. to this strategy, we will be able to make even more progress. The creation of retention grants and incentives, in addition to the establishment grants and incentives, will ensure that we retain BPO organisations in South Africa.

"The local BPO industry is doing its part to offer career opportunities. However, more still needs to be done to promote contact centres as viable career opportunities within the BPO industry by incorporating talent development entities such as the Services Sector Education & Training Authority, private sector training and even schools to create a uniform development approach," says Kunz.

THE COST OF BANDWIDTH is the biggest hurdle faced by the local business process outsourcing (BPO) sector, says Richard Britt, MD of the Dialogue Group.

"We still suffer from our legacy of a single pipe and expensive bandwidth solution. Until that perception changes we will never achieve our full potential," he maintains.

"This business is all about cost; pennies and pence matter a great deal when you are at scale. Any moves by government to help reduce our international operating cost will do more to open the industry than marketing and missions. Our telecoms and data is still quite expensive, but there is hope in the international sector with the new [Seacom] West Coast transoceanic fibre cable due to land in South Africa in June. This will further lower prices and expand bandwidth," elaborates Britt.

But he acknowledges that the Department of Trade and Industry has been helpful with incentive packages for the sector, noting that "we know they are committed to our success".

The Dialogue Group launched in SA in 2006. It currently has three sites, one in-sourced to a client in Durban, and two outsourced facilities in Johannesburg and Cape Town. The total seat capacity in the outsource facilities is near 1 100.

Currently, 64% of its revenue is accounted for by domestic business, but the Dialogue Group's plan is to move its business to reach 70% international, indicates Britt.

"We want to remain in the domestic market though, as it is healthy, successful and stable. "Focusing on the domestic market during this global economic slowdown will help us hedge our forex exposure to dollars, pounds and euros, as well as give us the opportunity to use our current domestic clients to expose Dialogue internationally," he adds.

"We still don't find the appetite to shed costs and increase technology as a generally accepted practice in South Africa. Most South African companies still want to have 'control' over their non-core business processes. Those who have taken this step, enjoy a greater level of control over their operations than if they were internal. Dialogue is in a position to demonstrate to companies proven case studies of the effectiveness and efficiency of outsourcing non-core processes as we've been successful with inbound and outbound campaigns," he insists.

Although he declines to name any of Dialogue's key clients for reasons of confidentiality, Britt reports that the company is in a "wonderful growth phase, having just launched with two well-known international brands in the last three months, as well as a huge campaign aimed at assisting with the 2009 national elections. And there are lots more in the pipeline," he promises.

"Our goal is to provide exceptional service to clients in a seamless fashion. We are extremely proud of the brands and provide an experience for, and also find we are partners to, many of them," he adds.

As for its investment in its own operations, as the company is in a closed period financially, Britt can't divulge the company's 2009 capex figure, but he does reveal that "the lion's share of this is in the technology arena. We are updating our technology to international standards to better serve our overseas and domestic clients," he comments.

Britt claims that the one thing the company isn't suffering is a skills shortage. "We run a Generation Y company: we know our staff have a limited time with us, very few of our agents and managers will retire from Dialogue. We are a milestone on our people's career paths, and it is our duty to be a significant and positive influence or motivation so that the time our talented people choose to spend here is as productive and fulfilling as they can make it. And we offer our staff very competitive packages, and the ability to develop their skills for the future," he explains.

Given the near economic recession, Britt predicts a heightened interest in the BPO sector, both internationally and domestically.

"We expect continued growth; recessions are generally good for this sector. BPO is a leading indicator for economic turnaround, and we are positioning ourselves to help companies lower costs and increase expertise over 2009," he says.

He also expects some large BPO players to enter the local market in the coming year, and some large local companies to begin to outsourcing more functions.

As for the regional threats to SA's status as a BPO destination, Britt suggests that Kenya, Zimbabwe and Nigeria should be our greatest concerns, due to a combination of population size and English language skills.

"There are quite a few issues to sort out in those geographies, but we believe a time will come when companies will be looking for trans-African strategies, not just a South African solution," he explains.

THE ECONOMIC DOWNTURN has had the effect of companies postponing investment decisions, even those that pertain to contact centres, observes Paul Fick, CEO of Spescom DataFusion, the call-centre and CRM solution provider of tech group Spescom.

"For us, this recessionary thinking poses some challenges, as we have to demonstrate the value of our product to customers more than ever before, be it in terms of cutting costs, increasing revenue or mitigating risk.

"It's become a situation where we have to get even closer to our customers so we can understand their service models, and, in turn, help them get closer to their customers," he elaborates.

Contact centres are a burgeoning industry in SA due to low resource costs and overheads, with the anticipated drop in bandwidth costs within the next 18 to 24 months expected to further boost cost efficiencies.

"We have also seen a rise in the adoption of call centre services by local companies, especially in financial services and the retail sector where debt collection is an important focus. And so Spescom DataFusion is helping its customers to improve their debt collection process through the use of various value-added call centre and CRM tools, such as self service, multimedia handling and routing, and outbound dialler solutions.

Spescom DataFusion's call centre and CRM solutions are supplied largely, but not exclusively by technology partner Avaya.

"Although we're an Avaya shop, we've placed a strong focus on value-add on top of the basic platform, tailoring the platform to the needs of each of our customers," explains Fick.

Workforce optimisation, through the use of quality management, workforce management and CRM integration tools are also proving popular with its customers in these tough economic times, he notes. And, while Spescom DataFusion has traditionally been a contact centre technology provider, be they in-house or outsourced, Fick indicates that it is increasingly being drawn into hosted solutions and managed services.

THERE'S A SUDDEN groundswell in the building of hosted contact centre platforms in SA at the moment, says Jed Hewson, director of 1Stream.

Dimension Data (DiData) and Telkom have just released their offerings, and Neotel and Vodacom are busy developing their platforms, he says.

Hewson's company, which also offers a managed contact centre service, was launched little over year ago. Formed by Hewson and his partner, Bruce von Maltitz, both ex-DiData guys themselves, they've partnered with DiData for the provision of their entire IT infrastructure.

1Stream's infrastructure is housed in the Internet Solutions (IS) data centre and connected directly to IS's data and voice backbone.

And, 1Stream has teamed up with Interactive Intelligence as its technology partner. "Hosted contact centre technology allows a client to deploy their contact centre for a low subscription fee without having to buy expensive hardware or software and recruit IT personnel to implement and maintain it," he explains.

Moreover, hosted contact centre services give the financial director of a company predictability in terms of costs, which are fixed per seat per service and per month, and the IT director peace of mind of guaranteed 99.8% system availability.

What differentiates 1Stream from its more established competitors is its flexibility to tailor a solution to the exact requirements of a client.

"We're in negotiations with a number of possible clients," says Hewson of the young company's client portfolio.

He comments on the fact that the recent economic slump the world finds itself in has produced two drivers for hosted contact centre solutions in SA: companies need to ensure that their delivery is cheaper, and so they're taking their call centres offshore to destinations such as South Africa. Secondly, clients are no longer sure of their capex in the short to medium-term, so they're looking at hosted models for a semblance of surety.

INTELLECA, a leading provider of voice and contact centre solutions, has won two innovation awards with its client MultiChoice at the annual BPeSA (Business Process Enabling SA) Awards: the Gauteng and National Best Technical Innovation of the Year for 2008.

This is the second year in a row that Intelleca has won both these awards for innovation.

The companies won the awards in December for the work they did on a new customer interface, based on Genesys's Intelligent Customer Front Door concept. Part of Genesys's Dynamic Contact Centre suite, it employs a business rules engine to shift call answering away from frustrating interactive voice response (IVR) menus and voice mail to an intelligent blend of self-service and live service.

The Genesys Intelligent Customer Front Door uses VoiceGenie IVR to build an intuitive, automated customer interface. Callers can use natural language speech recognition rather than their phone keys to guide them to the appropriate destination in the contact centre.

"Our solution has reduced by 73% the length of time taken from first contact to required destination," says Chris Cochrane, call automation and speech technology manager at Intelleca. "Callers are offered a keyword, and based on this utterance, they are channelled to the appropriate resource, whether it's automated or a live agent.

"This has reduced from 75 seconds to 20 seconds the average time taken for a caller to navigate through the auto assistance menu and reach the right person or service and satisfy their requirement."

Other benefits of the Intelleca implementation include a reduction in misrouted calls; increased caller self-service; and allowing MultiChoice to segment its subscriber base of 1,5 million people and route subscribers more appropriately, based on caller line identification, and ascertaining their previous history and profile.

"These awards represent the highest accolade and achievement for technology in our industry," says Michael Renzon, CEO of Intelleca, a division of the Bytes Technology.

PEOPLE OFTEN underestimate the investment required in an efficient contact centre. According to Intelleca director Peter Flanagan, the most important aspect is getting the most out of contact centre agents. "A contact centre has 70% of its costs in people only 7% in technology," he points out.

Flanagan says that this just is one of the reasons that a hosted contact centre model is the most efficient one.

"If you compare the costs of hosted solutions, they are cheaper by 30% to 40%," he says, adding that it offers the option of "try before you buy".

"Hosted solutions provide predictable costs. A business can easily see how much it costs per agent, per function, per month."

A hosted solution also avoids cost creep on equipment and provides a good system for change management. Flanagan points out that the hosted model has taken off overseas because of the cost benefits, as well as the risk reduction it offers.

"We are similarly expecting substantial growth in the hosted contact centre market, particularly with the costs of broadband coming down this year."