Communication costs hindering South Africa’s business process outsourcing potential
South Africa has what it takes to become a business process outsourcing (BPO) “destination of choice”; however, the high cost of communication is limiting its potential.
Earlier this month, Deloitte South Africa said that the country’s BPO industry accounted for 1% of global revenue in 2014, with expectations that this would increase to 4% by 2030, while Johannesburg, Cape Town and Durban ranked 20th, 56th and 100th respectively in the top 100 global outsourcing destinations.
However, the overall cost of wireless and fixed-line tariffs continued to impede the potential for BPO in the country, with lower tariffs “widely considered to play a major role” in the growth of the sector, said Deloitte business-process-as-a-service director Sharoda Rapeti.
“And when one considers that the country is one of the most expensive when it comes to broadband connectivity, then you have a market that is being severely curtailed for growth,” she added, referring to the World Economic Forum’s ‘Global Information Technology Report 2016’, which ranked South Africa 58th and 61st out of 139 countries for prepaid mobile cellular tariffs and fixed broadband Internet tariffs respectively.
“Given how increased broadband access and faster connectivity can be a windfall for economic growth and job creation in a country, it is critical that these areas are addressed to accelerate business development by providing new prospects for innovation and growth,” Rapeti commented.
However, several other factors are exacerbating the stalled potential growth, including government support, labour availability, linguistic capabilities, cultural compatibility and South Africa’s legal structure.
“Government and information and communication technology organisations need to work together to increase local manufacturing, expand networks and reduce connectivity tariffs to help drive the growth of a globally competitive BPO industry in South Africa,” she said.
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