Johannesburg, South Africa, 15th May 2006 - The news is filled with stories about the global economy teetering on the brink of an economic recession, which, quite frankly, scares a lot of business people.

The South African market is particularly jittery, and for good reason, considering the fact that we’ve had eight interest rate hikes since the middle of 2006, inflation is set to peak at over 15% this year and the petrol price has reached the psychological R10/litre level.

Clearly, the pinch that everyone’s been speaking about for the last two years has finally arrived.

We’re seeing it with some of our clients locally. People are spending less on perceived luxuries, like cellphone airtime for example, in favour of servicing costly debt or simply putting food on the table, which is leading to a steady decline in revenues for a number of consumer-facing organisations.

Reading the above stats, it’s easy to get caught up in the doom and gloom of a global economic recession but there are opportunities that come even in these difficult financial times.

As an organisation that deals in outsourcing and, particularly, offshore outsourcing, Merchants can see that there is clearly an increasing need for companies to find cost-effective ways to maintain their customer service practices while controlling cost.

Offshore outsourcing is still the most compelling cost-reducing strategy for organisations operating in markets where the economic “pinch” is hurting the most – and, despite the various economic and political uncertainties, South Africa is on the radar screen as the destination to invest in.

Rob O’Malley, UK managing director of Cyber City Teleservices, recently wrote a very interesting article about the future of offshore outsourcing through 2013 and it offers a lot of positivity about the South African market.

In it, he said that an economic recession would necessitate that companies scale back their capital investments and offshore outsource more to cut costs.

He also said that, through 2013, Durban and Johannesburg are amongst the top cities most likely to attract additional offshore outsourced seats, while offshore seats in traditional destinations such as India are likely to decline.

This is already evident in the number of international outsourcers – that are actively looking at South Africa to start up shop. This has the potential for local partnerships that drive onward investment.

That said, SA should not rest on its laurels and become complacent that business will just come knocking. We still have a lot of work to do to ensure that we deliver on the value proposition that South Africa is a good “quality” destination to send offshore outsourced contact centre seats.

SA still lacks good, emotionally mature, commercially aware and practical contact centre managers, which are critical to ensure that contact centres are run effectively. People don’t leave companies, they leave managers, which is why it is vitally important for the right skills to be in place.

Merchants’ objective as an outsourcer is not only to help our clients reduce their costs, but to also ensure we mitigate the perceived associated risk of outsourcing by ensuring our people, our processes and our technology are capable of delighting their customers in a predictable and sustainable manner.

This is something that all organisations have to take to heart if they want to benefit from the opportunities that the global “pinch” is affording our economy.

Increasing interest from non-traditional markets, such as Australia, is positive and will also contribute to the opportunity for SA in specific international offshore markets.

Certainly, on the local front, the public sector is beginning to actively evaluate outsourcing given the number of tenders for contact centre services that have been issued.

The economy has dealt global markets a terrible hand of cards. If we are proactive and committed to our BPO strategy, there is no reason why SA can’t be the winner in this round.

For further information please contact:

Vanda Dickson, Marketing & Strategy Development, Merchants
Tel: +27 11 575 2479
Email: vanda.dickson@za.didata.com

Lee-Anne Poon, Tribeca Public Relations
Tel: +27 11 208 5500
Mobile: +27 82 818 4041
Email: lee-annep@tribecapr.co.za

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