SA's BPO window closing fast

Johannesburg, 15 Mar 2007

An increasing international backlash against offshore outsourcing could harm SA's hopes to capture deals.

This is according to Charnell Hebrard, the City of Johannesburg's business process outsourcing (BPO) sector project consultant.

"There is no doubt there is significant opportunity for companies targeting foreign BPO deals. Nevertheless, this window of opportunity is closing fast and local companies need to take action now," she says.

Hebrard's comments come ahead of the Department of Trade and Industry's mission to the US to promote SA's business offerings, particularly within the BPO sector.

On Saturday, a delegation featuring, among others, the minister of trade and industry, companies in the BPO sector and special interest groups, will head for New York, Detroit, Dallas and Chicago to engage in high-level discussions with US businesses.

Addressing challenges

In putting its case forward as a favourable destination for offshore outsourcing opportunities, the delegation is expected to face questions about its telecommunications infrastructure and costs, incentives, skills availability, labour costs and black economic empowerment initiatives.

Hebrard notes that, while SA's telecoms cost is still an issue to international companies, the concern has shifted to the country's ability to train and retain skilled service personnel that can provide improved experiences.

"Due to the low barrier of entry to many of our service offerings, acquiring and training service agents is less of an issue in SA. However, our ability to retain skilled people in our service centres is a serious problem that is impacting the cost of our offerings.

"Additionally, we need to address growing concerns over data safety and security, ensuring the proposals we offer customers provide a good argument on a financial, service and intellectual property safety basis."

Limited opportunities

However, time may be running out for SA to take its chunk of what is expected to be a $50 billion to $60 billion market by 2008.

"The international market is beginning to see a shift in consumers like the 'Europe for the Europeans' drive, which is seeing a backlash for companies outsourcing to foreign locales. If we don't act now, we may not get the opportunity again," says Hebrard.

Of equal concern to Hebrard is that it appears SA's biggest BPO service providers have decided to walk away from foreign opportunities, deciding instead to focus on local business.

"Chasing international contracts have been both difficult and costly for these companies, so many have decided to go after what is an increasingly lucrative local market," she explains.

Hebrard acknowledges the public sector has been slow to provide industry with its required support. This has made it difficult for companies to gain an international foothold, she admits.

Nevertheless, government is now ready to act and support the sector and adopting a "wait and see" approach could be short-sighted for industry players.

Trade and industry minister Mandisi Mphalwa will this afternoon conduct a public briefing on the incentives for the BPO industry that Cabinet approved last year.