Business services industry key to job creation

Tuesday, December 18, 2018

The Business Process Services (BPS) industry offers South Africa the largest job creation potential across all service sectors, says Trade and Industry Minister Rob Davies.

Launching the revised Global Business Services (GBS) Incentive in London, United Kingdom recently, Davies said the industry has been stimulating economic growth and it was instrumental in enhancing cost competitiveness which is crucial to the South African business case for BPS investments. 

Davies said the Business Process Services incentive that he launched four years ago in London was successful in creating jobs in the BPS Sector, stimulating economic growth and instrumental in enhancing cost competitiveness.

However, due to the tapering nature of the incentive and inflation, South Africa started losing its cost competitiveness in relation to its competitors.  

“The 2014 BPS incentive programme that we launched here in London had the objective of attracting investment and creating employment opportunities amongst the youth in South Africa. I am pleased to announce that the programme achieved its objectives and resulted in the creation of an additional 20 000 direct jobs in the sector with an average growth rate of 22% per annum during the period 2014-2018,” said Davies.

Through a global benchmark study and investor engagements, the Department of Trade and Industry (dti) has been able to present a revised GBS incentive.

The revised incentive includes a three-tier incentive program and a reduction in the minimum criteria of jobs.

“The key components of the GBS incentive include a three tier incentive program which includes a non-complex job, medium complexity job and high complexity job, with an increase in value across all three tiers.

“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 was amended to include a minimum salary threshold of R60 000 per annum for entry level agent roles,” said the Minister.

Minister Davies has assured investors of governments continued commitment in supporting the growth of the sector. 

“Although South Africa offers significant cost arbitrage in comparison to their source markets such as UK, US and Australia, without the incentives or with a decreasing incentive value South Africa may not be able to leverage off the investment opportunities which this sector presents.”

Davies said the decision was to review the existing incentives as a key enabler in support of South Africa’s value proposition.

He said the success of the BPS sector is the strong public - private partnership between government, industry, stakeholders and investors.

The recent Job Summit highlighted the importance of this sector and the hosting of the Global Sourcing Association (GSA) Summit and Awards in South Africa, provides confidence in the ability to deliver a quality product.

The dti has partnered with industry to develop a compelling value proposition to investors which will support government’s objectives of job creation within South Africa, primarily for youth and increase export revenue.

BPeSA, the industry body representing the Global Business Services Sector in South Africa, welcomed the revised incentive package which will ensure that South Africa remains highly competitive as an offshore delivery location for GBS in an increasingly more competitive global market impacted by the digital economy and the journey into Industry 4.0.

Chief Executive Officer of BPeSA, Andy Searle, said the industry welcomes the changes and that they are happy with the support they are receiving from government.  

“We are confident that our value proposition underpinned by these well-tailored incentives will offer real value to investors for years to come. Governments continued support for this sector is applauded and hopefully sends a clear message to investors in the UK and elsewhere that South Africa is very serious about your business,” said Searle. –