Incentives for business process outsourcing in the Western Cape

The Western Cape Provincial Department of Economic Development has introduced an incentive scheme that will boost the growing business process outsourcing (BPO) sector in that part of the country.

Making the announcement, Western Cape MEC for Economic Development Alan Winde stated: “We are building the province into an attractive place to live and work by increasing our competitive edge in terms of pricing, and by building an appropriately skilled workforce.”

International firms such as Bloomberg and Amazon.com currently base part of their operations in the Western Cape, he said, adding that the new incentive was expected to attract more big companies to the province.

“It puts us on track to build the Western Cape into a world-class BPO and call centre hub,” he noted.

A first for South Africa, the incentive takes the form of a partnership with established service provider, Internet Solutions, to offer a six-month period of free Internet, data and voice services to companies setting up their call centres to service offshore markets from the Western Cape.

The incentive will help with job creation, since these free telecommunications services will apply for every 200 local agents employed.

Foreign interest in SA

Gareth Pritchard, chief executive officer of the Western Cape chapter of Business Process enabling South Africa (BPeSA), said that during 2011, several big investors have shown interest in the country in terms of outsourcing.

“South Africa has so much to offer countries looking to outsource both their voice and non-voice services,” he added.

“Traditionally, high telecoms costs have been a limiting factor for new investors; with the new incentive, this limitation has been significantly reduced.”

Established in 2001, BPeSA Western Cape is a section 21 company, funded by member contributions as well as local and provincial government. Its main focus of operation is to promote Cape Town and its surrounds as a destination for national and international investment in call centres and BPO.

Economic growth and job creation

Toward the end of 2010, the government announced new incentives for the offshore call centre sector, providing salary subsidisation for local employees for the first three years of operation, with the subsidy decreasing over the three-year period.

The combined incentives will not only make the Western Cape a more attractive destination for establishing new call centres, but is also expected to reduce operating costs by 50% during the first six months.

The local BPO sector received a significant boost when Internet retail giant, Amazon.com, established offices in Cape Town to provide support for its United States and German markets. The move created 1 000 employment opportunities and demonstrated international confidence in the local call centre sector.

Currently, the Western Cape’s call centre industry employs 30 000 locally recruited people and contributes an estimated R6 billion (US$834 million) to the regional economy.

The industry is targeted for development because the entry requirements are not as steep as in other sectors and therefore present an employment opportunity to youngsters who may not have any other qualification besides a Matric.

Over the next three years, the Provincial Department of Economic Development and Tourism plans to create 10 000 more call centre jobs in the province.

It has already established a training programme for call centre agents, which has seen 310 unemployed people graduate – with all but one finding employment.

Chris Reid

MediaClubSouthAfrica