May 17, 2006
By Anish Abraham
WITH local prospects for development in the business process outsourcing industry on the increase, a regional body, Contact in Gauteng, held its first annual conference at the Sandton Convention Centre on 16 May.
The conference comes at a time when the City is considering various alternative sectors, business process outsourcing (BPO) included, through which it can diversify its economy and create new jobs.
Representatives of industry, local and provincial government and potential investors in the sector attended the conference, held alongside Futurex 2006, where the sector was also showcased.
According to Mike Roy, a senior business strategy consultant at auditing firm PriceWaterhouseCoopers, outsourcing included general back office work, corporate services, customer contact services and specialised services.
Multi-national corporations have already taken advantage of the benefits of having their call centres in Gauteng - IBM's Integrated Delivery Centre in Sandton is the second largest of its kind in the world, with 1 019 agents.
"We have had high-level partnerships between business and government going on for nine years now. We first sorted out issues in the tourism industry, which has since grown, and the focus is now turning to the outsourcing industry," Roy said.
PriceWaterhouseCoopers is part of the steering committee of the Business Process Outsourcing and Offshoring Sector Support Programme, a joint initiative by the Business Trust and the national Department of Trade and Industry.
The high-level partnership between participants in the industry; the South African Call Centre Community, the national body representing industry members; and the government, through the Department of Trade and Industry, is known as BPO2SA.
The partnership is aimed at boosting investment in the sector, through incentives like providing preferential benefits for locating call centres in Department of Trade and Industry-designated previously disadvantaged areas.
"The call centre industry in Gauteng is the largest in the country, but is very fragmented, which weakens us," said Keryn House, the chief executive of Contact in Gauteng. "We are now trying to mobilise the industry in the province through Contact in Gauteng."
The body has 118 members, most of whom are multi-nationals with call centres based in the province, mostly in Johannesburg. Banks are the largest in terms of overall seats at their call centres, while the insurance industry is also prominent, though it is very fragmented.
"However, there are a lot of City initiatives which should see a shift in the call centres' concentration from the northern suburbs to central Johannesburg," she said.
Apart form the City's efforts to lure business process outsourcing players back into downtown Johannesburg, the national government is also playing its part through the Urban Development Zone tax incentive.
BPO Sector Support Programme
"It is one of our key sectors identified for support," said David van Niekerk, the programme manager of the BPO Sector Support Programme, a programme within the City's economic development unit. "It helps that Johannesburg has a gross geographic product of R181-billion in today's prices, as well as being home to some 70 percent of head offices in South Africa."
He told the audience of the City's strategic objectives, which include accelerated and shared growth, proactive absorption of the poor, social mobility, settlement restructuring, sustainability and environmental balance.
The City views diversification of its economic base as a way to ensure balanced and accelerated sectoral growth, and provides identified sectors with support and incentives aimed at improving industry competitiveness.
Sectors identified for support include business process outsourcing and offshoring, information and communications technology, creative industries, sport and freight and logistics.
"Reasons for choosing outsourcing are that it has the best job creation potential, has a low entry-level skills barrier and the city's available information and communications technology infrastructure, as well as an existing critical mass of operations in Joburg," Van Niekerk said.
The Sector Support Programme has completed a number of projects: it has done an analysis of the local business process outsourcing sector; sent the first South African business process outsourcing delegation to the UK Expo; initiated and managed the formulation of a National Strategic Framework for the industry; and create a Joburg business process outsourcing marketing DVD for the industry.
"We also work with Contact in Gauteng to build industry competitiveness and have created a web portal and database for the association," he added.
The
Contact in Gauteng portal is a web-based database providing the latest relevant, accurate, high quality information on an easily accessible platform as a one-stop reference point for potential clients and investors. In addition, it provides a full-house support package to local industry members.
It is a joint venture between the City, the Gauteng Economic Development Agency (Geda) and Contact in Gauteng. Joburg is also busy rolling out its own wireless broadband network, setting up a BPO Skills Hub, and is to demarcate a designated business process outsourcing precinct in the inner city.
The skills hub is a venture between the City, Cida City campus and industry stakeholders to facilitate a skills development process to provide a pool of higher-quality contact centre agents and managers at a lower cost, using a call centre simulation facility.
In future, Van Niekerk said more emphasis would be placed on financial outsourcing, on support and interventions around the business process outsourcing precinct in the inner city, on engaging in inter-city partnerships and on providing targeted international marketing support.
As part of its mandate to improve service delivery to citizens, the Gauteng Shared Services Centre is planning a 1 000 seat call centre for Braamfontein, hoping to turn it into another business process outsourcing hub.
"We are currently lobbying the City to support those plans," said Nomzamo Fihla, the customer contact centre operations manager at the centre.
Business process outsourcing operations in the country at present provide more than 5 000 jobs. It is hoped that by 2009 there will be 25 000 direct and 75 000 indirect jobs created by the industry, with revenues of between $600-million to $700-million.
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