Mar 09, 2012
Bright future for Western Cape BPO sectorBack
Cape Town|Engineering|Africa|BPeSA Western Cape|Education|Gas|Shell|System|Africa|Australia|Egypt|Ghana|India|South Africa|The Philippines|United Kingdom|United States|Insurance Brand|Oil And Gas|Utilities|Western Cape|Gareth Pritchard|Infrastructure
© Reuse this
“These investments form part of a broader provincial government strategy of creating 10 000 offshore-related jobs by 2015, which we are on track to achieve,” he says.
Further, Pritchard predicts that fears of another global recession could drive the growth of the BPO sector this year, as businesses look at innovative ways to cut costs without sacrificing quality.
As outsourcing is seen as a tried and tested model, companies will look to BPO as a way to reduce operational costs in difficult economic times, says Pritchard.
“With increasing pressure on senior management to improve productivity, while still cutting costs, BPO enables organisations to focus on improving core competencies, while secondary functions, such as customer service, are outsourced,” he notes.
In the past decade, the Western Cape has played host to a number of major international brands including oil and gas group Shell and German airliner Lufthansa.
In the past six months, a British utilities company and a well-known UK insurance brand have set up operations in Cape Town and are set to be joined by a globally recognised mobile brand during the first quarter of this year.
“Since the 2008/9 recession, worldwide unemployment levels have not shown any real sign of improvement, placing further pressure on companies that are offshoring their customer service,” he explains.
A further challenge is the growing number of competitors from first-tier destinations like India and the Philippines, as well as from second-tier competitors, such as Egypt and Ghana, which compete more directly with South Africa.
As this competitive landscape grows, it is critical for the South African BPO industry to continue looking at ways to improve its offering to foreign investors, Pritchard notes.
Meanwhile, South Africa has a large pool of highly skilled agents; however, there is a shortage of quality team leaders, he says.
“BPeSA is aware of this and we are rolling out a new skills strategy, which will include a purpose-built academy specifically for the sector,” he adds.
“The BPO and offshoring industry is a multibillion-dollar sector responsible for hundreds of thousands of jobs worldwide.”
There are local jobs, however, a lot of these are transferred from other provinces thus creating new jobs for the Western Cape specifically, but not necessarily new jobs for the country, Pritchard explains.
Therefore, BPeSA is focusing on attracting new jobs from the offshore market, with a particular focus on the UK, which makes up a majority of the Western Cape’s BPO sector. It is also looking into attracting business from other destinations, such as the US and Australia.
Pritchard believes industry growth can be secured through continued support from the private sector, government, trade bodies, such as the Department of Trade and Industry (DTI), and industry bodies like BPeSA.
SA BPO Proposition
The country is typically able to offer source destinations a cost saving of about 50%; however, this figure improves further for investors making use of the DTI’s national incentive scheme, says Pritchard.
This incentive pays investors up to R112 000 per employee for each job created and maintained over a three-year period, lowering the cost of outsourcing from South Africa to about £10 000 a year for each full-time employee.
In the Western Cape, there is also an additional telecoms incentive available, which provides new investors with free telecoms services for their first six months of operation, he adds.
“As telecoms costs form an important part of an investor’s cost basket, this initiative removes a lot of risk for new investors who are deciding whether to set up in the province,” he explains.
Further, the local industry will focus on promoting its domain skills to other countries.
Pritchard says its large pool of personnel with world-class experience in the financial, telecoms and legal domains enhance Cape Town’s mature domestic BPO market.
“Our tertiary education system produces a large number of qualified actuaries, chartered accountants and other specialists each year, while sector-specific programmes in banking and insurance also provide intermediate levels of skill, making the province a competitive service destination for these markets,” he explains.
Meanwhile, South Africa’s large pool of skilled English-speaking individuals to choose from, and rapidly improving telecoms services, both in terms of performance and cost, have further added to South Africa’s standing as a world-class service destination, he says.
The country is also well located to service the European market, given its time zones and its ability to offer cultural affinity to Western markets.
“These factors, combined with our world-class infrastructure, make South Africa and the Western Cape a highly attractive BPO investment destination,” Pritchard states.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines
Other Western Cape Profile News
Effective energy management is showing significant cost savings at South Africa’s largest steel producer, ArcelorMittal’s Western Cape plant in Saldahna, says the National Cleaner Production Centre of South Africa (NCPC-SA). Energy savings were achieved at the...
Updated 18 minutes ago South Africa’s newly drafted National Integrated Information and Communication Technology (ICT) Policy White Paper would be finalised by February 2015, new Telecommunications and Postal Services Minister Dr Siyabonga Cwele has revealed. In a response to a...
Updated 42 minutes ago The Passenger Rail Agency of South Africa (PRASA) will continue refurbishing its existing Metrorail fleet for another 15 years, despite the R51-billion acquisition of 600 new trains of six cars each, signed last year. Not all the new coaches will come on stream at...
Updated 57 minutes ago Talks are under way to establish a network of technology incubators across Africa, Western Cape Economic Opportunities Minister Alan Winde said on Wednesday. Following a recent Western Cape Government-led delegation to Nigeria and Ghana to present an ‘African...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Local aerospace company Denel Aerostructures (DAe), part of the State-owned Denel Group, has won a fourth contract to manufacture parts for the Airbus A400M military air transport and air-to-air refuelling aircraft. The new contract, which was won in an international...
Although CEO Mark McChlery and chief marketing officer Bob Skinstad likened themselves to children in a playground when taking on the task of “reengineering and repositioning” the Seartec brand, the “young, dynamic and enthusiastic guys” were like proud...
An increasing number of buyers, in both the new and used car markets, are opting for finance structures that lower their monthly repayments, says asset financing company WesBank. These include the use of large balloon payments (also known as residuals), as well as...
Tertiary education institutions can use search engine giant Google’s Chromebook to provide secure mobile end-point devices for students on which they can share documents, work collaboratively on documents and access education materials and applications being used...
Local ceiling and partition company Abbeycon has beaten global competition at the Saint-Gobain Gypsum International Trophy competition, which was held last month in Berlin, Germany.
Next ArticleConstruction at Wemmershoek WWTW to start shortly