2010 September

Steve Rennie

By Steve Rennie, managing director of Rennie Property

The announcement by Amazon, the world’s largest online retailer, that it would be opening a customer service centre in Cape Town in October has put South Africa firmly on the map as a preferred location for business process outsourcing (BPO).

Amazon said in July that it would be opening a call centre to service its US and German markets and be creating up to 1,000 jobs in the process. The company said that one of the main reasons it had chosen South Africa was because its timezone made it convenient for Amazon’s customers. The company also applauded the Western Cape government’s backing of a customer service industry in the region.

As well as a favourable timezone and government support for BPO, foreign companies looking to base parts of their business offshore choose South Africa for a range of reasons:

• South Africans’ neutral accent and English-speaking skills
• A good cultural fit with customers on the other end of the phone line
• The ability to get a skilled, educated workforce at a cheaper wage than in many Western countries
• A lower labour turn-over rate than many of the typical BPO destinations such as India
• The country’s improving telecoms infrastructure offering increasing capacity at prices that are dropping
• A reasonably favourable exchange rate
• Excellent systems and infrastructure, including property
• World class customer service levels

With companies including Shell, The Car Phone Warehouse and BSkyB’s TEAMtalk media locating customer call centres in South Africa, the country’s pedigree as a premier BPO destination is assured. In 2004, the South African government set a target of 100,000 people employed in the BPO industry by 2014, with R1.75 billion in direct foreign investment and a R16 billion contribution to the GDP. Despite a tough economy, a Business Trust report card showed that by July 2009 87,000 jobs had been created and there had been R1.5 billion in foreign investment.

Having said all that, setting up a new operation in a foreign country is always challenging, and it is vital to find the right partners along the way especially for the big investments such as property.

Whether companies choose to buy or rent the space for their call centre and other operations, finding the right property is key to the success of the venture.

Some of the things to consider when choosing a property for your call centre or other BPO operation:

1. Location & staff:

• Call centres generally have the highest concentration of staff per 100 square metres than any other office user. So it’s important that call centre employees are comfortable, both from the point of view of attracting new staff, and retaining existing team members.
• Decide where the best place is to be situated to attract the correct calibre of staff to your operation.
• Availability of public transport – are your offices easily accessible via public transport routes, including trains, taxis and buses.
• Is there ample secure parking for staff members with cars?
• Is your property and its surrounds safe and secure, especially if staff members are going to be working shifts?

2. Location & infrastructure:

• Enough power and broadband infrastructure is essential, with fully-redundant back-ups in case of emergency.
• CBDs are typically less affected by power load shedding than outlying areas.
• Does the nature of the business require “Chinese walls” between various teams working with competing customers, or privacy to avoid sensitive account information being overheard?

1. Growth

• Depending on the company’s expansion plans, the office complex needs to have enough space for the company to grow without having to relocate.
• Alternatively, some BPO organisations prefer to split their operations to benefit from being based in two separate locations to minimise business downtime and ensure compliance with the SLA’s they have in place with their clients.

A local property partner with local knowledge, contacts and expertise is an important partner in laying the foundation for a successful BPO operation in South Africa, creating a win-win situation for all concerned.

About Rennie Property

Rennie Property,  South Africa’s top-performing specialist commercial property management company, offers property management, broking and consulting services. It was established in 1997, and for the past 13 years has looked after some of South Africa’s most prestigious buildings including Melrose Arch in Johannesburg, and the ABSA Centre in Cape Town. Its present portfolio of properties under management is valued at more than R6 billion.

For more information please visit: www.rennieproperty.co.za

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By Steve Rennie, managing director of Rennie Property

With South African financial experts still concerned about the threat of a global double dip recession, Steve Rennie, managing director of Rennie Property warns landlords to be extra vigilant about keeping a handle on bad debt.

Collecting incoming payments should always be at the top of any landlord’s agenda, but with the risk of there still being a fall-out from last year’s economic downturn, landlords need to be even more proactive about debt collection.

Landlords and their property managers need to get their hands dirty, says Rennie. First and foremost is accurate and timely reporting that will flag problems early on, giving landlords a chance to take action before the debt starts to gather.

Once landlords or property managers have spotted a problem, it’s vital that they act quickly. This generally involves a few tough decisions on whether or not it makes sense to keep the tenant or not.

If the tenant is an attractive one, that complements the property’s tenant mix, and runs a generally sound and sustainable business it is most likely worth nursing them through the tough times to benefit from a longer term gain.

Put a manageable payment plan in place, or be creative about extracting value from the tenant. For instance, retail tenants might be behind in their rent, but will still be marketing their business. Landlords should strike a deal to ensure that their property features prominently in the tenant’s marketing campaign. Another good option is to agree that the tenant arranges a promotional event in the shopping centre to help attract new shoppers.

On the other hand, if the tenant is not a particularly desirable one and/or appears to be suffering from deep-rooted and systemic financial woes, it may be better to cut for a landlord to cut their losses before they escalate – within the confines of the lease agreement with that tenant, of course.

Other tips from Rennie include:

• Maintain good communication on both sides of the food chain. If your tenants are struggling to pay their rent, you might find yourself in a position where you can’t pay suppliers or your bank. Know who is likely to default so you don’t get caught by surprise, and keep your debtors informed of your position so that they remain favourable to you.
• Do take judgement against defaulters, even if they have absconded and it seems highly unlikely you will receive any money in the short term. You may at least recoup your losses in the long-term when the tenant wants to clear their black-listing.

A double dip recession refers to second recession that kicks in after short period of economic growth following an initial recession. At the Fortune-Time-CNN Global Forum held in Cape Town at the end of June, both Trade and Industry Minister Rob Davies and Absa CEO Maria Ramos warned about the risk of debt-laden developed economies slumping again.

About Rennie Property

Rennie Property, www.rennieproperty.co.za, South Africa’s top-performing specialist commercial property management company, offers property management, broking and consulting services. It was established in 1997, and for the past 13 years has looked after some of South Africa’s most prestigious buildings including Melrose Arch in Johannesburg, and the ABSA Centre in Cape Town. Its present portfolio of properties under management is valued at more than R6 billion.

For more information please visit: www.rennieproperty.co.za

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