TAX STRUCTURE HURTING TELECOM INDUSTRY
SHAMIM AHMED RIZVI
Aug 04 - 10, 2008
The IT industry of Pakistan which was showing a fantastic growth of about 50 percent annually for the last 5 years is now finding it difficult to maintain that momentum. According to sources in the industry the increase in federal excise on telecommunication services from 15 to 21 percent has adversely impacted the usage of mobile phone and has resulted in a fall of about 8 percent during the first few week of the current fiscal year.
Tax levy of Rs 500 per mobile phone would hurt low income groups that can only afford sets worth bellow Rs3,000 and have negligible impact on higher income groups purchasing sets worth over Rs20,000, mobile phone dealers said. The across the board tax is un-justified, as it does not differentiate between expensive and cheap phones, they said. The tax on mobile phones introduced in budget 2008-009 would eat away purchasing power of persons that can only afford cheap sets. Now a person buying a cheap mobile phone worth Rs 2,000 is paying 25 percent tax while an affluent person purchasing a set worth Rs 20,000 is paying only 2.5 percent, it is highly unjustified and smacks of a policy to poor.
"We have suggested the government to reduce the tax on cheap mobile sets and keep it as low as Rs100 and on the other side it can increase the tax on expensive mobile sets by up to Rs750 and above according to their prices. But this was not done", they informed. The new tax affecting sales of legally imported handsets in the organized sector where 80 per cent sales are of cheap handsets. Mobile and telecom industry has emerged as a great cash generator for national treasury in last few years. In the year 2006-07 the telecom sector contributed two percent of the GDP.
Almost reaching the saturation point in cities the mobile companies were now planning to expand their net work to villages and suburban areas which offered a high potential for inexpensive mobile sets. Had the government used some brain, it should not have ordered a uniform tax of Rs 500 on all types of sets. Sliding slabs should have been introduced starting from Rs 100 on a set costing up to Rs 3000 and Rs 3000 per set costing Rs 50,000 and above. In this way the government would have been to have the desired increase in its revenues without hurting the growth momentum of the industry, a source confided to this correspondent. Increase in taxes and duties on telecommunication services in the budget for the current fiscal year 2008-09 would have negative impact in attracting fresh foreign impact in attracting fresh foreign direct investment in telecommunication sector and overall economic growth of the economy, he said.
At present some 6 mobile phone companies are providing services out of which 4 are facing losses under the head of operations. At this point of time sudden increase in taxes and duties on this potential sector will not be a welcome step.
Mobile phone companies have invested $6 billion during the last 4 years in their infrastructure to provide reliable services to their consumers and crated around 1 million job opportunities across the country. According to the mobile phone industry experts, the mobile phone industry, which has already tapped the market in the urban areas of the country, was planning to invest heavily in their infrastructure to expand their services in remote and far flung areas. At present mobile phone companies have already sold 80 million connections to the consumers but the actual numbers of live consumers stand at 50 million. The companies were aiming at increasing their consumer's base to at least 100 million by expanding their services in remote and far-flung areas of the country. But the sudden shift in fiscal policy for the telecommunication services has threatened the expansion plans of the mobile phone companies, especially in the rural areas of the country, they lamented.
According to the telecom experts, the result of this additional tax, contrary to the aim of government, will result in reduced usage and expansion of the services resulting in lesser revenues. During budget making exercise the representatives from the mobile phone industry proposed the government to eliminate Rs 500 per connection activation charges, which were borne by the companies and not by the consumers.
The representatives were of the view that government should take such steps which allow the consumer base to grow as it would result in increased investment in the infrastructure and hence more revenues for the government as witnessed in the last four years. But the government has not only increased the federal excise duty rate from 15 percent to 21 percent, but also slapped Rs 500 customs duty on the import of mobile phone sets.
Growth in mobile phone sector has also provided good basis to the economy to grow in the last 4 to 5 years and this sector was required to continue growth pattern to serve the rural population. "Other options like taxing stock market or direct taxation of rich should have been looked into as compared to burdening the existing taxpayers or consumers," they added.
Urging the government to revise the uniform levy on mobile sets, the industry sources has reminded the government that Pakistan has been emerging as a location of choice for the outsourced software development and IT enabled services such as call centers and medical transcription. Several multinational have located development and support centers here while others outsource work to Pakistani companies.
Pakistan has an edge over the neighboring global giants in terms of its thriving Business Process Outsourcing industry. The ready availability of skilled professionals, an appropriate IT infrastructure, and affordable rates for connectivity result in considerable time and cost savings for entrepreneurs. The costs in Pakistan are as much as 30 per cent lower than India while the infrastructure advantages of high speed connectivity in all the major cities are available at competitive rates. There is a rapid movement of connectivity towards broadband services which are taking precedence in homes and business. Efforts to network the country continue, and so far over 1,800 towns and cities have been plugged into the Internet backbone.
The Pakistani industry's major growth area is that of telecommunication, with an increase in cellular network operators over the last year, as well as the doubling of subscribers over the course of a single year. One of the most progressive policy changes came with the deregulation of fixed-line telecommunications body, PTCL, formally bringing the incumbent operator's monopoly to an end and setting the stage for the opening up of the sector to major investors.
THE ROLE OF A CALL CENTER
MR. AYUB BUTT
CEO - ZRG INTERNATIONAL (PVT) LTD.
Due to a competitive environment, progressive organizations are paying special attention to customer services in order to gain and retain their customers. These days, the customers prefer and even demand high quality services and personalized attention. Therefore the service providers face a choice of either setting up and managing physical locations to provide customer service or creating one or more call centers to offer most of the services by phone, email and fax.
Obviously, call center is a much more cost effective way of delivering most of the services and assistance required by the customer and therefore, call centers have become a necessity of the time.
A call center provides a platform for an organization to:
Make it easy for their customers to access information and services
Launch and support products and campaigns,
Fine tune products, services and support delivery mechanism
Document all activity that takes place during the delivery of services
Measure and analyze facility usage, volumes, trends, feedback, problem areas
Call center also helps in many other key areas such as customer relationship building, cross-selling and service quality assurance, etc. Most of the leading brand name companies in the Telecom services sector and the Banking services sector already have working call centers. Still, a large number of companies that need a call center still do not have one and many among them are presently planning, evaluating and implementing call center setups to manage customer services, support, sales, recovery, marketing, etc.
HOW TO IMPROVE CALL CENTER EFFECTIVENESS:
One thing that customer service call centers dread is customer backlash and this is something that is becoming all too common for call centers all over the world. Disgruntled customers choose to do business with a rival instead of you because you could not offer them the after-sales service that you promised. When customers consider their trust to be breached their reactions include a poor perception of your company, reduced likelihood of doing business with your company, and almost no chance of recommending your company to a friend.
Customer call centers invite trouble when they deviate from the maxim that an existing customer who has paid good money deserves respect; ironically most businesses are aware that it's easier to retain a customer than go for a new one.
Poor customer perception of business call centers is not industry-specific. Its spread across industries covering businesses of all sizes. Too often, businesses lose sight of customer requirements and in an effort to improve operational efficiencies they cut corners and try to reduce costs. This affects call center performance.
IF YOU ARE RUNNING A CALL CENTER, YOU SHOULD KNOW WHERE THE TROUBLE LIES; HERE ARE SOME OF THE ISSUES THAT ARE PET CUSTOMER PEEVES
Having to make more than one call and then talking to more than one customer representative
Having to stay on hold, deal with IVRs and a menu that is anything but easy to use.
The absence of dedicated executives, so that each call is a new beginning where the problem has to be explained afresh.
Poorly trained executives who more often than not escalate the issue to their seniors while you are put on hold.
IF YOU WISH TO IMPROVE YOUR CUSTOMER'S EXPERIENCE WHEN INTERACTING WITH YOUR CALL CENTER, HERE ARE A FEW THINGS THAT YOU NEED TO UNDERSTAND -
Time and effort devoted to offering customer service should not be viewed as an avoidable cost, also your call center is not a cost center it is a profit center which if run properly will get you a very quick ROI on what you put into it. It also means that you have to select your call center
A successfully closed issue helps a great deal in retaining a customer.
Only trained staff can deliver consistent results so focus on training the staff, quality control. Attrition can prove to be a drain on your resources so work on retaining the experienced and talented staff.
Remember there are a lot of intangibles and trifles that lead to improved customer call center performance which in turn enables you to achieve sales conversions. Empathize with your customer and you will be handsomely rewarded for it. Do not forget that it also means that you have to carefully select your call center CRM application.