Fibre Optics Bring South Africa into the Global Competitive Market

In an attempt to become a more attractive outsourcing destination for international companies, the South African government has announced plans to train up to 30,000 South Africans to work in call centers. But with a far from advanced technological infrastructure, can South Africa pose any real threat to its outsource destination counterparts in Asia Pacific?

There are a number of advantages South Africa holds over China or India as an offshore call center location. Firstly, it is located in European time-zones, and English is one of its official languages. Add to that the fact that in terms of wage and telephony costs, running a call center in the Africa and Middle East region is currently one of the cheapest options going. As Andy McCue reported for Silicon.com in February:

The eighth annual Merchants Global Contact Centre Benchmarking Report by Dimension Data found that the annual salary range for a call centre agent in Africa and the Middle East ranges from just $8,900 to $22,100. The dominant location in that region is currently South Africa.

That compares to a range of $24,500 to $33,100 for a call centre worker in the UK and Europe and $22,000 to $36,200 in the Asia Pacific region. North America has the lowest pay rates in the developed regions with call centre staff picking up between $17,600 and $26,400. The study says salary costs, on average, comprise 70 per cent of the operating budgets of call centres.

In fact, with India seeing double digit salary growth since 2003, much offshore outsourcing attention has turned to China, some even originating from Indian companies. Eastern Europe and Russia have also made attempts to enter the market.

Despite its geographical, financial and linguistic advantages, however, South Africa exists within a continent that has the least advanced telecommunications systems in the world.

But this could all be about to change.

If things go to plan, 2008 should see the Eastern African Submarine Cable System go into operation. The EASSy, an undersea fibre optic cable, will be the final link in “Africa’s data highway”, bringing this region into the global optic fibre networks. Add to this the appointment of a South African Broadband Development Advisory Council intended to research ICT cost reduction, and the promise of an infrastructure investment plan to be presented at the beginning of next year, and it appears that the South African government is determined to get a taste of that offshore outsourcing money.

But they are not the first sub-Saharan country to have reaped the benefits of this expanding market.

Over the past couple of years, French-speaking Senegal has become one of the main outsource destinations for French companies seeking cost-cutting opportunities, as documented by Nayan Chanda in Yale Global Online in October last year.

Tapping into the transatlantic undersea fiber-optic cable linking Europe and Latin America which runs along the Senegalese coastline, companies have been able to use inexpensive voice-over internet telephony to offer a quality call center service to telecom operators, mail order companies and internet service providers. The result is that along with companies in Tunisia and Morocco, Senegalese entrepreneurs are profiting from a share of 10,000 of France’s 250,000 call center jobs.

As Africa enters global technological networks - albeit painfully slowly - it is becoming one of the most competitively priced locations for offshore outsourcing. Senegal has already shown how its done, and South Africa could be about to pave the way for English-speaking Africa.