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BPO industry SA's job creation window of opportunity

by Michael Appel
on 10 Jul 2008
BuaNews Online
BuaNews Online

Trade and Industry Minister Mandisi Mpahlwa believes the Business Process Outsourcing and Offshoring (BPO&O) industry is a window of opportunity for South Africa to address its Accelerated and Shared Growth Initiative (AsgiSA) targets to create jobs, writes Michael Appel.

Speaking to BuaNews at the two-day national BPO&O policy conference in Durban on Thursday, Mr Mpahlwa highlighted that the industry, which has only been active in the country for about a decade, is expected to grow annually by 50 percent for the next four years.

"The sector provides an opportunity to create many, many jobs for young unemployed South Africans with little effort because one needs a basic matric.

"You are able to provide short term training that will equip them with the basic skills required in for example a call centre.

"In that way we are able to soak up a lot of young people. Unlike other work we are doing...it is a sector that makes for quite quick and easy job creation and that is particularly relevant in terms of addressing youth unemployment.

"When these young people get these skills and get to work in that environment, they soon develop ideas about other things they can do.

"So very often, people upon developing these ideas migrate [into other fields of employment], and so there actually is quite a turnover allowing us to bring people into the industry on a constant basis," said Mr Mpahlwa.

He said the department had been working on this sector for some time with regard to value proposition and putting in place the required instruments that will enable it to promote, support and market this sector.

"As a dynamic industry we don't need to wait ten years to evaluate how we're doing things, so we found it appropriate to do a review that firstly helps us to re-look at this window of opportunity that we believe exists in terms of the expected growth [of 50 percent] in the next few years.

"Some of the traditional centres of BPO have reached some sort of limit in terms of infrastructure and skills, and as a result the costs are starting to push up, in countries such as the Philippines.

"We do therefore believe we could capture some of that business that is set to grow over the next four years," the minister said.

As the costs of doing business rise internationally, South Africa needs to evaluate its marketing and value proposition strategy in order to get foreign companies to relocate their BPO&O in South Africa.

The conference, he said, is an opportunity to sharpen certain focus areas within the sector and provides a platform upon which to market BPO&O as a crucial part of the economy.

"We took a view when we developed the strategy for the BPO sector that this is one sector that can actually open up opportunities for us to address unemployment by looking at locating some of these [BPO&O ] facilities in the rural and far-flung areas of South Africa.

"These [rural] areas have abundant labour, a low cost of doing business as well as existing physical and telecommunications infrastructure.

"You will find many of these areas have buildings that are appropriate for the industry but are unused.

"We thought it was important for us to look at packaging incentives that will attract companies to locate to these areas. We don't force companies to do this, but we do make available the information and we have begun to see some successes," the minister told BuaNews.

The department identified 22 municipalities in which BPO&O centres could be located, and the individual municipalities then had to "make a case for themselves," he said.

The minister added that a number of call centres had already started springing up within these identified municipalities such as in the North West, Northern Cape, KwaZulu-Natal and Limpopo provinces.

The department will be looking to raise the incentives that are in place at the moment in order to further boost involvement in the industry.

As it stands, the BPO&O Investment Incentive comprises an investment grant ranging between R37 000 and R60 000 per seat and a Training Support Grant towards costs of company specific training up to a maximum of R12 000 per agent.

The Training and Skills Support Grant will be provided directly to approved projects to go towards the costs of providing company specific training, as opposed to industry wide training, up to a maximum of R12 000 per agent.

The training grant is over and above training rendered by the Sector Education and Training Authorities (SETAs).

The BPO&O strategy has been in place since 2006 and will run up until 2011.

The minister highlighted that one of the biggest booms in the economy had been felt in the services sector, and that the BPO&O industry would work in tandem with the services sector to contribute to the growth of the economy. - BuaNews


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