South African break convinces Budget to expand call centres

A British insurance company is using a South African tax break to treble the size of its offshore call centre in Cape Town. Budget said it would increase the number of seats at its centre from 200 to 700 over the next two years but pledged it was still committed to its three UK call centres.

Budget, which is the UK's third largest independent general insurer, said the 500 new workers would include more than 200 unemployed South Africans who are being trained by a government scheme specifically aimed at boosting the country's share of the call centre market.

The government will give a tax break worth R60,000 (£4,300) for each one Budget takes on. South Africa hoped to boost the number of call centre seats from 6,000 now to 25,000 over the next five years. The government hopes that the £70m scheme will attract other UK companies to follow Budget, Asda, Carphone Warehouse and Shell in creating offshore centres.

Adam Winslow, director of Fusion South Africa, Budget's outsourcing subsidiary, said South Africa had been chosen over India, Malaysia and the Philippines, with the English language, cultural similarities with the UK and high unemployment making South Africa the best choice.

He said wages were 35 per cent lower than in the UK but cost was not the driving force, as wage costs were lower in rival countries.

Mr Winslow said Budget, which was founded by South African entrepreneur Douw Steyn, was committed to its three UK call centres in Peterborough, Coventry and Sunderland. "What Budget has done, compared with other companies, is that we have no job losses," he said.

"We are recruiting for the other three sites although it is hard. It is challenging for staff recruitment and retention for the reasons that UK operators are well aware of."

Budget's recruitment in South Africa will include taking 211 people with qualifications up to the equivalent of A-level who have not found a job. Calling the Cape, a not-for-profit organisation funded by call centres and local government, will provide training.

Mr Winslow said Budget would abide by the law that insists recruitment must match the local racial make-up. In the case of the Western Cape that is 60 per cent "coloured", 20 per cent white and 20 per cent black.

Luke Mills, executive director of Calling the Cape, said: "If you look around the world all the established markets [for call centres] have had strong growth. India now has a war for talent. So we should have a long-term competitive advantage if we get unemployed people into work, otherwise we will all be fishing in the same pool."

Rob Cannavo, a counsellor at the South African High Commission in London, said that President Thabo Mbeki had made offshoring and tourism the top priorities for growth.