Players who are benefiting include contact centres that handle outsourced phone calls from Europe, the Middle East and Africa. They are remaining competitive and profitable after successfully containing their costs, says Cape based research house Frost & Sullivan.
“Despite the economic downturn, market participants have high expectations for continued expansion with new and existing clients into 2009 and beyond,” says analyst Michael DeSalles. There are exceptions — the Dialogue group’s call centres lost R28,1m and shed 650 jobs last year by failing to win new deals.
Yet call centre specialists are bearing up nicely, DeSalles says, with the economic crisis prompting more companies to outsource. Outsourcing lets a client cut its capital expenses, gives it qualified staff speaking multiple languages and access to new technologies without the financial outlay. Contact centre operators for calls from Europe, the Middle East and Africa earned $15,2bn last year and should earn $19,9bn by 2014.
Outsourcing other parts of the IT infrastructure may be a way for companies to survive and thrive. Last week the mobile operator Zain signed a five-year deal for equipment supplier Ericsson to run its networks in Nigeria. Although Zain is a network operator, it believes Ericsson can do the job more cheaply and efficiently.
The deal is Ericsson’s first major managed services contract in Africa, showing how it is benefiting while other companies are suffering from the recession.
The need for telecoms carriers to chase operational efficiencies and grow their networks is creating opportunities for firms that manage networks and services as an outsourcer, one of the fastest growth areas in the industry.
Although cutting costs is a priority for every CEO, companies are collectively losing hundreds of billions of dollars through misguided moves in buying and operating their IT systems, says Derek Wilcocks, services director for Dimension Data’s Middle East and Africa regions.
The CEO usually lacks the vision to understand the power of technology to drive business growth, so he fails to empower the chief information officer and instead lets the financial director manage the IT budget. The financial director puts the focus on costs, which prevents the head of technology from making smart long-term decisions.
This cost-cutting focus wastes millions through misguided buying, operational chaos, managing multiple suppliers and the overall failure of technology to support the business, Wilcocks says.
While South African business leaders are among the most entrepreneurial in the world, they lessen the potential of their business by failing to implement the right systems and processes to enable and sustain its growth. “South African business leaders see IT as a cost and not as a potential business driver,” he says.
Network security company AfricaSD says firms must resist the temptation to cut back on network security and expose themselves to cybercrime or commercial negligence.
“As businesses bear the brunt of the economic downturn there is a great temptation to simply cut network security budgets,” says MD Hennie Moolman.
“This is a dangerous approach when you consider that cybercrime is growing rapidly and the types of threats are ever more complex and costly.”
Instead, firms should audit and reconfigure their systems and defences to streamline them more, Moolman says. That should generate cost savings and performance improvements, reduce the likelihood of a breach, and ensure regulatory compliance.
“The economy will bounce back, but a company that has to cover the cost of losing confidential customer data might not,” Moolman says.