With the worldwide economic crisis, and as companies respond to increasing cost and efficiency pressures, South Africa is becoming a favoured international location for businesses process outsourcing and offshoring.
This is according to Pule Mokoena, group executive at business process administration and consulting company, Innovation Group, who says: "With the global credit crunch affecting most business sectors, business process outsourcing (BPO) is one of the more resilient ones. Naturally our business, too, has been affected, but not to the extent of many other sectors. There is still growth."
BPO and offshoring are becoming major global phenomena and are said to be worth around $130-billion a year – with an expected annual growth rate of 50% over the next five years.
"Although our labour costs are not as low as they used to be – and cannot compete with countries like India – we still have a lot to offer the BPO world in terms of the correct geographical location, the use of English as a business language of choice, and our improving skills level. There are certainly opportunities – and we need to seize them as a country," says Mokoena.
BPO has been identified by the government as one of the key sectors in its strategy to boost the country's economy and generate employment. BPO and offshoring are expected to create 25 000 direct and 75 000 indirect jobs in South Africa and contribute up to R7,95-billion to the national economy during the course of this year.
At the core of BPO is IT, says Mokoena, with IT outsourcing making up more than one-third of the R30-billion IT services market, according to a study generated in 2008 by research firm, IDC.
"This is a big and growing pool," says Mokoena. "We also must not think that we are tadpoles in this market. Gartner, the worldwide research group, has said that South Africa is one of its top 30 software development outsourcing destinations, with research done in 2007 putting us on par with Israel in the Europe, Middle East and Africa region – and next to Australia and India from a global perspective. This is not to be scoffed at."