Buiness Process Outsourcing Sector Support Programme (BPO)

The Business Process Outsourcing Sector Support Programme has provided a focal point for a concerted effort to enhance South Africa's competitiveness in the outsourcing sector.

The Business Trust Business Process Outsourcing Support Programme has been established to enable actors in the public and private sectors to work together to establish South Africa as a preferred location for business process outsourcing as a means of creating 100,000 jobs and thereby reducing unemployment and poverty.

The Sector Support Programme established by the Business Trust in partnership with the Department of Trade and Industry (DTI) has provided a focal point for a concerted effort to enhance South Africa's competitiveness in this sector. To exploit the opportunity BPO offers South Africa, the Business Trust has worked with the DTI to establish a BPO support programme. Experts have been contracted to:

• support the effective marketing of South Africa as a competitive business process outsourcing location;
• develop and deepen the pool of internationally competitive talent;
• create an enabling environment of incentives and infrastructure to support the sector;
• control the quality of the South African offering; and
• develop an industry body capable of mobilising and representing the key stakeholders

The Marketing Programme aimed to establish South Africa as a recognised BPO centre by attracting and retaining global investors to expand the local BPO market.

The Talent Development Programme aimed to provide work-ready entry level talent and matching manager and supervisor skills to support the targeted expansion in demand.

The goal of the Incentive Development Programme is to catalyse growth in the BPO sector by improving South Africa's short-term cost competitiveness in relation to other BPO destinations.

The Second Economy Programme aimed to channel the growth of the BPO sector to maximise job creation ad skills development for marginalised communities, including the unemployed and those living in designated areas.

The BPO Industry Mobilisation Initiative established and supported the process of restructuring the national industry association by unifying the industry under a national umbrella. The national body changed its name from South Africa Call Centre Community (SACCCOM) to Business Process enabling South Africa (BPeSA).

The goal of the Infrastructure Development Programme is yo secure competitive telecommunication costs for BPO investors.

The goal of the Quality Assurance Programme was to safeguard South Africa's reputation by adopting a national code of practice and developing and industry regulation framework and monitoring system.

The global business process outsourcing and off-shoring (BPO&O) industry is forecast to grow at 50% per annum (resulting in growth of between US$50bn and US$60bn) for the next four to five years. This opens a window of opportunity for South Africa to create 25 000 direct and 75 000 indirect jobs and contribute up to R87bn in GDP to the economy by 2009.

Because of the channel through which the service is provided (telephone, email, and internet) the service can be provided from any location in the world with adequate infrastructure and skills at competitive costs. This sector is thus particularly attractive because it has the potential to link formerly unemployed young people into the global economy. It also offers the opportunity to generate employment in places outside the major centres since many BPO operators seek out secondary towns, because of the cost saving offered.

South Africa is well placed to capitalise on this opportunity. It has good English language capability, well developed skills in the highest growth sectors of financial services and insurance, political stability, a good quality of life for managers and employees, an attractive business environment, and a BPO industry that is growing.

South Africa must, however, address a number of critical challenges. These include: a shortage of entry and middle managers; higher cost of operations than key competitors; negative perceptions of operational risks; relative difficulty in setting up new operations in South Africa; some restrictive regulations; a limited number of BPO service vendors with major anchor clients; an uncompetitive and comparatively expensive technology infrastructure; and an ineffective marketing effort.

New Report Published on SAs BPO Capabilities in the Financial Services Sector
The Financial Services sector constitutes the largest segment (about 45%) of the global sourcing industry worldwide. South Africa's standing in this sector is world class. It is backed by a sound regulatory and legal framework, and has a large number of domestic and foreign institutions providing a full range of services: commercial, retail and merchant banking; mortgage lending, insurance and investment.

The sector presents a significant opportunity for firms building offshore global delivery networks. It offers a 50-60% cost advantage over international destinations and a quality and sophistication that compares with the major source markets in this sector.
This report was commissioned to provide potential investors with a level of fine-grained information to support the business case for investing in Financial Services BPO in South Africa.

The report was produced by The Everest Group and Letsema Consulting under the guidance of a Leadership Group drawn from industry leaders in South Africa and supported by the Department of Trade and Industry (the dti) and the BPO industry association (BPeSA).

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