Trade unions, the government and business should unite if South Africa is to attract an estimated two million jobs.
If South Africa is to become a serious competitor to India — and attract the lion’s share of the two million jobs that it is claimed will be outsourced by the Western world over the next five years — trade unions, business and the government must take South Africa’s offering to the next level.
According to Peter Watt, chief executive of IT solutions company Comparex Africa, the perception of local labour inflexibility could be a major stumbling block.
“The Economist Intelligence Unit has indicated that labour inflexibility is our greatest handicap when competing with other emerging markets. It has also been cited as a major deterrent to foreign direct investment.”
The local call-centre industry — particularly the big centres — has been a target for union action.
Watt says that South Africa cannot compete for a significant share of the outsourced business on price alone.
“Our minimum wage is higher than the R1 100 paid to university graduates in India. The recent gains made by the rand against the dollar will add further cost pressure. If we are to win this race — said to be worth $356-billion globally — business, the government and the unions must collaborate to create an environment that is more attractive than those created by our more established competitors.”
Sewell says the work done by the government to position South Africa as an alternative venue for outsourced call centres and business process outsourcing has gone some way towards positioning South Africa as a viable competitor. This includes a road show and the establishment of Savant, a government/business initiative to market South Africa’s IT industry to the world.
“It hasn’t come a moment too soon,” says Sewell. “Nasscom, the Indian trade body, claims that in 2004 it will grow outsourced sales of software and services by 50% from the $9,5-billion billed last year.
“The volume of business — and the potential to create jobs — is phenomenal,” he says.
“However, right now India is in the poll position to capture the majority of work from American and British business. They have built a reputation for delivering. In fact, the list of United Kingdom companies that have outsourced to or set up operations in India reads like the who’s who of British business — British Telecom, British Airways, HSBC, Prudential, Asda, Aviva, Lloyds TSB, Barclays, Thomas Cook and Channel 4.”
The time has come for South African business to do something that will capture the imagination of the big players overseas. This may include consolidation in the local call-centre industry, creating a critical mass that will act as a magnet, or offering value added services.
“We could create a competitive differentiator, offer services that deliver value to the organisation as well as to its customer and thereby render the call centre the central hub of business intelligence, ” says Mike Sewell, group executive of Comparex Africa.
“In this way the call centre has the capacity to deliver sustainable long-term profitability to the organisation.
“Business must also actively work with the government and trade unions to make South Africa a more attractive investment destination than those offered by competing countries.”
Sewell says that the government’s international road show, coupled with business’ entrepreneurial drive, has certainly created a sound base from which to build.
“But we’ve got some way to go to position South Africa as the destination of choice.” he says.
“India is seen as the dominant player.
“If our role players have the vision and maturity to harness this opportunity, this could be just what we need to reduce unemployment in this country.”