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Industry Research : Business Outsourcing Incentives ‘to Expand’
Incentives for foreign companies setting up call centres and other business processing operations in South Africa have been so successful that they will be extended and increased, says Yusuf Timol, economic minister in the South African High Commission in London.
South Africa is competing with countries such as India and the Philippines in this market. The industry has already created about 210,000 outsourcing jobs nationally.
A 2012-13 Business Outsourcing report showed that the Western Cape was second to Gauteng for the number of call centre and business process outsourcing jobs, but that it had the highest number of international companies locating their offshore outsourcing jobs.
"Gauteng’s jobs are mainly aimed at servicing the local market while the Western Cape is dealing with the international markets," Business Process Outsourcing South Africa: Western Cape CEO Gareth Pritchard said.
The report stated that the financial services sector makes up the highest proportion of customer service associates (those who operate call centres) at 41.2%.
It said this was different to other international outsourcing markets where the financial sector made up about 16.5% of their call centre jobs. The UK market makes up about 61% of the Western Cape outsourcing market with Australia making up about 9%.
"Those incentives have proved to be the real sweetener to attract foreign direct investment. However, other factors such as the 85% reduction in telecommunications rates, have also helped," he said.
Mr Timol said he expected the final announcement on the incentives, which were originally introduced in 2009, to be made in the first quarter of next year.
Mr Pritchard said there were no final numbers on the success of the incentives. He said that if one calculated the 3,000 jobs created in the past year with the average incentive, the return on investment for the Department of Trade and Industry on a payout of about R300m was about R2.5bn in foreign investment into the Western Cape.
"That incentive has proved to be a real boon for companies, especially in the first three years of their operations," he said.
Mr Pritchard said there had always been an expectation that an outsourcing operation would have a three-year life span, but that the incentives have probably extended that to about five years or more.
Posted by Veronica Silva Cusi, news correspondent
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Published: Thursday, March 20, 2014