Throne for the best call centre work was first given to India.

Recently, it was snatched and gifted to the Philippines. But, what will we see next? Emerging business process outsourcing (BPO) destinations like Eastern Europe, Latin America, South Africa, Czech Republic, Egypt and China are facing internal challenges to be a part of the outsourcing race. Amongst these, huge potential is seen in South Africa (SA) and Europe. Many Indian BPO providers like Aegis, Spanco, Genpact, Mahindra Satyam are now expanding their footprints in South Africa to cater to the European market and the increasing South African customers as well.

Europe is the second best client market for the $12.4 billion Indian BPO industry and drives it 30% of its revenues. After the initial spree of expanding into Europe or Latin America, service providers are now expanding into South Africa to cater to these clients. ?Though South Africa is 20-30% higher in terms of cost as compared to India or the Philippines, customers still prefer to outsource work to SA because of its multilingual capability and fluent accent coupled with a time zone favouring Europe,? says Nikhil Rajpal, partner, Everest Group.

He further adds that though on one side we have the Philippines which has a major market as the US and is best suited to serve it? South Africa?s major chunk of business comes from the Europe. The continent gets almost 70% BPO work from continental Europe and UK combined.

It is not just Europe that is served from the continent. Even the South Africa market is growing. The South African BPO client market got a recent boost with the Bharti-Zain telecom deal. Bharti Airtel selected IBM, Tech Mahindra and Spanco BPO as partners to drive customer service across 16 African countries. Currently over 4,000 people are employed in Africa supporting Bharti Airtel?s customer service operations. Going forward, the number of people employed in managing Bharti Airtel?s customer service functions will increase as Bharti Airtel expands its network and customer base.

Pravin Kumar, CEO, Spanco BPO Services says, ?We will employ 2,000 people within six countries in Africa by the end of March 2011. In the next 12-18 months, we will have more than 5,000 people in the continent.? Kumar clarifies that the company will initially concentrate on the African business of Bharti Airtel as it claims to have 50% of the BPO business of the telecom operator. In the next phase, Spanco is looking at expanding footprint in the country to cater to the European clients as well.

There are 2,00,000 jobs across the domestic captives and BPO service providers in South Africa. This provides investors with access to a significant pool of experienced talent. Right now, the country has 10,000 offshore jobs which are expected to reach 40,000 by 2015. The South African offshore BPO industry has witnessed dramatic growth from 2,800 jobs in 2008 to 10,000 jobs in 2010.

There are large sized Indian providers like Aegis and Genpact present in South Africa since last year. In a recent survey by Everest Group, a spokesperson from Aegis notes: ?Aegis has made a significant investment in South Africa, and will continue to do so as part of a long-term strategy. Our vision is to grow to 5,000 employees within the next three years, and 10,000 within five years.? In 2009, Aegis had acquired a contact centre outsourcer CNN Group in South Africa. Even Genpact has been operating in South Africa since August 2009 and is looking at further expansion.

In June last year, Mahindra Satyam BPO entered into an agreement with the Johannesburg-based Direct Channel Holding, a contact centre and BPO company with multiple delivery centres in Africa. For Mahindra Satyam BPO, the association meant extension of services to its global customers to the African continent, particularly South Africa. ?It will be handy for those with operations in Africa and for those considering South Africa as an alternative delivery centre for call centre or any other transaction-based back-office services,? says Vijay Rangineni, CEO, Mahindra Satyam BPO.

Though South Africa is a strong contact centre hub, the scope of services spans both voice and non-voice functions, with voice constituting the majority of the work. While all aspects of voice work are delivered from South Africa for international end-users, it is the high-touch customer-centric processes (e.g. complaints, customer retention, product renewals) or sensitive customer segments (e.g. pensioners, high-net worth, distressed) that South Africa has distinctive capabilities in serving.

On the back-office side, the work delivered is complex, judgment intensive in nature requiring knowledge of industry domains. The majority of end-users serviced from South Africa are in financial services, telecom and retail verticals.

In the larger picture, Indian BPOs in South Africa do not face much competition from local players. Rajpal from Everest Group mentions that the local players are very small and are always ready to be acquired by a big player in the market. For instance, eTelecare Global Solutions bought Talk Talk Group?s South African customer care subsidiary. The other potential destinations other than South Africa that serve the European clients are India, Kenya, Egypt, Morocco and Mauritius. ?Amongst these, Egypt is similar to South Africa in terms of penetration and services provided,? notes Rajpal from Everest.

South Africa is one of the few global sourcing destinations beyond India and the Philippines that can offer sizeable and good quality English language skills at a low-cost. Latin American countries such as Argentina face challenges with good English skills. Nigeria, Jamaica and Kenya have smaller labour pools. Canada and Northern Ireland have higher costs. Mexico and Czech Republic too are more expensive relative to South Africa.

Thus, we will see more of the ?India plus one? concept in the near future. This implies that another destination such as the Philippines or South Africa added with India in the service provider portfolio of customers.

The war for clear voice will be interesting to watch.