LONDON – Trade and Industry Minister Rob Davies has launched the Global Business Services (GBS) Incentive at South Africa House in London, the trade and industry department (dti) said on Saturday.
The Business Process Services (BPS) industry offered South Africa the largest job creation potential across all service sectors, Davies said in a statement issued by the dti.
The BPS incentive that he launched four years ago in London was successful in creating jobs in the BPS Sector, stimulating economic growth, and it was instrumental in enhancing cost competitiveness which was crucial to the South African business case for BPS investments. However, due to the tapering nature of the incentive and inflation, South Africa started losing its cost competitiveness in relation to its competitors, he said.
“The 2014 BPS incentive programme that we launched here in London had the objective of attracting investment and creating employment opportunities among 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 percent per annum during the period 2014-2018,” Davies said.
He indicated that through a global benchmark study and investor engagements, the dti had been able to present a revised Global Business Services incentive. The highlights of the revised process were 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,” Davies said.
He assured investors of government's 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.
"Therefore, a decision was taken to review the existing incentives, as a key enabler in support of South Africa’s value proposition. 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 our ability to deliver a quality product,” Davies said.
The dti had partnered with industry to develop a compelling value proposition to investors which would 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 would ensure that South Africa remained 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.
BPeSA chief executive Andy Searle, said the industry welcomed the changes and they were happy with the support they were 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. Government's 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 and will continue to put great effort and resource into attracting and retaining your investment in SA," Searle said.
South Africa’s value proposition for Global Business Services was underpinned by good quality English-speaking talent, significant cost savings, a strong foundation in contact centre and niche services, evolving capabilities for next-gen services for digital contact centres, and world class infrastructure, the dti said.
African News Agency (ANA)