However, these special deals are only for new entrants to the sector and current industry players are upset that the red carpet is being rolled out for new entrants, while they are being ignored.<\/p>\n
Both Telkom and the department of trade and industry have declined to give details of the new special discount. The department is proposing cash subsidies of R60 000 per job created, skills subsidies and negotiated, cheaper call rates through Telkom for a chosen few, large, foreign investors.<\/p>\n
This is in line with the government\u2019s Accelerated and Shared Growth Initiative for South Africa (Asgisa), which singled out BPO, tourism and bio-fuels as key industries to drive job creation and boost economic growth.<\/p>\n
The government\u2019s industrial policy plan indicates that the BPO industry is forecast to grow at 50% a year (equivalent to growth of between $90-billion and $100-billion) in the next four to five years.<\/p>\n
The policy plan says a window of opportunity exists for South Africa to become a significant global player in the industry and it estimates that the sector has the potential to contribute up to R7,9-billion of GDP by 2009 and create up to 100\u00a0000 new jobs in South Africa (25\u00a0000 direct and 75\u00a0000 indirect) by 2014.<\/p>\n
The government\u2019s industrial policy plan indicates that the national treasury has allocated funds for an initial incentive for investors in the 2006\/07 medium-term expenditure framework (MTEF) and that the labour department has allocated R17,1-million to fund the pilot skills-development programme to be rolled out this year.<\/p>\n
The Trade and Industry Department\u2019s Deputy Director General of the enterprise and industry development division, Lionel October, says it is targeting 12 top companies to locate their call centres in South Africa.<\/p>\n
He says a big obstacle to the department\u2019s plans has been the high cost of telephony in South Africa so, with the department of communications, it has managed to negotiate cut-rate deals for these new entrants. October says although Telkom denied that its prices were too high, it was \u201cclear as daylight\u201d that this was the case.<\/p>\n
The trade and industry department is in the final stage of finalising the deal with Telkom and October says the department hopes to announce soon that two of the chosen investors will enter the market and create 3\u00a0000 to 4\u00a0000 jobs.<\/p>\n
October says the five-year plan is to create 25 000 direct jobs. He says large targeted foreign investors who create more than 300 direct jobs will be in line for a R60\u00a0000 incentive per job created. The proposed incentive deal has received a mixed reaction from BPO players.<\/p>\n
Storm Telecoms\u2019s Dave Gale says South Africa has a lot of positives for the BPO industry, such as time zones and acceptable accents. However, high telecoms costs and an unreliable power supply count against it. Gale says he takes issue with Telkom offering special rates to new entrants into the market.<\/p>\n
\u201cIf I was a call centre operator I would be pretty pissed off that I came in when the environment was not that conducive and now others are getting cut rates,\u201d he says.<\/p>\n
\u201cIt should be across the board.\u201d Jason Drew, of Dialogue Group, says the new incentives could rankle existing BPO investors and the government\u2019s response to this issue is still unanswered.<\/p>\n
However, Drew says that government\u2019s backing of the sector is \u201cextremely appropriate\u201d as there is a large opportunity to create jobs. Martin Liefeldt, of Digicall Solutions, says even with negotiated cut-rate deals Telkom would battle to compete with other service providers in the sector.<\/p>\n
\u201cTelkom is becoming more and more obsolete as a service provider,\u201d says Liefeldt. \u201cMost call centres have moved away from Telkom and are using other service providers.\u201d<\/p>\n
Liefeldt says he runs a call centre based in Johannesburg and services the United Kingdom, where he pays only R4,80 a talk hour using Voice over Internet Protocol (VOIP).<\/p>\n
\u201cQuite how Telkom is going to compete with this, I don\u2019t know,\u201d says Liefeldt.<\/p>\n
\u201cTelkom is [hurting] the industry and that is why India is beating us in the BPO sector,\u201d says Liefeldt. \u201cIts service is appalling and it is being regulated by the people who own it.\u201d<\/p>\n
Telkom\u2019s spokesperson, Lulu Letlape, says the telco is currently engaged in discussions with government on the development of the BPO sector.<\/p>\n
\u201cIt is noteworthy that Telkom is committed to the process of consistently adjusting its pricing model in order to stimulate economic development, job creation and in order to make telecommunications more affordable and accessible to business as well as the broader South African public,\u201d says Letlape.<\/p>\n