Sectors

BPO

Outsourcing support to Western Cape and connecting the global economy

Collaboration between companies and external service providers who are offsite and increasingly offshore have increased rapidly with the universal use of email and the availability of high bandwith and web-based connections. This has given birth to a rapidly expanding business process outsourcing and offshoring (BPO&O). BPO includes a variety of business services such as IT, call centre functions, financial accounting, administration, insurance industry functions and website design.
The call centre industry and BPO sector in the Western Cape is one of the fastest growing sectors. The number of call centre agents grew by 28.5% between 2006/07 and 2007/08. There are now more than 20,000 agents in the Province.
In 2011, South Africa was ranked in the top 3 emerging BPO offshoring destinations worldwide in the Everest Consultancy survey. This has led to an expected increase in investment from traditional investors such as the UK, but also from countries such as Australia and the USA.
The acquisition in 2009 by Indian giant Aegis of one of South Africa’s largest privately owned call centre companies, CCN, is a sign of the attractiveness of South Africa as a destination. Aegis intends investing ZAR 500 million over three years and growing the CCN workforce from 1,000 to 6,000.

The Industry in Numbers:

  • The sector contributes an estimated ZAR3bn to the gross regional product, and just under 30,000 employees
  • The number of companies grew from 116 in 2004 to 215 in 2008, while the number of call centre agents more than doubled from 8,000 to 20,000 for the same period
  • In the period 2003 to 2007, some ZAR933m worth of call centre deals were facilitated in the Western Cape
  • Approximately 79% of this investment originated from the UK, Canada, Germany, the Netherlands, and the USA
  • Major firms such as Shell, Amazon, Lufthansa, Barclays Bank, Microsoft and Dimension Data are some of the companies that have established offices in Cape Town in the BPO sector

Main Advantages of Investing in the Western Cape in BPO:

  • The Western Cape displays cultural and linguistic similarities to key Western markets such as the USA and Europe
  • High worker efficiency with a recorded 89% of first calls where customer requests could be solved immediately
  • Low employee turnover of only 17% due to the high demand for BPO jobs when compared to a turnover of around 30 to 40% p.a. with other offshore markets like the UK and USA
  • First world infrastructure is available to potential investors in the form of energy, telecoms, internet and communications – the worldwide network integration of South Africa through three submarine fibre-optic cables and satellites meets the latest technical standards
  • The BPO targets industries such as insurance, banking and telecommunications, which are well developed in Cape Town considering it is the second-largest financial centre in the country

Incentives

In January 2011, the national Department of Trade and Industry launched its new incentive scheme in support of the BPO that will lower operations costs by an estimated 20% allowing South Africa to compete more aggressively with other off-shoring destinations. There are two specific incentives that investors can make use of, namely the Sector Specific Assistance Scheme and the BPO&O Investment Incentive and Training Scheme.
There is also a regional Western Cape-based incentive, namely the BPeSA Western Cape Telecoms Incentive which provides free connectivity for Voice and Data services for the first six months of operation.
For more information, please click here to be directed to our incentive brochure, or alternatively contact the portfolio manager listed below.

Contacts

For further information, please contact the Portfolio Manager below:

Tel: +27 (0)21 487 8600