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Alan Graham takes a look at outsourcing in South Africa and describes the benefits the destination can bring to the business.

When outsourcing first became popular, outsourcing was purely a cost saving mechanism. The mobile revolution has created a 21st century customer who demands more. In recent years, companies are thinking about the long term cost of outsourcing.

When you start looking at the long term effect of selecting an outsourcing destination purely on price, the bottom line becomes blurred. Factors such as customer retention, 1st call resolution, customer satisfaction and brand protection give cost savings a new meaning.

South Africa has become a buzz word in the industry, as a high quality offshore solution. It has even been called an equivalent to onshoring.

Some key facts about outsourcing in South Africa
South Africa is a nation of diversity, with 50+-million people, 17.32 million are part of the labour force and 62% of the population is urbanised.

South Africa is among the top 3 Locations that support English language skills at scale, it also has the added advantage to support a broad range of European languages.

South Africans also have a natural cultural affiliation to UK, US, EU, Australia and New Zealand and a neutral accent understood and accepted by all.

South Africa has the 26th largest GDP in the world and a thriving democracy.

With infrastructure to match any first world country and well-developed financial, legal, communications, energy and transport sectors, South Africa is on par with the other leading BPO destinations.

South Africa’s undeniable differentiator
So what’s all the fuss about? Yes, South Africa has the infrastructure, English and European language skills and talent pool to sustain the industry. On the surface, nothing stands out. Take a closer look, and the people element is the resounding differentiator.

South Africa offers a skilled talent pool that achieves excellent results with complex products and interactions. Companies currently outsourcing to South Africa, tend to outsource higher-end services, which they wouldn’t outsource to other locations or prefer to keep in-house.

Why? The claim is South African’s have a natural ability to create rapport, are customer focused, have empathy and the so called ‘Ubuntu’ service culture.

Are these claims valid? Well the results speak for themselves, some companies claim to experience higher 1st call resolution than they have experienced elsewhere. Others say they experience improved quality and the customer service is comparable to none.

There are BPO’s who have been operating in South Africa for the last 14 years. Yet, it was a relative unknown compared to its competitors. South Africa’s recent Global recognition as the Offshoring Destination of the Year in the 2012 NOA and 2013 EOA awards finally put this BPO gem on the map as an offshoring destination of choice. This recognition, together with a worldwide trend to differentiate with customer service and a strong focus on customer retention, has led to global awareness. The world is finally taking notice.

Companies want more! Customers expect more!
Cost is no longer the only deciding factor in the outsourcing space. Companies want more! Customers expect more! The only way for companies to be successful today, is to differentiate themselves with exceptional customer service. Companies, who have previously outsourced to destinations such as India and the Philippines based on cost savings alone, are back shoring. While other companies have realised the potential of quality offshoring destinations such as South Africa, where cost savings can still be achieved and customer retention can be maximised.

I predict South Africa’s popularity will only increase, as more companies become aware of the long term cost savings and associated benefits.

When 94.7 FM’s Darren Whackhead Simpson made a prank call to Multichoice’s call centre, it was iFundi learner Dikeleti Seleko who remained unrattled and handled the call with poise.

Stefan Lauber, the Managing Director of i-Fundi says: “We are very proud of her. She proves what over half of South African contact centres already know, namely that learnerships are a great way to develop quality people. Learners are an ideal solution for even the most challenging positions, such as those in the digital broadcasting industry.”

Despite the current recession it is difficult to recruit good contact centre agents. In the past, companies could attract good call centre agents by offering better hourly rates, a costly and often short term solution that lasted only until another company offered more money. However, in the wake of the economic downturn, good quality agents are putting down roots and are staying with their employers.

This does leave a small pool of experienced agents but they come at a price that may prove higher than simply a hike in the salary bill. Lauber warns that many experienced agents who are currently available in the job market are a liability as they often come with bad habits from their previous jobs. Therefore, he says the best solution is to use learnerships that bring highly motivated personnel into the company at a fraction of the cost.

While some companies opt to recruit inexperienced call centre agents directly into the call centre environment, this approach is more costly than learnerships and it often takes longer before agents become productive members of the team. Supported by government incentives, learnerships, on the other hand, offer up to one month of free initial training that is geared to making personnel productive once they enter the workplace.

“Learnerships can be awarded to people within the company or to individuals who are unemployed. People who have suffered through a period without work often prove highly motivated as they do not wish to return to the ranks of the unemployed. They appreciate the opportunity they are being given and know that at the end of the programme they will have a nationally recognised certificate. Learners are individuals who are prepared to work for less and willing to make a real investment in their future,” Lauber says.

A learner typically earns around R1 500 a month compared to a usual entry level salaries of about R4 500, yet their long-term prospects are excellent. He points out that contact centre learners are making a smart move and setting their feet on a real career path. Agents can advance up the salary ladder to a point where they become top managers and can earn more than professionals such as lawyers and with the assistance of i-Fundi they can go on to obtain masters degrees.

Ensuring that call centre agents are the right people with the right training is crucial as ineffective agents can prove costly in terms of lost reputation and customer satisfaction. Although learners are often new to the world of contact centres, they are amongst the best employees because they are motivated and receive extensive training.

Selecting people for learnerships is no easy task as advertisements usually result in literally thousands of applications and only around five to ten percent are appropriate for consideration as potential call centre agents. Where required, i-Fundi works closely with recruitment agencies and clients to develop a shortlist of potential candidates. This allows i-Fundi’s clients to focus their attention on a smaller pool to identify those candidates that will have the best fit with their corporate and operational cultures.

During their month of upfront training learners are exposed to areas such as life and reasoning skills, customer service, and communication skills. These skills provide a solid foundation that quickly puts learners on a par with experienced agents. “Typically, they outperform normal agents,” Lauber says.

On an industry wide basis over 50% of call centres have tried learnerships and over 80% of these companies report a positive experience. i-Fundi is the learnership partner of choice for many of South Africa’s leading contact centres.

Having been the first to implement contact centre learnerships, it has developed systems and processes that give it the ability to significantly improve on the general industry experience. “We meet the 100-90- 80-70 standard. 100% of projects are completed on time and in accordance with the parameters set by SETAs and our clients. 90% of learners are retained, which is better than the attrition rate of most contact centres. In addition, of the people who start on our programmes, 80% acquire national certification and 70% find permanent positions with their host employers,” Lauber points out.

i-Fundi is a results driven company and a major reason for its success is the company’s i-FundiWorx methodology which won the award for the best non-technical innovation at the recent BPeSA awards.

i-FundiWorx focuses on three main components:

Getting the right things done correctly so that work is carried out as effectively as possible and a standardised implementation of agreed best practices is ensured.
A highly effective monitoring system tracks student progress and alerts management to any implementation problems and triggers corrective action.
And, i-Fundi’s proprietary evaluation tool tracks each project’s impact and return on investment, thus ensuring that training leads to clearly measurable performance improvements.

The cost to company of learnerships is very attractive once employers understand the approach and the rebates that can be accessed. Not only do learners typically earn a third of standard industry entry level salaries during their first year but sponsoring companies are also often able to obtain government funding.

“While companies may be put off by the idea of weaving their way through the red tape, i-Fundi has a lot of experience in this area. We help clients with their applications – dealing with any compliance issues – and taking them through the entire the process. It is our speciality and it significantly reduces the host employer’s administrative burden,” according to Lauber.

However, this is not the end of the trail as companies can also enjoy huge tax breaks; R50 000 per annum for existing staff learnerships; R60 000 for currently unemployed people; and up to R100 000 when companies are prepared to employ disabled individuals.“Very often the tax breaks alone cover the learnership’s salary costs,” Lauber says.

Learnerships also strengthen a company’s position in the marketplace, clearly demonstrating its commitment to South Africa’s transformation. A company can earn a full fifteen percent of its Broadbased Black Economic Empowerment score if five percent of its workforce are learners.

“Everyone wins with learnerships. Learners get decent work, companies find better staff, customers enjoy good service and South Africa as a whole benefits,” Lauber concludes.

Customer service

Outsourcing in South Africa: A blurred bottom line Outsourcing based on lowest rates

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