According to Jed Hewson, Director of Hosted contact centre provider 1Stream, the costs of telecoms in South Africa is only a minor deterrent to international BPO investors.
The cost of telecoms in South Africa is still high, making up about 9% of the cost basket of call centres in the BPO space, but it is broader issues such as; the strong rand, high labour costs, shortage of skills, and ineffective government incentive programmes which are limiting foreign investment into South Africa.
By international standards South Africa has a quality telco infrastructure to service foreign markets. If you compare South Africa to the likes of India, they might be cheaper, but our telecoms sector is reliable and is backed up by a good power supplier.
Over the past two to three years, the cost of telecoms to key BPO destinations like the UK has almost halved. This combined with faster internet has enabled South Africa to provide an increasingly attractive offering to overseas investors. This change has been driven by the developments like the SEACOM cable in 2010 and with the imminent arrival of WACS (West Africa Cable System) in 2011; one can expect further improvements.
The real problem lies in the state of the local telecoms industry, where things have hardly improved, with internet speeds still very slow and telecoms costs far too high.
It is cheaper to call an Australian cell number than a local cell number, while setting up a direct 1mb connection from Cape Town to London, costs less than a connection from Cape Town to Joburg.
Despite the arrival of a number of alternate providers to Telkom over the past few years, not much has changed for local business. This combined with the issue of government not outsourcing public sector call centre operations, has meant the local BPO industry and SMMEs in particular have continued to suffer.
The majority of telecoms infrastructure in South Africa is still owned by Telkom which means we do not see the benefits of local loop unbundling which would allow the likes of Neotel, Internet Solutions, Vox Telecom and various other players to compete on a more level playing field.
Interim CEO of BPeSA Western Cape, Fagri Semaar believes that from a telecoms perspective South Africa is heading in the right direction, but that a lot still needs to be done particularly for the local BPO industry.
“It is our responsibility together with the private sector and government to continue to fight for a more competitive outsourcing market and thus help drive socio and economic development through the BPO industry.”
