SA As A BPO Destination
For more information visit www.thedti.gov.za or www.offshoringsouthafrica.com
South Africa’s BPO and Captive market is dynamic, vibrant and world class. We offer a compelling destination for BPO since
• We offer incentives that ensures an almost 20% reduction in cost.
• Our Telecommunications are high quality and cost competitive
• We’ve invested in developing a pool of skills for the industry
• SA has developed quality standards for the industry
• You have a choice of South African cities geared for the BPO environment
• We have a vibrant and active association culture.
South Africa offers 50-60% cost arbitrage from source destinations
Direct operating cost per FTE for English contact centre services
2010; UK£ '000s per annum per FTE
Though we had lower cost options, we chose SA given the first world experience, and quality of English skills. Further, SA provided us attractive savings (~50%) |
• Costs 30-40% lower than near-shore locations in the UK
• Costs 10-20% lower than locations in Central & Eastern Europe (Poland, Czech Republic, Hungary, Romania)
Note: Exchange rate used: 1 GBP = 11.5 ZAR (Calculated based on daily closing averages during 1-Jan‟10 to 30-Jun‟10)
Source: Everest Analysis (2010)
South Africa has a pool of skills available to the market.
South Africa is among the Top 3 global locations that can support English language skills at scale
Annual supply of fresh talent for English language BPO
2010; "000s
• 350,000 graduates added annually across |
South Africa has a sizeable pool of specialized skills across multiple domains
Examples of specialized skills in the Financial Services Sector
Pockets of strength in specialized skills related to Financial Services, Legal and Healthcare domains
Source: Everest Analysis (2010)
Telecom infrastructure has improved with more undersea cables and reduction in costs
Improvement in telecom connectivity
• Reduction in telecom costs by 85% since 2003 “Reliability and redundancies were issues of the past. The quality of service has now improved a great deal. My costs have reduced by 50%.” |
Source: Everest Analysis (2010)
Strong government support for the offshore BPO industry
In 2007, the Government Assistance and Support (GAS) programme was launched to support the BPO sector. During the period July 2007 to March 2010, incentives totalling R 688 million were approved, which will support 25,000 jobs and attract R 1.7 billion in investments.
Responding to investor needs, the government has revised the system of incentives to reduce the cost of operations, while easing administration. The revised incentives will be paid for a period of three years for every new offshore job created and maintained.
Incentives reduce the cost of operations by 20%, further strengthening South Africa’s cost competitiveness.
“The incentives make South Africa very attractive. The lower effective cost coupled with good infrastructure and First World quality of life have made its overall BPO value proposition quite compelling for investors.” Global contact centre player
1Exchange rate used 1 GBP = 11.5 ZAR
Salient features of the incentive structure
What is offered?
● A base incentive as a tax exempt grant paid over three years for each offshore job created and maintained (e.g. the total incentive paid for a job created in the
financial year beginning April 2011 will be R112,000 as shown in the graphic below)
● A graduated bonus incentive paid as follows:
● 20% bonus for more than 400 but less than 800 offshore jobs paid once off in the year in which the bonus level is reached
● 30% bonus for more than 800 offshore jobs paid once off in the year in which the bonus level is reached
* Base incentive paid for 3 years on actual jobs created and sustained
* * Bonus incentive paid once in the year in which the bonus level is first achieved
Who is eligible?
● Local and foreign investors registered as legal entities in South Africa that create at least 50 offshore jobs over three years. Offshore BPO refers to services
delivered from South Africa to clients located outside of South Africa
● The types of business processes that can benefit from the incentives include Back Office Processes, Contact Centres, Finance and Accounting Services, Human
Resource Functions, IT and Technical Services and other Specialist Services
What will the incentives fund?
● The incentives may be offset against all types of expenditure at the discretion of the investor
How will the incentives be disbursed?
● The incentives will be disbursed twice a year for three years for each offshore job created and maintained
Source: Everest Analysis (2010)
o We have set standards for our operations, registered with the South African Bureau of Standards (SABS) that helps us to achieve quality operations (SANS 990).
WE SPEAK YOUR LANGUAGE
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OUR INCENTIVES: MAKING A DIFFERENCE
OVERVIEW OF INCENTIVES OFFERED TO SOUTH AFRICA’S BUSINESS PROCESS OFFSHORING INDUSTRY
In 2007, the Government Assistance and Support (GAS) programme was launched to support the BPO sector. During the period July 2007 to March 2010, incentives totalling R 688 million were approved, which will support 25,000 jobs and attract R 1.7 billion in investments.
Responding to investor needs, the government has revised the system of incentives to reduce the cost of operations, while easing administration. The revised incentives will be paid for a period of three years for every new offshore job created and maintained...
Click here to download pdf