Recently we attended TradeSSA’s official launch of the Global Business Services (GBS) Incentives at South Africa House in London. Before I cover the highlights announced on the day, it’s worth noting that the current investment scheme has already borne fruit: the Business Process Services (BPS) industry is growing at c.22% annually, which is 3 times faster than India and the Philippines.
The new measures announced have been carefully designed to sustain this strong growth, whilst introducing modifications so that South Africa creates the right environment and workforce to remain competitive over the longer term. In short, they aim to grow the sector 10 fold and ensure that South Africa remains competitive with both established and emerging competitor countries.
I’ve summarised the key highlights of the new incentives below:
- The yearly Opex based incentives will continue, but they will give companies greater flexibility in how they use their incentives (e.g. for training, telecom rentals). Given the operational nature of the bulk of expenditure, this is welcomed.
- An incentive is payable for 5 years per job created. While these incentives will taper-down marginally over time, the long term nature of the incentive does demonstrate the support and commitment to investors, and will help them drive operational improvements (e.g. productivity, automation) over time.
- The incentives will encourage job creation of high-complexity jobs by introducing three tiers of incentives for jobs, with varying degrees of complexity. This will increase the competitiveness of high value jobs, and help niche skills move up the value chain. This will lead to the transition of the sector upwards in the value chain, and cover areas such as complex customer management, social media, and analytics; and more investment in industry capability to include legal, banking and financial services. I believe that SA is ready to take on and flourish with these capabilities, having matured over the last decade.
- There will be the possibility to maintain incentives for committed jobs beyond 2023 for applications approved before the end of 2023. This measure will further increase investor confidence, which is a critical fuel for the growth the SA economy is pursuing across all sectors.
- The bonus cut off (in terms of number of jobs) will be increased for non-complex jobs. As the segment is relatively established in South Africa, and given the changing nature of our industry, it makes sense that the bulk of the incentives are focused on work and jobs of the future.
- The incentive measures have been designed with strong eligibility criteria in mind. For instance, 80% of jobs should be for 18-35 year olds and medium/high complexity jobs; a minimum wage needs to be respected to protect workers; and eligibility criteria have been modified to enable domestic companies – especially outsourcers – to scale and compete more effectively.
Some of the world’s biggest brands are already in South Africa, which without a doubt, is testament to all that South Africa has to offer and supported by the incentives to date. And when I think about the overall value proposition South Africa has to offer vs. other offshore locations, it’s clear that a sustained focus in key areas have helped to make it really powerful. There’s an aligned focus on our sector from a number of the key players: BPeSA (Business Process enabling South Africa), Harambee (youth employment accelerator), the Department of Trade and Industry (DTI), and InvestSA, which is resulting in strong national coordination and mobilisation, the development of a clear and differentiation value proposition and a coordinated strategy around supply and demand.
However, to my mind, the real ‘magic’ of South Africa lies in its young talent – and there’s no shortage of it. 1 million students are enrolled in University at any one time, with c.192,000 graduating each year. Across the country, c.150,000 people are employed in the Global Business Services Sector – our talent pool has a reputation for a more neutral accent vs. other offshore destinations, which is giving us a clear edge.
The UK and Australia have leveraged South Africa’s talent for customer support for many years, and this work is now evolving to include end-to-end customer experience management (upselling, retention, chats/social media and customer analytics, etc.). Companies in the US are also increasingly lured by South Africa, thanks to the quality of the talent and lower operational costs. And the huge investment in skills – industry, Customer Experience (CX) & Business Process Outsourcing (BPO) specific – and Future Skills, things like applied knowledge, people and workplace skills, is giving clients confidence that South Africa is a great long term solution for their CX and BPO requirements.
South Africa also offers a real opportunity to make a difference for young people and their communities. c.25-30% of 2017 hires in global services come from “Impact Sourcing” championed by BPeSA and the Rockefeller Foundation. Webhelp has successfully implemented impact sourcing in partnership with Harambee and not only are we proud to support this worthy cause, it’s actually paying dividends. The punctuality, attendance and attrition amongst our impact workers all compare favourably to the average across our estate, and their performance was just as good as the average.
Other key factors contribute to magical South Africa:
- Our first world infrastructure and ‘enabling environment’ combines a high quality business and operating infrastructure with government support designed to drive inward investment and global contact centre standards (ISO 18295)
- Strong industry ‘savoir faire’. Above and beyond the contact centre, the country has developed capability in non-traditional areas of work, such as financial services, legal processes, insurance and healthcare
- An investment in next-generation services for the digital contact centre is being driven by strong customer demand, and there are many examples of high quality multi-channel experiences – particularly at Webhelp South Africa! – supplemented by deep customer analytics
- The country has a high number of quality locations, some of which can be reached by direct flights from the UK (Johannesburg, Cape Town, and Durban)
- And last but not least, significant cost savings (c. 50-60%) in the cost of operations vs the UK and Australia for both voice and non-voice work, really do make South Africa a ‘no brainer’
To conclude, with everything that South Africa has to offer, and the new incentives to do business here, it’s hardly surprising that it was awarded the Global Sourcing Association’s “Offshoring Destination of the Year” for the second time in 2018.
So if you want to get REAL value from your CX and BPO, think South Africa, and call Webhelp! Drop me a line, I’d love to talk! E: Brandon.email@example.com.
Author: Brandon Aitken