The Department of Trade and Industry (DTI) has launched government's revised business process outsourcing (BPO) and business process services (BPS) incentive programme.
The initiative is aimed at rewarding foreign businesses for creating jobs in SA, as it noted the telecoms sector is set to play a crucial role in boosting investment prospects.
According to the DTI, the BPO and BPS incentives - which focus on encouraging companies to outsource some of their operations to SA - form part of government's objectives for creating jobs and an investment-friendly environment.
Speaking to current and potential investors as well as analysts in London this week, trade and industry minister Rob Davies said SA's incentive programmes over the past four years had been successful, with the telecoms sector providing strong growth.
"The majority of foreign investment in the sector originates from the United Kingdom (75%), with voice services accounting for 80% of all BPO work conducted in South Africa. The South African vertical split among sectors serviced is healthy and split over the following verticals: telco and ICT (34%), retail (29%), utilities (12%)," he said.
"The previous incentive which ended on 30 September was offered over three years to companies creating over 50 offshore jobs. The companies presented a compelling argument that many of the industry's contracts ran for five years and therefore it would provide a level of comfort to investors if the incentive was to also run for five years. The review by Everest Global took note of this and the new BPS incentive will also run for five years from October 2014 to March 2019.
Back office reliance
"We have noticed South Africa is increasingly being asked to provide more complex back office process services. The legal process outsourcing (LPO) and shared services sub-sectors are beginning to expand as South Africa proves its capability and capacity to provide such services," added Davies.
The DTI notes SA's value proposition, which includes a large skills pool of English speakers, the depth of skills available, the cultural affinity with the UK, and time zone compatibility, continues to attract new investors and existing investors are expanding.
Davies said the country's value proposition is now even more compelling as it allows local bidding for UK contracts to offer a more cost competitive proposal when compared to other offshore destinations.
According to the DTI, SA was named the best off-shoring destination at the UK's National Outsourcing Association Awards in 2012 and 2013, while it received the same accolade from the European Outsourcing Association during the same years.
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