Does economic upgrading lead to social upgrading in contact centers? Evidence from South Africa
Mark Graham and I have just published a new article in the African Geographical Review. The article’s main argument is that economic upgrading in the South African BPO industry can lead to both social upgrading and downgrading among contact centre agents.
Anwar, M. A. and Graham, M. (2019) Does economic upgrading lead to social upgrading in contact centers? Evidence from South Africa. African Geographical Review, https://doi.org/10.1080/19376812.2019.1589730
See the abstract, short conclusions and policy recommendations below.
Business Process Outsourcing (BPO) has been identified by the South African government as a key driver of economic growth and employment generation. While BPO operations are inevitably tethered to some physical infrastructures, they can be relatively easily shifted around the world, threatening the jobs of current workers. This observation—combined with the industry’s immense focus on workplace control and high levels of attrition—means that the development potential of the BPO industry on workers in South Africa is a matter of critical concern. This article uses the global production network (GPN) framework to understand the developmental potentials of contact center jobs for workers in South Africa. It asks under what conditions economic upgrading leads to the social upgrading and downgrading of workers in the context of outsourced services activities. One of the central arguments is that economic upgrading among BPO firms can lead to both social upgrading and downgrading among contact center workers. We end with some policy recommendations for the South African government.
This article’s main contributions are two-fold. First, we have demonstrated that the acquisition of South African outsourcing firms by international players is creating a consolidation at the top of domestic value chains, often to the disadvantage of local firms. Lead firms occupy dominant positions and exert power in production networks (e.g., over suppliers, costs, and standards) in order to manage production processes across a host of actors, resulting in value capture at the very top of the chain (Coe & Yeung, 2015). Unequal power relations in the network can lead to bigger firms benefiting, with smaller firms struggling to compete, especially in a neoliberal domestic environment like South Africa’s.14
The case of the outsourcing industry in South Africa also shows that there are multiple trajectories of economic upgrading, yet there are crucial variations. Process upgrading is more common among small local firms in South Africa who are adopting new digital technologies for delivering better services and customer experience. But functional upgrading is difficult to achieve.
The second contribution of this article is to show that different types of economic upgrading have differential impacts on the social upgrading of contact center workers. On the one hand, process upgrading can lead to improvements in certain measurable standards of contact center agents. For example, contact center jobs offer income earning opportunities for the unemployed poor in South Africa and expand social safety nets among these groups through employers’ contribution to workers’ pension and medical insurance: an indicator of social upgrading.
On the other hand, firms also adopt buyer-specific procedures and flexible employment structures that put pressure on both the measurable standards and enabling rights. In fact, both process and functional upgrading can also lead to increased workplace control, performance monitoring, unfair dismissals, exploitation, and health and safety concerns among agents: an indicator of social downgrading among workers. In the absence of job opportunities in other sectors and fewer prospects for career progression within the contact centers, workers may face a stagnation of their socio-economic fortunes. Finally, the lack of union activity in contact centers restricts workers’ collective voice and ability to demand basic working rights, such as against unfair dismissals.
Recommendations for policy makers
In order to try to address these problems, the South African government needs to embrace a comprehensive economic development strategy (Benner, 2006). The South African government should offer preferential treatment for local firms through public services delivery contracts, support marketing campaigns abroad for the domestic sector, and develop a policy framework that ensures that the entry of big multinationals leads to technology and knowledge transfer. Finally, and perhaps most importantly, the South African government also needs to ensure that it has the institutional capacity to monitor working conditions in contact centers, in order to avoid the real potential for an erosion of working standards. By understanding some of these risks and setting minimum standards, regulators can ensure that the emerging knowledge economy can lead to more inclusive economic development.
Graham, M. and Anwar, M.A. 2018. Digital LabourIn: Ash, J., Kitchin, R. and Leszczynski, A. (eds). Digital Geographies,Sage: London. 177-187.
Anwar, M. A. (2018) Connecting South Africa: ICTs, uneven development and poverty debatesin Knight, J. and Rogerson, C. (eds). ‘The Geography of South Africa’,Springer.
Graham, M., Ojanpera, S., Anwar, M. A., and Friederici, N. 2017. Digital Connectivity and African Knowledge Economies.Questions de Communication.32. 345-360.
Graham, M., and Anwar, M. A. 2019. The Global Gig Economy: Towards a Planetary Labour Market?First Monday.24(4). doi.org/10.5210/fm.v24i4.9913.