The Minister of Trade and Industry, Rob Davies, says the Global Business Services (GBS) incentive that became effective from January 1 will create employment opportunities for the youth in South Africa.
Davies launched the GBS incentive last month at South Africa House in London.
He said the opportunities would be especially in the areas of medium- to high-complexity jobs, and that young people would be exposed to servicing major global brands out of South Africa.
“Areas of special interest by potential global investors are legal services, finance and accounting and IT services. South Africa’s value proposition remains a compelling business case for most global companies that are looking to optimise their customer solutions at a globally competitive rate,” he said.
The sector has demonstrated an annual growth rate of 22% on average year on year, and it is expected that the growth rate will continue to increase over the next five years.
Davies said that through continuous monitoring of the sector, global benchmarking study and investor engagements, the Department of Trade and Industry had been able to present a revised GBS incentive.
“The key components of the incentive include a three-tier incentive programme that includes a non-complex job, medium-complexity job and high-complexity job, with an increase in value across all three tiers,” he said. “A further change includes a reduction in the minimum criteria of 50 jobs across all levels of work to a minimum of 30 jobs for medium- to high-complexity jobs. To ensure that South Africa delivers the best quality services at the right price, the eligibility criteria were amended to include a minimum salary threshold of R60000 per annum for entry-level agent roles.”
The Trade and Industry ministry said the GBS replaced the Business Process Services incentive that was launched five years ago in London, which was successful in creating jobs in the BPS Sector.
Davies said the 2014 BPS incentive programme had achieved its objectives and resulted in the creation of an additional 20000 direct jobs in the sector, with an average growth rate of 22% per annum during the period 2014 to 2018.
However, the incentive started to lose its competitiveness despite South Africa offering significant cost arbitrage in comparison with their source markets such as the UK, US and Australia, therefore a decision was taken to review the existing incentives, the ministry said.
BPESA, the industry body representing the Global Business Services Sector in the country, welcomed the revised incentive package, which will ensure that South Africa remains highly competitive as an offshore delivery location for GBS in an increasingly competitive global market impacted by the digital economy and the journey into Industry 4.0.
BPESA chief executive Andy Searle said the industry welcomed the changes.
“We are confident that our value proposition underpinned by these well-tailored incentives will offer real value to investors for years to come. The government’s continued support for this sector is applauded and hopefully sends a clear message to investors in the UK and elsewhere that South Africa is serious about your business and will continue to put great effort and resources into attracting and retaining your investment in South Africa,” said Searle.