Johannesburg — SA is considered to be a relatively safe and economically stable environment

THERE are an estimated 450000 contact-centre seats in the US, UK and Europe that are planning to outsource their operations offshore.

Driven by the need to increase performance levels, manage risk and cut costs, many companies are already doing this, says Jason Krause, GM for managed services at Dimension Data.

"In some locations offshore, you can get better agents a lot cheaper than in saturated areas, where the market value of people goes up and you get a lot of job-hopping."

A high attrition rate means constantly having to take on new staff and retrain them, only to lose them in the next round of headhunting.

But offshore, where there is a high unemployment rate, staff tend to stay in their jobs longer and it is possible to get better value from them over time.

In high-cost regions, the attrition rate is up to 40% a year, compared with SA, which is running at about 15%, says Krause.

Companies looking to relocate offshore typically move to nearshore destinations first. For example, US contact centres migrate to Canada, and UK contact centres move to Ireland, to test the water.

"Although there is less cost benefit, it is perceived to be less risky and easier to get there and check on the operation," says Krause.

The global instability regarding risk, which has arisen since the September 11 US terrorist attack and the war in Iraq, has put SA in a relatively favourable position for offshore outsourcing, says Krause.

"SA is considered to be a relatively safe environment and it is economically and politically stable."

He says another trend is that overseas companies are looking to outsource their back-office processes that support the call-centre activities, and are asking for a combined quote to do both.

Krause says Dimension Data has entered into an agreement with a multinational US media and communications company to operate a local contact centre for inbound calls to the US, and this operation will eventually scale to 900 contact agent seats.

"We provide similar services for some UK clients, but more in the area of telesales and telemarketing."

Contact-centre outsourcing holds big potential for SA, although it means competing with places such as India and the Philippines, and even some South American countries like Mexico.

In a high-cost destination the hourly cost of a contact-centre agent is $25 to $40, which compares to $15 to $20 per hour in SA, Mexico and Eastern Europe, and $10 to $15 in India and the Philippines.

Bearing these comparisons in mind, SA operators cannot differentiate themselves on cost alone, says Krause.

"But SA is seen as a low-risk destination, with good power and telecommunications infrastructure, and we have a mature industry, world-class contact centres, good operational skills and a low staff attrition rate."

In SA there are 50000 contact centre seats compared with India's 38000 and Ireland's 25000. Krause says Dimension Data has 1200 contact-centre seats in operation.