US-based call centre group TeleTech has apparently pulled out of SA, leaving as many as 400 people in the lurch in the Western Cape business process outsourcing (BPO) sector.
The company, which is listed on the Nasdaq stock exchange, says on its Web site that it has operations in 16 countries, including Brazil, Canada, China, England, Germany, Malaysia, Mexico, New Zealand, Northern Ireland, Philippines, Spain, SA and the US. It has 40 000 staff members worldwide.
However, Fagri Semaar, interim CEO of Business Process enabling SA (BPeSA) Western Cape, tells ITWeb that the company has pulled out of its Cape Town operation, and sold the building. BPeSA is an umbrella body that seeks to promote BPO in SA.
TeleTech “made all sorts of promises to the Western Cape, but they never delivered”, says Semaar. TeleTech entered the local market in 2007 and said at the time that it intended creating 500 to 3 500 call centre seats in SA within five years. Its Cape Town centre was expected to employ 2 500 people.
The US company also benefited from the Department of Trade and Industry's incentive programme and was approved for support grants of between R37 000 and R60 000 for each of the initial 1 300 jobs it was expected to create.
Semaar adds that the company has closed two other call centres in the last year, one in Canada and one in the US, leading to an average job loss of 500 people at each centre. TeleTech's major client at each of these centres is German cellular operator T-Mobile, he notes.
No surprise
TeleTech's departure from SA is a “big blow in terms of job losses”, says Semaar. However, he adds, the lesson learnt from TeleTech's pull out is important for the industry as it needs to be more diligent in the types of customers the sector selects to support in investing in the province.
No investments have been lost as a result of TeleTech pulling out, and it has not affected any discussions that BPeSA is having with potential investors, says Semaar. “No one we are talking to is surprised or bothered. It is sad that we are losing jobs, but it is also a good sign that we are maturing.”
Semaar says TeleTech has not provided BPeSA with official reasons for pulling out of the country, and the company recently sold its building to a local business. He says between 320 and 400 jobs were lost when the company left, and TeleTech's departure is believed to be the second largest since AOL closed shop.
ITWeb has not been able to get comment from TeleTech, as several e-mails to the company's US-based media and investor relations department went unanswered. TeleTech claims to handle about 3.5 million customer interactions a day, in 16 countries and in 26 languages.
SA's BPO sector is seen as a key economic driver and has the potential to create thousands of jobs, especially for lower-skilled people. However, the industry, and the call centre segment, in particular, has come under strain recently, as a result of the recent global economic crisis, which led to the liquidation of Dialogue SA, and Blue Label closing three call centres.
According to the latest figures from Frost & Sullivan, the local BPO industry is worth $960 million, which is forecast to grow to $1.9 billion by 2015.
The industry also faces several challenges, including the lack of a suitably-qualified skills base, a need to cohesively market its value proposition to potential investors and high telecoms costs, although broadband prices are expected to come down substantially.
Global group
Last month, TeleTech released its second quarter results for the three months to June and reported revenue of $272 million. It said the pace of new business was accelerating and it had signed up deals worth $80 million during the quarter.
The company's results announcement made no mention of its South African operations. Ken Tuchman, chairman and CEO, said TeleTech “continued to invest heavily in our global sales efforts and completed key strategic alliances to extend our breadth of technology-based offerings and social customer management solutions”.
Revenue from TeleTech's offshore locations in the second quarter accounted for $114.4 million, or 42%, of total revenue.
During the first seven months of the year, TeleTech signed deals worth about $135 million in revenue from new and existing clients. Of this, $55 million was signed between January and April, and the balance was signed between May and July.
“TeleTech is encouraged by the increased pace of new business wins and is on track to sign a comparable amount of business in the next three months,” it said. The company anticipated that full-year revenue would be about $1.1 billion.
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