South Africa – SEACOM cable could change the nation

A simple cable. That’s all it is – a cable. 

Granted, a very LONG and EXPENSIVE cable made of glass wires and special coverings, but it is still just a cable.

But in this one cable is the potential to dramatically change a nation.

Flashback to 2009 in South Africa. A country still adjusting to a new government of 14 years and lots of international interest ready to descend upon it with the FIFA World Cup just months away, South Africa had been mostly in information darkness.

But then in July of 2009, the SEACOM fiber optic submarine cables brought the possibility of high speed, data connectivity to countries within Africa, South Africa, Mozambique, and Tanzania effectively connecting South and East Africa directly with Europe and South Asia. This was a huge and expensive undertaking and one that now provides over 1.28 Terabytes of bandwidth throughout the continent. Of course, not everyone had access immediately as service had to be rolled out – and at first, it was costly to subscribe to.

In the early part of 2010, however, multiple ISP’s came online which drastically drove the down cost of connectivity to the point where mass adoption is now feasible. For the first time in history, South African’s are connected to the rest of the world through the Internet with broadband access. And while there have been a few issues with the cable (Pirates, initial high costs, cable problems)  it has proven reliable and was even used to broadcast video and data from the 2010 FIFA World Cup around the world.

Prior to the SEACOM cable, most businesses wanting broadband internet access had to rely upon  costly satellite service with bandwidth issues and high latency. Residents fared even worse, if they were lucky, and trusted dial-up. How bad was it? In September of 2009, a test was run to see if a carrier pigeon could carry a 4GB memory card faster than the same amount of data could be delivered across the existing Telco’s ADSL lines. After giving the Telco download a 26-minute head start, the pigeon, named Winston, took off. Two hours and six minutes later – the pigeon won! And by a landslide! By the time Winston delivered the data, the ADSL download had only delivered 4% of the data! Read more.

Now, the economic impact on this country could be huge – from banks, communications companies, and small businesses to online retailers, healthcare and IT outsourcing to name a few. And in the area that I’m most familiar with, contact centers, I could see South Africa becoming one of the next rising countries to offer affordable offshore contact center services for English speaking companies around the globe.

While that thought may not be a popular opinion here in the US, there are several reasons to give this some thought:

  1. The majority of South Africans can speak English and it is easy to understand. Additionally, other major languages are also spoken which means other countries can tap into their resource as well.
  2. Bandwidth costs are lower – which means that internet access is more accessible to the mass of South African residents. This opens the door for work-at-home agents and gives companies the ability to tap into resources from around the country (and continent).
  3. Inexpensive labor costs – Unemployment is high in South Africa. There are millions who need work and the cost for those workers is low.

Now, before you think I’ve got it all figured out, I must admit that there are several obstacles that South African’s must overcome before this idea of mine can become a reality:

  1. High crime – especially in some cities, crime makes it unsafe for businesses to want to come to South Africa.
  2. Highly uneducated audience – In many pockets in South Africa, millions are struggling to gain an education. Illiteracy rates across the country are around 24%, but the government continues to make improvements to the educational system. Over time, broadband access being brought into the homes and schools will only help decrease illiteracy.
  3. Increasing competition with the Philippines, India, Caribbean, and the United States – While off-shoring will remain popular in our global economy, there are many countries that are continuing to lead the efforts. Sutprisingly, the US is starting to win a lot of their contact center sites back from India. This is due to the downturn in the US economy causing labor costs for contact center agents to decrease as well as poor customer satisfaction ratings from US customers unhappy with a thick Indian accent of the contact center agent.
  4. Unions – Today, the majority of the unions in South Africa are unorganized and mismanaged causing labor conflicts that international companies don’t want to deal with.

So, it seem there are as many reasons for South Africa to fail as there are reasons for them to succeed in becoming a leader in offshore contact centers.

However, don’t forget that this is a country that pulled off the 2010 FIFA World Cup and has overcome Apartheid. And now that they have connected to the international community through the SEACOM cable, I like their chances.

Next week, I’m heading to South Africa for 10 days and I’ll start running my idea by those in the know. And for the first time since I’ve been there, I’ll have a nice big pipe to work from!

Tim Passios