VoIP and the Emerging-Market Call Center

The stage is set for further growth in Voice over Internet protocol communications with technological advances, telecom market deregulation and a growing web of fiber optic and wireless networks.

India is now recognized worldwide as a center for offshore call centers, but a range of companies in other emerging markets are now looking to capitalize on the outsourcing, offshore and near-shore call center and VoIP trends.

Many Hurdles to Success

In emerging market countries — from the Philippines to South Africa to Costa Rica — deregulation and related policies are fostering growth of modern telecom and computing infrastructures. The potential benefits are numerous, as governments worldwide increasingly realize.

Yet the hurdles are many and varied: Large capital investments and a concomitant need for well-trained and educated staff — along with equitable terms of investment, trade and income distribution — are required if emerging markets are to realize the benefits.

Fertilizing the Ground

Competing in the offshore and near-shore call center market presupposes a modern telecom and computing infrastructure, as well as trained, capable staff.

Once governments and businesses make the investments, they open up myriad opportunities for economic and social development.

The potential for telecom modernization to stimulate business development, generate foreign currency earnings, facilitate job creation and provide strong incentives for investment in education and training has attracted the attention of government and business leaders around the world.

Offshore and near-shore (as well as domestic) call centers are an offshoot of this trend. They have grown rapidly as countries invested in modern telecom infrastructure — and as the outsourcing of manufacturing and services from developed to emerging-market countries has continued. India provides the highest-profile and largest-scale illustration.

Emerging markets in Asia — and on every continent — are now looking to follow suit.

With metals, minerals, and oil and gas prices at their highest levels in decades, countries across Africa — the world’s poorest continent — have been attracting capital from international and domestic investors.

Another significant portion is going into increasingly deregulated telecom markets.

Out of Africa

As governments such as South Africa’s have begun deregulating their telecom markets, VoIP service providers and their suppliers — outlawed until recently — are spreading to what was once known as the “Dark Continent.”

Call center operators and technology providers in African countries are beneficiaries. Increasingly, call centers are making the migration from legacy voice and data communications to IP telephony and data platforms.

South Africa began deregulating its telecom market over two years ago. This led some international telecom providers and investment groups, such as Vodacom andNeotel, to announce ambitious plans to roll out wireless and fixed-line voice and data networks countrywide.

Vodacom has since made significant inroads as a wireless voice and network services provider. Meanwhile, Neotel, a private consortium backed by Indian-South African capital and management, has been given the go-ahead by government to build out its own nationwide telecom infrastructure. That still remains about a year off, however, Clayton Hayward, CTO of OpenVoice Holdings, told CRM Buyer. “Our biggest hurdle is the cost of bandwidth,” he said.

Open Source Spurs Growth

The combination of deregulation and the development of the open sourceAsterisk VoIP platform have lowered the barriers to entering the South African telecom market.

“I think the key differentiation that needs to be made here is VoIP as a carrier mechanism and IP telephony as a technology. VoIP has gained a lot of ground in both in-bound and out-bound call centers based in South Africa focused on international campaigns,” Hayward explained.

“Domestic VoIP is still very small given QoS (quality of service) issues with the limited number of carriers and the high cost of bandwidth,” he added, but “the market is obviously still going to grow substantially. And with the costs of broadband on the decline, more carriers to choose from ,and the costs of IP telephony on the decline, these are all positives.”

Call centers, as a result, are increasingly turning to VoIP platforms as a means of obtaining a much wider range of features that can increase productivity, reduce costs and lead to more efficient and effective management.

“One of the biggest drivers has been the open source initiative, specifically the development and introduction of the Asterisk IP platform,” Hayward said.

South African Call Centers

In general, the call center market is broken down according to size ranges — those at or below 50 seats, those at or below 200 and those at 500 or greater, Hayward explained. “There are very few [call centers] in the 500-plus range — the emphasis is on the mid-range, less than 200-seat centers.”

A variety of telecom and call center service and equipment providers have been quick to enter and grow in the South African market.

Though not as cost-competitive as in India, a range of multinational and domestic companies including AOL, IBM, Microsoft, Verisign and First National Bank of South Africa are currently operating call center networks in the country.

Avaya andMyTel have been the dominant VoIP platform providers in the call center space, particularly in the larger centers and at the enterprise level, Hayward added.

However, the advent of deregulation and the implementation of the Asterisk VoIP platform lowered the barriers to entry and provided an opportunity for smaller, local and independent companies, such asOpenVoice, to enter the market early and build up their client bases.

“Adoption of IP telephony by businesses and organizations continues to expand at a steady pace — more than 14 million lines have been shipped globally since January 1, 2006,” Jeremy Duke, president and CEO of the Synergy Research Group, said.

“Our report shows that Avaya continues its leading-edge position in terms of market share growth by outpacing industry averages quarter-over-quarter and year-over-year,” he added.

The High Cost of Bandwidth

Although the number of VoIP service providers has grown rapidly since market deregulation took effect in South Africa,Telkom, the former state monopoly, remains the only infrastructure and raw bandwidth provider of any real note.

Hence, the country has yet to see the big reductions in bandwidth charges that are expected as the market becomes more competitive.

The comparatively high cost of bandwidth in South Africa hasn’t prevented OpenVoice from rapidly growing as one of the country’s first IP telephony platform providers, however.

The company, now in its third year of operation, expects to see 200 percent growth in its business this year compared to 2006, although starting from a low base.

No VoIP? Try VoSAT

“Bandwidth is our biggest issue,” James W. Wilson III, vice president of direct sales for U.S.-based Dow Networks, a hosted call center technology vendor in a wide range of emerging market countries, told CRM Buyer.

“VoIP with latency under 250ms (milliseconds) will have perfect voice. We operate in some countries in Africa, Latin America and the Caribbean where they have no terrestrial fiber for VoIP and must do VoSAT (satellite VoIP),” Wilson said.

“Typical African satellite is 680ms round trip to the USA. We have hired U.S. Army Satellite technicians to make VoSAT sound great,” he continued.

“My VP of R&D said, ‘I can trick the satellite to make voice sound perfect, but there is no way to trick world geography and physics. A fiber route goes the shortest distance, but a satellite route goes up 44,000 feet. The additional milliseconds make it impossible to help the data over satellite work like it is under 200ms, but the voice can be tricked to sound perfect.'”