SA's business process outsourcing (BPO) sector is on track to add a total of about 30 000 new jobs by 2016, based on the progress the Cape hub has made.
BPO was meant to be one of the country's key economic drivers when the Accelerated and Shared Growth Initiative for SA was unveiled, 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 previously battled to aid government's targets, as it has faced constraints such as rising electricity prices, the cost of communications, and an insufficient pool of skilled workers.
Business Process enabling SA (BPeSA) interim CEO Gareth Pritchard says the sector is "finally getting somewhere". Last year, the Cape province, which accounts for about 65% of the local industry, added 2 600 jobs. Durban is also doing well, and - based on the Cape figures - the country added around 5 000 jobs in the sector, he notes.
The Cape province, which Pritchard used to head up before recently becoming interim CEO of the national body, is on track to meet its targets, he says. He adds that, although figures are not currently available, the rest of the country should follow suit.
In 2011, BPeSA - an umbrella body for the sector - said about 30 000 jobs should be created in the sector by 2016. Last year, Prichard said the Western Cape's aim was to create about 5 000 jobs over the next three years.
The sector is estimated to be responsible for about 18 500 jobs.
New wins
This month, a large telecoms company will open an office in Johannesburg, says Pritchard, who cannot disclose the name of the entity. He says about 5 000 jobs should be added this financial year, which ends next March.
So far, the sector has inked three new contracts with outsourced providers, which will increase the number of brands active in SA, says Pritchard. He notes that more brands will move into SA on the back of the growing presence of global outsourcing companies.
BPO organisations and service providers currently operating in SA include IBM, Capita, Serco, Merchants, WNS, Teleperformance, Aegis and Genpact.
Government revised its incentive programme about two years ago in a bid to attract more investment into the sector. The scheme aims to trim operating costs by up to 20% and will pay investors 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 plan replaced the department's Government Assistance and Support initiative, which paid out R688 million between July 2007 and March 2010, but was criticised because of the amount of red tape involved in accessing the funds.
Last November, trade and industry DG Lionel October told Parliament that the department had approved 23 projects, which would see a total of R4 billion in investment come into the country, with the potential to create 15 000 jobs. At the time, although grants worth R1.8 billion had been approved, only R51 million had been paid out.
Investments in the 2011/12 financial year included Amazon's customer service centre in Cape Town, worth R834 million; Etitnerse, to the value of R845 million; and Mindpearl, to the value of R356 million.
Encouraging investment
In addition to the investments, SA recently won the European Outsourcing Association (EOA) Offshoring Destination of the Year Award. The annual awards ceremony, hosted in Amsterdam, acknowledges destinations and operators that have excelled in servicing the European outsourcing market.
President Jacob Zuma, speaking at the weekend, said the award "confirms our status as a leading business process outsourcing destination of choice".
In 2012, SA took home the National Outsourcing Association (NOA) - UK Offshoring Destination of the Year Award. Pritchard says SA is mostly targeting English-speaking companies to come into the local sector.
This includes the UK, Australia and, to a lesser extent, North America, says Pritchard. European countries currently serviced from SA include England, Germany, France, Netherlands and Switzerland. Services provided in English account for 75% of the offerings, he adds.
"In the past, SA has often flown under the radar as a BPO destination, but on the back of the EOA and NOA awards, and through the continued investment from global operators, I believe we will see an influx of new investment in 2013 and beyond," says Yunus Hoosen, chief director of Investment Promotion and Facilitation at the Department of Trade and Industry.
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