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Telkom to reduce costs of bandwidth to boost BPO&O industry

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Telkom to reduce costs of bandwidth to boost BPO&O industry

by Michael Appel
11 Jul 2008
BuaNews Online
BuaNews Online

Telkom has announced it's willingness to work with the Department of Trade and Industry's incentive programme and the Business Process Outsourcing and Offshoring (BPO&O) industry by significantly dropping the costs of bandwidth.

Group Executive for Strategy, Steven Hayward, on Thursday said: "We do not expect to make any profit from the BPO sector. We are prepared to do this for the department's incentive programme and the BPO industry."

Speaking at the two-day national BPO&O policy conference in Durban, Mr Hayward said Telkom regarded the BPO and government incentive scheme as strategic for South Africa.

He said debate would naturally circle around whether Telkom's pricing structure would be an enabler or an inhibitor to the growth of the BPO sector in the country.

In 2004, reports of Telkom's telecommunications pricing structure were mostly negative due to the high price of communications.

Two megabits of bandwidth, for example, was costing R250 000 per month, which Mr Hayward described as "absolutely exorbitant".

"In 2005, the same product would cost you R200 000 per month, which is high but still lower than the previous year. In 2006, the price was significantly dropped to R135 000 for the same amount of bandwidth and in 2007, we further dropped the price to R105 000.

"This year the price will be R88 000. Now that is a significant change in price over a period of four years," Mr Hayward said.

He also announced that Telkom was now offering its Multi-Protocol Label Switching (MPLS) technology, which has voice carrying capabilities and is far less expensive than equivalents, offered at R50 000 to local industry.

Managing Director of TeleTech, which recently located to South Africa, Craig Reines told the conference there seemed to be significant confusion as to what exactly Business Process Outsourcing and Offshoring was.

He said BPO included far more than merely call centres.

Mr Reines questioned why South Africa was not exploring the BPO opportunities within North America.

He highlighted that despite South Africa being the United States' 10th largest trading partner, there was little focus that had fallen on exploiting the US markets BPO industry.

India has a BPO industry that has grown by over 500 000 jobs since 2004, but unlike South Africa has suffered two major terrorist attacks and four significant natural disasters.

The Philippines has had six terrorist bombings, 50 media assassinations, three attempted coups and seven super typhoons, as well as earthquakes registering above 7.5 on the Richter Scale.

South Africa, Mr Reines believes, should be at the top of the list when it comes to relocating businesses and BPO.

Dimension Data Group Executive of Sales Andrew Briggs said government's incentive scheme to make the BPO industry more attractive showed commitment, however, he noted that South Africa's cost of doing business and ease of investment was still a concern.

"South Africa, however, scored 14 out of 30 on the fundamental Key Performance Indicators (KPI) measuring things such as customer satisfaction, first contact resolution, staff retention, staff attendance, and the amount of answered calls, among others," Mr Briggs said.

What is significant to note is that South Africa scored above the global average score of 13 points on the KPI measurement system. - BuaNews

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