(Updates with operating cost ranking in 10th paragraph.)
Dec. 2 (Bloomberg) -- From an office park in Cape Town, Gershwin Osman fields a call from a woman in the English town of Worcester and helps update her utility account.
Osman is one of about 2,500 people employed in South Africa by WNS Holdings Ltd., a Mumbai-based back-office services provider lured by government incentives, tumbling communications costs and a pool of workers whose diction and accents suit the U.K. market. Amazon.com Inc., the world’s largest online retailer, set up a call center in 2010 in Cape Town to service British, American and German clients.
“Most customers think I’m in Britain and that I’m actually British,” said Osman, 23, who handles 20 to 35 calls a day and fine tunes his accent by listening to commentary of English Premiership soccer games.
While India and the Philippines dominate the global market for back-office services outsourcing, which Boston-based HfS Research expects to grow 5.1 percent to $304 billion this year, the industry in Africa’s largest economy has grown 30 percent to 35 percent over each of the last five years. South African call centers employ about 210,000, with 9 percent of those working for offshore companies, industry data shows.
WNS, which has operations in 10 other countries, including the U.S., U.K., China, the Philippines, India and Poland, entered South Africa in June last year after acquiring Cape Town-based Fusion Outsourcing Services (Pty) Ltd. South Africa is the ideal location for servicing the British market because of the accents, cultural affinity, similar time zone and operational costs that are as much as 50 percent lower than the U.K., said Chief Executive Officer Keshav Murugesh.
“When we look at the location, we look at the talent, the seriousness of the government to work with us to build the business and the overall geopolitical situation,” Murugesh said in a Nov. 8 interview from Mumbai. “We are looking to branch out in South Africa. The English premium voice quality works extremely well.”
While 2011 census figures show English is the mother tongue of less than 5 million South Africans -- ranking it fourth behind Zulu, Xhosa and Afrikaans -- about half the 53 million people in the former British colony have knowledge of the language.
The government offers grants of as much as 88,000 rand ($8,623) for each new call center post created and sustained for three years. The incentives, introduced in 2007, have helped attract more than 1.6 billion rand of direct investment and create at least 10,500 jobs in a country where one in four people are unemployed, according to the government.
New undersea telecommunications cables also spurred investment as data costs fell 85 percent between 2003 and 2009. Call center operating costs are on a par with Egypt and Malaysia, industry data shows.
While the government plans to extend the incentive program next year, the ruling African National Congress’s labor union allies have reservations about the call-center industry.
“We certainly don’t want to be party to destroying jobs elsewhere, but until we have a completely different kind of economy, inevitably we will find this trend to chase the lowest possible wages,” Patrick Craven, a spokesman for the 2.2 million-member Congress of South African Trade Unions, said in a Nov. 8 phone interview from Johannesburg. “If companies think this the best place to open up such centers, it clearly indicates they think it will be cheap.”
About 35 percent of South Africans aged 15 to 34, a group that accounts for more than two-thirds of call-center staff, are unemployed, government data shows.
The industry gives “young people an opportunity, exposure, and that’s why it’s worth promoting,” Trade and Industry Minister Rob Davies said in a Nov. 4 interview in Cape Town. “I don’t think we think of this as a lifetime career opportunity.”
Perceptions of call centers as sweatshops are outdated, said Patrick Gordon, head of marketing for Business Process Enabling South Africa Western Cape, an industry body.
“A lot of the work is relatively entry level, but you can work your way up,” he said. “Maybe in the past, it was a sweatshop, but a lot of these new arrivals are bringing international best practice.”
Amazon’s downtown Cape Town offices are in a complex that also houses a Virgin Active gym, a doctor’s surgery, restaurants and coffee shops. Amazon, based in Seattle, didn’t respond to three phone calls and four e-mails seeking comment.
Osman and about 800 colleagues work in one of WNS’s two Cape Town offices at Century City, an 18 billion-rand development that includes one of the country’s largest shopping malls.
Only about 15 percent of WNS staff in the country are hired from school, while the balance have work experience or a further qualification, said Johann Kunz, the company’s managing director in South Africa. Monthly salaries range from about 5,500 rand for new hires to 18,000 rand for senior staff, he said.
South Africans with formal sector jobs earned an average of 15,184 rand a month in the second quarter, latest data from the government statistics agency shows.
“The whole contact center world is changing,” Kunz said in an Oct. 29 interview in Cape Town. “The less-complex stuff is handled through self-service, meaning the level of skill required from agents is far higher. We try not to operate on a minimum wage or benefit basis.”
Other global companies that offer office services and operate in South Africa include Teleperformance, Mindpearl Group and Chase Response Ltd.
Osman, who was unable to find a job after studying audio engineering and has a wife and daughter to support, sees scope to build a career in the call center industry.
“If you want to grow you can,” he said in a Nov. 15 interview. “You can become a team leader and move up the ranks to become an operations manager. Every day I learn something new.”
--Editors: Dylan Griffiths, Antony Sguazzin