The term 'outsourcing' has become far too familiar these days as large corporations and particularly the previous parastatals try to divest themselves of 'so-called' noncore business. In fact outsourcing, just like downsizing, is in many instances just a more affable term for closure and retrenchment.
While outsourcing has resulted in the loss of many jobs and technical capability, it is fortunate that it has also provided opportunities for entrepreneurs to break out of the employee mould and create their own business. An excellent example of just this modus operandi is Constantia Telecommunications Company (Constantia). The idea for the establishment of Constantia came about when Telkom decided in 1998 that it would no longer supply 'free' phones to its customers, and as a result it also decided to close down its telephone repair and re-manufacturing facility. Colin Martheze and some of his Telkom colleagues who were to be retrenched from the repair facility at this time realised that in fact this presented a golden opportunity for them to provide this essential service as a private operation, servicing the needs of both the public and PABX markets.
Constantia was thus established in mid-1999 using the proceeds from Telkom's retrenchment packages and with the assistance of a far-sighted financial partner. The Telkom Klerksdorp repair workshop and all of its valuable test equipment was acquired from Molapo Technology that had in turn obtained the business from Telkom along with the more profitable high-tech repair and maintenance operations. Molapo in fact had no interest in the high-volume, low-margin telephone set business for its own account but it still required the service and now sub-contracts most of this business to Constantia.
The Directors of Constantia are Colin Martheze and Henk Heukelmann (both ex-Telkom engineers) as well as Ken Chie (a director of a number of companies including Sunray Electronics). The management team is complemented by another ex-Telkom engineer, Kobus Joythe, who manages the workshops. The rest of the staff (all saved from Telkom's retrenchment) are well representative of the community with a high proportion of women who carry out most of the delicate stripping and repair work. Constantia encourages its staff to study further and is currently assisting a number of them at the local Technikons. It also provides the Technikon with facilities for hands-on training of their students, the latter being paid standard contract worker rates. Besides being culturally diversified, the staff of Constantia are often from the same family with mothers, sons, husbands and wives working alongside each other.
Today Constantia operates two fully-equipped workshops located in Braamfontein and Klerksdorp, and maintains an office in Pretoria. Growth has been so strong that new larger Johannesburg premises are now being sought. The full-time staff complement is 15 people but this can be rapidly augmented by up to 50 previous Telkom staff on a contract basis as orders demand. These additional workers were all retrenched by Telkom, but are fully trained and can operate at 100% productivity in the Constantia environment from the moment they begin work.
With Telkom no longer supplying the 'free' phones to the public, and in particular to businesses, Constantia soon saw another opportunity for the supply of new telephones. Within months after opening its doors the company had secured the rights for local manufacture of telephones from two suppliers, one from a Far East supplier and the other from India. Currently these sets are imported in kit form and are assembled and tested by Constantia. Local content at present is restricted to cords from Retractel and Constantia's own innovative customisation service (see below). Within a few months the housings and keyboards will also be moulded in South Africa and from there, Constantia intends to start the local manufacture of the electronics, suppliers for the printed circuit boards having already been evaluated.
Besides Telkom, Constantia has 190 customers for its new and re-manufactured phone product lines, these including branded phones for Transtel, Eskom and even the SANDF. All the major PABX suppliers are customers, these including Dimension Data, Samsung, Panasonic and Hymax.
The TK2000 series of phones comes in five different versions and can be tailored by Constantia to operate with any ICASA-approved switches, including those from Lucent, Alcatel and Hymax. The exterior of the phone sets are customised for the user using a special printing technology that allows permanent marking with the customer's logo in colour. Electronic customising is also possible (including call waiting display). One interesting application is the information service phones supplied to ABSA for use in their banks. The bright red ABSA phone is tailored so that when the receiver is lifted it automatically dials the appropriate 0800 toll free number. The phone is still supplied with standard dial keys that are used to select services as prompted by the voice answering service. Unfortunately for the general public wanting to make a cheap call these ABSA phones will not connect into Telkom's normal network. In addition, Constantia also offers the Coral range from India, as well as a range of hands-free devices as used by travel agents and call centres.
Incredibly, some of the regulars in for repair at Constantia are the old magneto phones, still in their sturdy black enclosures reminiscent of the sixties. Up to 800 or more of these sets are re-manufactured each year to good-as-new condition. As with more modern sets such as the Telkom Venus, Orion and Erica lines (as well as the Diana and Jupiter small PABX), these phones are totally stripped. Re-usable plastic parts are hygienically washed in a 'secret' liquid, while the sun-faded plastic on the fascia is either bleached or replaced. In the case of the magneto phones the sturdy black plastic is buffed to produce a 'like-new' shine. New numbers are printed on dials; electronics are checked and refurbished if necessary, Constantia even has the necessary equipment to repair surface mount boards. After re-assembly with new cords and plugs, each phone is individually tested to full Telkom specification before being dispatched to the customer for many more useful years of service.
Of course, if required, the final Constantia touch of personal badging can be done on these refurbished phones. Note that although most phones are returned to the customer 'as new', some clients only require a basic clean and functionality test. While the largest share of the repair business is the Telkom-branded phones that dominated the market until 1998, Constantia can work on any ICASA-approved device. In addition to phones the company can also refurbish parking meters, many of these being based on Telkor's range of coin pay phones.
The custom phones provided by Constantia are catching on in a big way and a recent new market is estate agents. Just as you will probably receive a bottle of champagne with that new car, now estate agents are presenting house buyers with a brand new telephone. Of course the phone is branded with the name and details of the agent and more often than not also with the details of the bond provider. Perhaps these custom phones will even become popular as corporate Christmas gifts to replace the boring array of clocks, cuff links and pen sets. By the way, for the real telephone connoisseur a sideline of Constantia's business is the manufacture of replica 'antique' wall-mounted wooden telephones, complete with brass bells and dummy wind-up magneto. These phones are manufactured from teak, oak and kiaat and, unlike the 'real thing', are fully ICASA-compliant.
As for the near future Constantia believes that it is now ready to move into the consumer market. As a result it has signed an agreement with a major supermarket chain (500 outlets throughout South Africa) to stock its new phone line. This should be seen as a major breakthrough as although the inhabitants of a major city can go to the nearest electronic outlet, where does one go in Pofadder or Hazyview? Ubiquitous supermarkets are ideal to promote competitively-priced basic phone sets.
In terms of current business, Constantia supplies in the region of 4500 locally-assembled new phones every month and re-manufactures up to 10 000 a month. When the company started off it was dependent on Molapo Technology for 60% of its business, but inside three years this has reversed so that 70% of the business is private PABX and only 30% Molapo. In Rand terms Constantia has grown from a R180 000 per month turnover in mid-2000 to more that R600 000 per month in 2002, a massive increase by any standards.
While Constantia intends making inroads into the domestic telephone market, its main focus at present remains the PABX systems where it estimates it has a 65% market share. There is no doubt that Constantia phones, already technologically competitive will become progressively more cost competitive as a result of the increased local content and the declining value of the Rand, which will put pressure on fully-imported devices. The company's potential for sales into the growing telecommunications market in the rest of Africa is huge, while as the largest ICASA-certified telephone repair centre in South Africa this ongoing business will continue to grow.
For further information contact Colin Martheze, Contantia Telecommunications, 011 339 4048.
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