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| The Business Process Outsourcing Sector Support Programme was established to stimulate employment by attracting foreign companies to use South Africa as an off-shore location for their outsourced business processes. |
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| The focus on business process outsourcing (BPO) arose from the fact that in 2004 this sector was forecast to grow worldwide at 50% per year over five years, resulting in up to $60 billion of new business globally. The government identified business process outsourcing as a priority in the Accelerated and Shared Growth Initiative for South Africa (AsgiSA). |
| In order to capitalise on the potential benefits of this sector for South Africa, a strategy was devised to: |
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build an enabling environment by securing competitive telecommunications costs, deepening the talent pool, creating attractive incentives, improving industry organisation and assuring quality |
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attract and maintain investment by raising awareness of the value of South Africa’s potential for business process outsourcing, identifying potential investors and attracting them to bring business to South Africa |
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support South Africa’s development objectives by using the growth of the sector to draw unemployed young people into employment and, where possible, attract investment to areas outside South Africa’s main business centres. |
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| The key to the implementation of the strategy was to get the world’s major business process outsourcing companies to move part of their operations to South Africa. |
| In a partnership between the Business Trust and the Department of Trade and Industry, working with the National Skills Fund and the industry association, the Business Trust managed
this R158 million programme between 2005 and 2011.
R57,5 million of the funding came from the Business Trust,
R27,1 million from the dti and R73,4 million from the National Skills Fund. |
| By the end of the programme, seven of the world’s top ten business process outsourcing companies were doing business in South Africa. An investment incentive programme had been developed and R500 million in incentives had been awarded. Contracts had been signed for investment worth R2,7 billion and the creation of 34 354 jobs. In contrast with job losses in nearly every sector of the economy, over 10 000 people were employed as a direct result of the programme between 2007 and 2010. |
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| Results |
| Deepen the talent pool |
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New work readiness programme designed and implemented |
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| 4 600 unemployed young people were trained of whom 3 483 were
employed through “Monyetla”, an innovative employer-led work
readiness programme that guaranteed employment for people trained.
A plan was developed for the training and employment of a further
9 000 young people over the following three years. |
| Reduce telecommunication costs |
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Telecommunication costs declined |
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| Costs were driven down by market forces over the period of the project. |
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| Create attractive incentives |
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Globally competitive incentive scheme developed and implemented |
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| Some R500 million in incentives were awarded. Contracts were signed
for R2,7 billion investment and the creation of 34 354 jobs. |
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| Attract investors |
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Systematic marketing programme designed and implemented |
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| Seven of the world’s top ten business process outsourcing companies
started operations in South Africa between 2008 and 2010. Growth
prospects remained strong for the future. |
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| Assure quality |
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World class industry standards developed |
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| Standards on leadership and customer service management, human
resource management, operations management, and technical resource
management were developed and the South African Bureau of Standards
(SABS) issued guidelines to support industry compliance. |
| Draw unempolyed people into employment |
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Investment contracts signed to provide employment for 34 354
people |
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| This was achieved in the face of job losses in nearly every sector of the
economy. By 2010, 10 000 people had been employed. |
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| “The Business Trust
responded positively to
the call for a partnership ...
[and] facilitated the process
of interaction between the
public and private sectors.” |
– Rob Davies, Minister of Trade and Industry
November 2009 |
| Lessons |
| Focus on growth sectors |
| As was the case with the work in the tourism sector, the Business Process Outsourcing Programme confirmed the importance of focusing on a growth sector in which South Africa has a competitive advantage and where there is potential to create jobs for unemployed young people. |
| New investment |
| The importance of new investment for job creation was underscored. New jobs were created by new investors to serve new markets. This created a new demand for employment. |
| Adapting strategy |
| The Department of Trade and Industry incentive programme was adapted to industry needs as circumstances changed. |
| Good strategic advice |
| The intellectual energy of some of the world’s leading strategists was used to craft globally competitive investment, marketing, talent development and quality assurance programmes. |
| Sustained support |
| The provision of sustained support by the Business Trust concentrated external strategic advice, business commitment and government resources on the achievement of agreed objectives over a period of five years. |
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For Business Process Outsourcing Publications please click here |
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