GOVERNMENT should step up the pace of deregulating the telecommunications industry in order to boost growth in the call centre outsourcing industry, according to Call Centre Nucleus marketing director Jonathan Hackner.

Although the call centre industry had seen growth in the past two years, was employing 70000 people and was worth R500m a year, the industry was still "too embryonic and needs government as a catalyst", said Hackner.

However, the industry is set to benefit soon from the long-awaited liberalisation of the telecommunications industry announced by Communications Minister Ivy Matsepe-Casaburri in September.

Hackner said liberalisation in the industry would result in a drop in telecommunications costs as government heralded a switch to new technologies such as voice-over internet protocol. The regulatory changes could see the local industry tap into lucrative outsourcing opportunities globally.

According to the Gauteng Economic Development Agency, more than 70% of UK companies are seeking to invest in overseas markets because of overregulation and high costs in the UK.

On Friday, Call Centre Nucleus hosted a business delegation from the US and Europe looking for call centre opportunities in SA. Currently, 55% of the local industry's revenue comes from foreign contracts. The company gets 20% of its revenue from these contracts.

Gauteng Economic Development Agency CEO Charles Jonker estimated that Gauteng would see a 40% increase in the call centre industry, "with a number of deals in the pipeline already". He said the industry was expected to double in size in the next two years.

However, Hackner said because of high costs, the local call centre industry lagged behind competitors such as India and the Philippines. He estimated that SA accounted for less than 1% of the global foreign call centre industry. "The only reason we are not as successful as these countries is because of cost. Unlike India, SA is not a low-cost environment," Hackner said.

He said labour costs counted for about 65% of the local industry's total costs. But Hackner said SA had an edge over India and the Philippines because of its well- developed infrastructure. "But we are not getting growth because our costs are high ".

He said SA's call centre industry needed "a co-ordinated response from government".

If government took "the high road", which would entail lowering telecommunications barriers and high labour costs, the industry could create 150000 jobs by 2008, he said. In that period, India was expected to create 2-billion jobs.

He said in addition to liberalising the telecommunications sector, government should also play a leading role in uniting the players in the industry and also ensure there was a broad skills base.