By Larry Claasen
THE understated success of Business Processing Outsourcing (BPO) in South Africa underlies the country’s true potential.
Over the better part of a decade, South Africa has been gaining traction in running call centres and providing other support services for local and multinational companies.
Though the troubles around power supply and the lack of investment in transport infrastructure are clearly dampening economic growth, the steady rise of BPO demonstrates what is possible when government policy not only supports businesses but also changes the nature of the economy.
The results in the Western Cape speak for themselves.
According to the provincial government, BPO brings in R24-billion/year based on the salary contribution of 70 000 people working in the offshore BPO sector, who earn on average R350 000/year.
This is a conservative figure as it does not include the revenue BPO companies are generating or include the companies and staff just focused on the domestic market.
Even so, at R24-billion a year, it is now roughly the same size as the Western Cape tourism market.
Policy success. People success
So how did this happen? How did BPO become a major factor in the provincial and national economy in a relatively short time?
In a rarity in South Africa, it was in large part driven by supportive government policies at every level. Given the competing political dynamics of the City of Cape Town, the Western Cape, and the National Government, the BPO sector could easily have stuttered because of intergovernmental infighting.
This did not happen. Instead, the metro, provincial and national governments all created support programmes and policies that complemented each other.
The City of Cape Town supported the sector with its Invest Cape Town initiative that is single point of contact for business. The province offered support like funding a training programme. And the national government put in place a BPO master plan.
Another reason for the success is the people of the South Africa. Offshore BPO companies are looking for young people who are tech-savvy and speak English with a high degree of proficiency, all of which the country and the province are strong in.
It also helps that South Africans tend to have what is considered a “neutral” English accent that is easy to understand.
The country’s BPO profile has also been helped by the landing of several undersea data cables and the rapid rolling out of high-speed fibre over the past few years.
Spreading the economy
It’s clear that the BPO sector has been good for South Africa, but as unnoticed as its rise, it is also quietly changing the nature of work in the country.
Several companies, like Sigma Connected and Merchants, are now setting up contact centres close to where their staff stay. Sigma has a centre in Mitchells Plain, Cape Town, and Merchants runs one in Soweto, Johannesburg.
The thinking behind setting up in Mitchells Plain and Soweto is that it will cut down travel time and costs.
The knock-on impact of working closer to where they live is huge. Township residents using taxis, for example, commute on average 77,6km/day and spend R925/month on transport in South Africa.
Being able to walk to and from work will not only leave BPO staff with more money in their pockets but also give them more free time to spend with friends and family and to do things they enjoy.
