BPO sector cements its status in SA economic recovery

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 12 Apr 2021
President Cyril Ramaphosa.
President Cyril Ramaphosa.

As South Africa forges a “new economy” in the aftermath of the COVID-19 pandemic, president Cyril Ramaphosa has pegged the global business services sector, also known as business process outsourcing (BPO), as one of the green shoots that will steer economic reconstruction and recovery.

This after the country claimed top spot as the mostfavoured offshore location for call centres worldwide, based on the 2021 Front Office BPO Omnibus Survey.

While many industries have shed jobs during the global pandemic, SA’s BPO sector managed to create job opportunities during this challenging period. It is also identified as key to boosting the country’s employment prospects.

Business Process Enabling South Africa’s (BPESA’s) Andy Searle previously told ITWeb that the local BPO sector has 271 850 people in its employ, with over 70 000 of those employees working for the international or offshore segment of the market.

Taking to his weekly newsletter this morning, Ramaphosa lauded the sector’s accomplishments, noting its job creating potential in a new global reality.

According to the president, SA has several advantages that make it an attractive destination for business services. “First, we have sophisticated digital infrastructure, including mobile networks and high-speed broadband.

“Second, we have a young, dynamic and skilled workforce that delivers a world-renowned quality of service, along with deep knowledge in technology and financial services.

“Third, we have a high level of English proficiency. And finally, we are positioned in a similar time zone to our key export markets.”

Knocking out the competition

After three consecutive years in second place, SA beat stiff competition such as India, the Philippines, Malaysia, Poland, Egypt and Northern Ireland to claim the top award for the first time.

The annual 2021 Front Office BPO Omnibus Survey conducted by global firm Ryan Strategic Advisory was conducted with 628 enterprise contact centre decision-makers across the demand markets of Australia, Canada, France, Germany, Italy, Spain, the UK and US.

With SA in first place, mature sector giant India was knocked down to second place and the Philippines placed third.

According to the survey: “Aggressive promotional campaigns in key demand markets by South Africa’s CX [customer experience] services stakeholders are certainly a factor in the country’s first-place showing. So, too, is the view among enterprise CX buyers that South Africa is a high-quality service delivery destination.”

Ramaphosa describes the country’s current global BPO standing as a “remarkable” achievement. “In a short space of time, our country has propelled itself from a relatively unknown destination for offshore customer service delivery, in the shadow of large competitors such as India and the Philippines, to the very forefront of the global industry.”

The Department of Trade, Industry and Competition (DTIC), which has partnered to work hand-in-hand with non-profit industry association BPESA in this sector, welcomed the achievement.

“In a boost to business confidence, South Africa has won an award as the top global location for business process services, in a sector that is rapidly expanding locally and exporting call centre and related services to other parts of the world,” says the department in statement.

It adds: “The business services sector, which includes call centres, technical support and back- and front-office services for major multinationals and South African firms, has seen exceptional growth in recent years, and has been a major source of job creation for young South Africans.”

The country’s BPO sector has witnessed a hive of activity in recent months, with international companies announcing plans aimed at boosting the sector even further.

Last June, Amazon announced it would hire 3 000 people in SA this year to support customers in North America and Europe.

In February, consumer credit reporting agency TransUnion announced the opening of a new BPO centre in the country, which is set to boost job creation.

According to Ramaphosa, the government-introduced Global Business Services Incentive has been successful in reducing costs and attracting new investors into the country.

He explains that one condition for accessing the incentive is that a proportion of new jobs must be sourced through inclusive hiring and must go to marginalised youth. “The industry has committed to use, a platform for young people to access a range of opportunities, as a tool to recruit young people into these jobs. The platform forms part of the Presidential Youth Employment Intervention.”

The president notes the BPO sector has added 40 000 jobs to the economy since 2018, with young people making up 82% of these new jobs and women comprising 65% of the workforce. Furthermore, it generates R1.9 billion a year in export revenues and attracts significant capital investment.

“With global demand on the rise, and with a compelling and competitive proposition to global buyers and investors, the sector in South Africa is on track to achieve its target of 100 000 new jobs by the end of 2023 and 500 000 new jobs by the end of 2030.

“As we forge ahead with our economic reconstruction and recovery, we must recognise and nurture green shoots such as this.”

DTIC minister Ebrahim Patel notes the BPO sector is a large and growing employer of labour.

“Industrial development is no longer only about manufacturing; productive services like business process services and film-making are examples of new job-creators that we are actively backing.

“The digital revolution is placing greater emphasis on provision of strong, technical support through call centres. Firms in the sector want to be located close to a source of skilled workers. The rapid expansion of business process services is a tribute to the skills of young South Africans and evidence of what South Africa has to offer as a business and investment destination.”

Ramaphosa concludes: “Too often, we get caught up in our immediate challenges and lose sight of our true potential. Our country has all of the ingredients that we need for economic success. We only need to recognise these, and put them to use.”