BPO&O means more jobs for EC

About 4 000 new jobs are expected to be created in the business process outsourcing (BPO) sector in Gauteng this year, while the construction of a new 24-hour BPO facility, providing about 3 000 jobs, is on the cards for Johannesburg. At an outsourcing forum on Tuesday the Gauteng provincial government, in collaboration with players in the BPO industry, agreed on a strategy for Gauteng that should see the industry grow by an additional 9 percent to 14 percent annually over the next four years.


Keryn House, the chief executive of Business Process Enabling SA, said the centre would be established within the next 12 to 18 months. "Government will be making it a private sector project. It will be Johannesburg land and the project will go out on tender," House said.



Other projects include marketing of niche areas and providing research on South Africa and Gauteng. "If we do not do the strategy we will be on the low road, which is virtually stagnant," she said. The BPO sector's worth is expected to exceed R7.4 billion this year. The major centres for BPO in South Africa are Gauteng, the Western Cape, KwaZulu-Natal and the Eastern Cape.



Gauteng has historically dominated the South African market and employs 71 percent of the industry's full-time employees, or about 35 700 people. Although BPO is known for call centre outsourcing, this comprises two-thirds of the industry. Other more complex outsourcing services, such as information technology (IT) support, financial accounting, data analytics and a variety of legal services, account for a third of the industry.

House said pure call centres would experience pressure in future and would need to supplement their work with back-office support such as IT and financial services. She said South Africa was strong on voice offerings in the BPO industry and was becoming an attractive destination for foreign investors seeking such service owing to local competence in English.


India and the Philippines were still regarded as South Africa's strongest competition despite India being reportedly poor in customer care and service. North Africa and eastern Europe were emerging as new competition. In terms of labour costs, South Africa was still high but 40 percent to 50 percent cheaper than the UK or the rest of Europe. "It's a challenge in that we are more expensive but very attractive," House said.



Gerhard Kuhn, a senior economist at the Industrial Development Corporation, said inflation was the key to controlling labour costs. "Even if South Africa's inflation rate stays (at) around 6 percent, it is still far higher than the 2.1 percent and 0.9 percent inflation rates for the US and Europe, respectively. The US and EU strive towards a 2 percent targeted inflation rate. That means that, year on year, South Africa would become 4 percent less cost-competitive vis-224-vis the developed world."