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SA attracts more BPO players

The Department of Trade and Industry's incentives are paying off, says BPeSA Western Cape CEO Gareth Pritchard.

SA's Western Cape offshoring sector recently attracted three international companies that could add another 6 000 jobs to the industry.

Two UK-based companies, Serco and Capita, have entered the sector, while an Indian entity – WNS – has also opened up in the Western Cape. Business Process enabling SA (BPeSA) Western Cape CEO, Gareth Pritchard, says these companies currently have less than 1 000 seats each, but the potential is there for them to create as many as 6 000 jobs.

Pritchard says before the new entities entered the sector, the Western Cape business process outsourcing (BPO) industry had about 5 000 jobs.

Last year, BPeSA said about 30 000 jobs should be created in the sector by 2016. In January 2011, the industry employed about 10 000 people.

BPO was meant to be one of the country's key economic drivers when the Accelerated and Shared Growth Initiative for SA was launched more than five years ago, with the aim of halving unemployment and poverty by 2014. It has since been replaced with the New Growth Plan, which targets five million jobs by 2021.

However, SA's BPO sector has battled to aid government's targets as it has faced constraints such as rising electricity prices, the high cost of communications, and an insufficient pool of skilled workers.

Making inroads

SA has been selected as one of three countries short-listed for the National Outsourcing Association Awards 2012 Offshoring Destination of the Year. The awards, dedicated to the UK outsourcing sector, will take place on 25 October, in London.

Pritchard says the sector is finally making inroads. Government's trade and industry incentives are a “huge motivation” and are encouraging new entrants, he adds. “It's a success story we should all be shouting about.”

The Department of Trade and Industry launched a new incentive scheme last January, which aimed to trim operating costs by up to 20%. Government's incentives mean investors will be paid R112 000 for each full-time job created and maintained.

Local and foreign investors, registered as legal entities in SA, will be eligible for the programme if they create a minimum of 10 jobs. The incentives are paid out in instalments of R40 000 for the first two years and R32 000 in the final year.

The plan replaced the department's Government Assistance and Support initiative, which paid out R688 million between July 2007 and March 2010. However, the project was criticised because of the amount of red tape involved in accessing the funds.

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