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Business Process
Outsourcing (BPO) Government Assistance & Support Program
On 6 December 2006,
the South African Government approved a Cabinet memorandum
recommending substantial Government Assistance and Support for the
accelerated development of the BPO (business process outsourcing)
sector. The incentive scheme was formulated in partnership with the
private sector through The Business Trust and is part of the
Accelerated and Shared Growth Initiative for South Africa (ASGISA).
The strategy includes marketing, easy entry into South Africa for
the expansion of existing business process outsourcing operations,
skills development, simplifying administrative procedures and other
investment incentives.
The Government
Assistance and Support Program (GAS) was formally launched by the
Minister of the Department of Trade and Industry (the dti), Mr.
Mandisi Mpahlwa, on 16 March 2007.
Overview by Minister of Trade and Industry
The South African
government has identified the Business Process Outsourcing and
Offshoring (BPO&O) sector as one of the top three priority sectors
to stimulate growth within its Accelerated Shared Growth Initiative
(ASGI-SA). The sector is identified for its potential to attract
investment and create employment opportunities in the economy. A
vision has been stated that by 2014, South Africa will be recognized
as a Tier 2 player in the international market for Business Process
Outsourcing and Off-shoring Services.
To realize this
vision, the Department of Trade and Industry (the dti) has
introduced an incentive program to attract investment in the sector.
The incentive is offered to local and foreign investors establishing
projects that aim primarily to serve offshore clients, and comprises
a grant towards approved qualifying expenditure for start-ups and
expanding BPO&O operations.
The incentive program
is one of the elements of a holistic value proposition to position
South Africa as a preferred location for BPO&O operations, alongside
the sector skills development initiatives, a dedicated
investor-friendly set up process, and a program to improve industry
service standards.
I hereby extend an
invitation to potential investors to apply for the incentives on
offer, to invest and support the South African government in
realizing its goals of growth and employment.
Mandisi Mpahlwa, MP
Minister of Trade and Industry
Executive Summary of Government’s
Commitment to BPO&O
The idea of a
comprehensive Business Process Outsourcing and Offshoring (BPO&O)
Sector Support Strategy emanates from the dti’s industrial policy
framework, which seeks to attract a portion of the rapidly
expanding, global BPO&O market to South Africa. The BPO&O sector is
forecast to grow at 50 per cent per annum (resulting in growth of
between US$50bn and $60bn) for the next four to five years. This has
opened a window of opportunity for South Africa to create 25 000
direct and 75 000 indirect jobs and contribute up to R8bn in GDP to
the economy by 2009.
The actions taken to
exploit the opportunity Business Process Outsourcing offers South
Africa, have been largely coordinated through a partnership between
the dti and the Business Trust, to exploit the opportunity
presented. Cabinet approved a comprehensive business plan in 2006,
and the focus was on:
-
supporting the effective marketing
of South Africa as a competitive business process outsourcing
location
-
developing and deepening the pool of
internationally competitive talent
-
creating an enabling environment of
incentives and infrastructure to support the sector
-
improving the quality of the South
African offering and
-
strengthening the industry body
capable of mobilizing and representing the key stakeholders.
The partnership
arrangements to drive the strategy operated under the direction and
leadership of His Excellency, the Hon. Minister Mandisi Mpahlwa, MP.
(The Minister of Trade and Industry and Director of the Business
Trust). The partnership also included key private and public sector
decision-makers, namely: Ms Thoko Didiza (Minister of Public Works
and Director of the Business Trust), Ms Elizabeth Thabethe (Deputy
Minister of Trade and Industry), Mr Derek Cooper (Chairman of
Standard Bank and Director of the Business Trust) and Mr Eddie Funde
(Chairman of the SABC and Chairman of the industry body, Business
Process enabling South Africa-BPeSA). Operations are directed by Dr.
Raymond Ngcobo (Chief Director for Strategic Competitiveness,
Enterprise and Industry Development Division of the dti), Mr. Brian
Whittaker (CEO of the Business Trust) and Mr Mfanu Mfayela (CEO of
BPeSA).
The BPO Sector
Support Program aims to place South Africa as a “Tier 2” player in
the global BPO&O market, this formed the basis of the Cabinet
memorandum approved on the 06th of December 2006. The memo set out
the framework for the comprehensive BPO&O Government Assistance and
Support (GAS) Program which is aimed at attracting substantial early
investments to the South African BPO&O sector. The support program
was formulated in partnership with the dti and the private sector
and is part of the Accelerated and Shared Growth Initiative for
South Africa (ASGISA).
The Government
Assistance and Support (GAS) Program offers comprehensive and
detailed support, through various initiatives. These include
marketing, easy entry into SA for both new and expanding business
process-outsourcing operations, skills development, simplifying
administrative procedures and other investment incentives.
Strategic Marketing
Initiative: The initiative straddles both targeted and broad-based
marketing. Targeted marketing focuses on attracting and securing
selected high-impact foreign investors, who will in turn create a
groundswell of other investor interest. Broad-based marketing
encompasses the supporting of government and industry initiatives,
to raise South Africa’s BPO&O global profile, with the aim of
securing a dominant Tier 2 position.
Talent Development
Initiative: Known as “Monyetla”, this Work Readiness Program is an
initiative between the dti and the Department of Labor, to take
unemployed matriculants or graduates through a process of learning
work-readiness skills. It includes both training for the workplace
and life skills. Monyetla is in its pilot phase and aims to train
1000 learners at a cost of R15 000 each and is expected to be
completed by the end of 2007.
The Training and
Skills Support Grant is directed towards the cost of providing
company specific training (as opposed to industry wide training) up
to a maximum of R12, 000 per agent. The incentive grant is over and
above the assistance obtained through the Sector Education and
Training Authorities (SETAs) and is a complement to the BPO&O
Investment Grant.
The BPO Investment
Support Grant: The objective of the investment incentive is to
attract BPO&O investment that creates employment opportunities. The
grant is provided depending on the value of qualifying investment
cost and employment creation. The grant ranges between R37,000 and
R60,000 per seat and is offered to local and foreign investors
establishing projects that aim primarily to serve offshore clients.
Contact Centers for
Designated Areas: This is a key second-economy initiative within
BPO&O. The initiative emerged from the Deputy President’s desire to
locate contact centers in more depressed areas, in order to spread
the opportunity and shift the focus away from active regions. As a
regional development support measure, the program aims to provide a
support facility for those operators who may wish to locate in the
designated areas, by assisting them to secure appropriate
infrastructure and business services, to derive value from locating
in the identified areas.
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