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Overview & Summary
Overview by Minister of Trade and Industry
Executive Summary of Government’s Commitment to BPO&O
Overview by Minister of Trade and Industry
- The South African government has identified the Business Process Outsourcing
and Off-shoring (BPO&O) sector as one of the top three priority sectors to
stimulate growth within its Accelerated Shared Growth Initiative (ASGI-SA).
The sector is identified for its potential to attract investment and create
employment opportunities in the economy.
- A vision has been stated that by 2014, South Africa will be recognised as
a Tier 2 player in the international market for Business Process Outsourcing
and Off-shoring Services.
- To realise this vision, the Department of Trade and Industry (the dti) has
introduced an incentive programme to attract investment in the sector. The
incentive is offered to local and foreign investors establishing projects
that aim primarily to serve offshore clients, and comprises a grant towards
approved qualifying expenditure for start-ups and expanding BPO&O operations.
- The incentive programme is one of the elements of a holistic value proposition
to position South Africa as a preferred location for BPO&O operations, alongside
the sector skills development initiatives, a dedicated investor-friendly set up
process, and a programme to improve industry service standards.
- I hereby extend an invitation to potential investors to apply for the
incentives on offer, to invest and support the South African government
in realising its goals of growth and employment.
Mandisi Mpahlwa, MP Minister of Trade and Industry
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Executive Summary of Government’s Commitment to BPO&O
The idea of a comprehensive Business Process Outsourcing and Offshoring (BPO&O)
Sector Support Strategy emanates from the dti’s industrial policy framework,
which seeks to attract a portion of the rapidly expanding, global BPO&O market
to South Africa. The BPO&O sector is forecast to grow at 50 per cent per annum
(resulting in growth of between US$50bn and $60bn) for the next four to five years.
This has opened a window of opportunity for South Africa to create 25 000 direct
and 75 000 indirect jobs and contribute up to R8bn in GDP to the economy by 2009.
The actions taken to exploit the opportunity Business Process Outsourcing offers
South Africa, have been largely coordinated through a partnership between the dti
and the Business Trust, to exploit the opportunity presented. Cabinet approved a
comprehensive business plan in 2006, and the focus was on:
- supporting the effective marketing of South Africa as a competitive business
process outsourcing location
- developing and deepening the pool of internationally competitive talent
- creating an enabling environment of incentives and infrastructure to support the sector
- improving the quality of the South African offering and
- strengthening the industry body capable of mobilising and representing the key stakeholders.
The partnership arrangements to drive the strategy operated under the direction
and leadership of His Excellency, the Hon. Minister Mandisi Mpahlwa, MP.
(The Minister of Trade and Industry and Director of the Business Trust).
The partnership also included key private and public sector decision-makers,
namely: Ms Thoko Didiza (Minister of Public Works and Director of the Business
Trust), Ms Elizabeth Thabethe (Deputy Minister of Trade and Industry), Mr Derek
Cooper (Chairman of Standard Bank and Director of the Business Trust) and Mr
Eddie Funde (Chairman of the SABC and Chairman of the industry body, Business
Process enabling South Africa-BPeSA). Operations are directed by Dr. Raymond
Ngcobo (Chief Director for Strategic Competitiveness, Enterprise and Industry
Development Division of the dti), Mr. Brian Whittaker (CEO of the Business Trust)
and Mr Mfanu Mfayela (CEO of BPeSA).
The BPO Sector Support Programme aims to place South Africa as a “Tier 2”
player in the global BPO&O market, this formed the basis of the Cabinet memorandum
approved on the 06th of December 2006. The memo set out the framework for the
comprehensive BPO&O Government Assistance and Support (GAS) Programme which
is aimed at attracting substantial early investments to the South African BPO&O
sector. The support programme was formulated in partnership with the dti and
the private sector and is part of the Accelerated and Shared Growth Initiative
for South Africa (ASGISA).
The Government Assistance and Support (GAS) Programme offers comprehensive
and detailed support, through various initiatives. These include marketing,
easy entry into SA for both new and expanding business process-outsourcing
operations, skills development, simplifying administrative procedures and
other investment incentives.
- Strategic Marketing Initiative: The initiative straddles both targeted and
broad-based marketing. Targeted marketing focuses on attracting and securing
selected high-impact foreign investors, who will in turn create a groundswell
of other investor interest. Broad-based marketing encompasses the supporting
of government and industry initiatives, to raise South Africa’s BPO&O global
profile, with the aim of securing a dominant Tier 2 position.
- Talent Development Initiative: Known as “Monyetla”, this Work Readiness
Programme is an initiative between the dti and the Department of Labour, to
take unemployed matriculants or graduates through a process of learning
work-readiness skills. It includes both training for the workplace and life
skills. Monyetla is in its pilot phase and aims to train 1000 learners at a
cost of R15 000 each and is expected to be completed by the end of 2007.
- The Training and Skills Support Grant is directed towards the cost of
providing company specific training (as opposed to industry wide training)
up to a maximum of R12, 000 per agent. The incentive grant is over and above
the assistance obtained through the Sector Education and Training Authorities
(SETAs) and is a complement to the BPO&O Investment Grant.
- The BPO Investment Support Grant: The objective of the investment incentive
is to attract BPO&O investment that creates employment opportunities. The
grant is provided depending on the value of qualifying investment cost and
employment creation. The grant ranges between R37,000 and R60,000 per seat
and is offered to local and foreign investors establishing projects that
aim primarily to serve offshore clients.
- Contact Centres for Designated Areas: This is a key second-economy
initiative within BPO&O. The initiative emerged from the Deputy President’s
desire to locate contact centres in more depressed areas, in order to
spread the opportunity and shift the focus away from active regions. As
a regional development support measure, the programme aims to provide a
support facility for those operators who may wish to locate in the
designated areas, by assisting them to secure appropriate infrastructure
and business services, to derive value from locating in the identified areas.
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