Incentives for BPO in Western Cape

Call centres such as this one are springing
up in the Western Cape province, which
is fast becoming a BPO hub.
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Mark Reid

The provincial Department of Economic Development in the Western Cape 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 currently base part of their operations in the Western Cape, said Winde, 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 said.

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 off-shore markets from the Western Cape.

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

Foreign interest in SA

Gareth Pritchard, CEO 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 said.

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

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 surroundings as destinations for national and international investment in call centres and business process outsourcing.

Economic growth and job creation

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

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 US 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 Department of Economic Development and Tourism plans to create 10 000 more call centre jobs in the province.

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