Pretoria - Trade and Industry Minister Rob Davies has launched the revised Business Process Services (BPS) incentive in London.
Launching the BPS at the South African High Commission, the Minister said the previous BPS had been a major success that has met the Department of Trade and Industry’s (dti)’s objectives.
Over 9 000 jobs have been created, he said, adding that the business process service sector is a key sector for attracting investment and creating new jobs especially in the 18-35 age group, where job creation for young people is most needed.
The majority of foreign investment in the sector originates from the United Kingdom (75%), with voice services accounting for 80% of all Business Process Outsourcing work conducted in South Africa. The South African vertical split amongst sectors serviced is healthy and split over the following verticals; Telco and ICT (34%); Retail (29%); Utilities (12%),” said Minister Davies on Tuesday.
The Minister said the reviewed incentive has taken into account South Africa’s increasing maturity in terms of the services that are being offered.
“We have noticed that South Africa is increasingly being asked to provide more complex back office process services. Legal Process Outsourcing (LPO) and Shared Services sub-sectors are beginning to expand as South Africa proves its capability and capacity to provide such services,” he added.
The key difference with the updated BPS incentive is the splitting of the incentive into Tier 1 (non-complex) and Tier 2 (complex) work.
The purpose of this is to attract more complex work such as LPO by offering a higher incentive for utilising and employing a higher skilled work force.
The Minister added that investors and South African companies running BPS operations had also requested the duration of the reviewed incentive should be looked at.
“The previous incentive which ended 30 September 2014 was offered over three years to companies creating over 50 offshore jobs. The companies presented a compelling argument that many of the industry’s contracts ran for five years and therefore it would provide a level of comfort to investors if the incentive was to also run for five years. The review by Everest Global took note of this and the new BPS incentive will also run for five years from October 2014 to March 2019,” stated Minister Davies.
Minister Davies indicated that South Africa’s Value Proposition, which included a large skills pool of English Language speakers, the depth of skills available, the cultural affinity with the UK and time zone compatibility, had continued to attract new investors and that existing investors were expanding.
Minister Davies also stated that the BPS incentive played a critical role in reducing the cost gap between South Africa and its competitors.
The South African Value Proposition is now even more compelling as it allows South African companies bidding for UK contracts to offer a more cost competitive proposal when compared to other offshore destinations.
The Chief Executive Officer of KwaZulu-Natal based Call Centre International, Mark Chana, said that he was excited about the revised incentive.
Chana said South Africa has the skills to be the best location for superior customer interaction and the scheme will enable them to compete from a value perspective by reducing operational expenditure by up to 12%.
According to him, the five year tenure of the revised incentive will encourage sustainability of job-creation in the sector. - SAnews.gov.za
