Government allots R569m to propel SA’s BPO sector

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 09 Nov 2023
Government has set aside R569 million for the global business services sector this financial year.
Government has set aside R569 million for the global business services sector this financial year.

The South African government has this financial year allocated R569 million to the global business services (GBS) sector, also known as business process outsourcing (BPO).

This is the word from Ebrahim Patel, minister in the Department of Trade, Industry and Competition, who added that government has invested more than R3 billion in the sector since 2016.

Patel this week addressed the annual Business Process Enabling South Africa (BPESA) GBS and BPO Conference and Alchemy Awards in Cape Town.

Host city Cape Town is among the most-established regions in the GBS/BPO sector, with over 59 000 related jobs, to date.

Patel noted the sector has played a pivotal role in job creation and economic expansion, and stressed the vital role of partnerships between government, the private sector and employees.

The next phase of the GBS sector focuses on expanding operations across provinces and towns, with emphasis on high-value services in information technology, finance, health, legal and retail, he said.

In addition, the sector is youth-focused, with 90% of employees being young people, and six out of 10 employees being women. “The face of the industry is female and young people, which fits in well with our national priorities.”

South Africa’s joblessness has escalated in recent years, and youth remain vulnerable in the labour market, with an unemployment rate higher than the national average.

The official unemployment rate was 32.9%, as at the first quarter of 2023, according to Statistics South Africa, with unemployed youth (15-34 years) at 46.5%.

The GBS/BPO industry, which is targeting 500 000 new jobs by 2030, has been pinned as the greenshoot that can alleviate the country’s unemployment.

Ebrahim Patel, minister of trade, industry and competition.
Ebrahim Patel, minister of trade, industry and competition.

However, with the rise of generative artificial intelligence (AI), there is widespread worry surrounding its impact on jobs, as the industry across the globe increasingly incorporates AI-powered agents into their processes.

According to Patel, the sector will need to address the challenges of AI in consumer-servicing markets.

“We need to embrace new technologies, while recognising the opportunities and challenges.

“Artificial intelligence will impact on the customer service market both here and globally. We must recognise that – while it’s potentially very uncertain what the extent, speed, nature and impact will be – unquestionably, it’s going to impact on the market.

“AI may be used to automate repetitive tasks and AI may be used for personalised customer support…let’s recognise that the world will change. AI will also provide enhanced monitoring and analytics that will measure and improve customer care – there are many different areas that AI will impact.

“We should consider ways in which AI can complement and support the activities of trained and highly-motivated human beings. During this small window of opportunity – because AI is going to explode on us rapidly – before the full force of AI is unleashed in the customer service markets, the industry should consider what adjustments are required to this service offering.

“There will be a vital role for human beings for a number of years in this market, but think through how we blend technology and human skill.”

Competent people

Patel believes skills enhancement is vital so that the industry can be the gateway to the world of work for young people. He pointed out this encompasses training before people come into the GBS sector, and there is also a need for partnerships with TVET colleges and universities.

“When you think of call centres and universities, the old paradigm is that those two don’t fit together. The thought is that people who go to universities are not people who come to call centres, but the world has changed.

“The digital revolution now means top-level professionals can use digital tools to provide services in markets globally.

“There is a market opportunity the GBS sector can utilise. In the process, work on ensuring that when people want to exit the sector, they would have acquired a portfolio of skills and expertise that makes them valuable to non-GBS sectors.”

He also emphasised the industry's commitment to ethical practices and called for improved social impact, strengthened labour relations and decent working conditions, in line with the principles enshrined in the South African constitution.

“Ethical sourcing presents both a market challenge and a tremendous opportunity. As consumers demand transparency in production conditions, we must showcase our strengths while enhancing their impact on local operations,” Patel concluded.